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What changed in TACTILE SYSTEMS TECHNOLOGY INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of TACTILE SYSTEMS TECHNOLOGY INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+399 added−362 removedSource: 10-K (2026-02-17) vs 10-K (2025-02-18)

Top changes in TACTILE SYSTEMS TECHNOLOGY INC's 2025 10-K

399 paragraphs added · 362 removed · 295 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

106 edited+39 added−43 removed186 unchanged
Biggest changeMarket Opportunity Lymphedema and CVI are costly and lifelong conditions with debilitating physical and psychological impacts on patients. Based on a study published in 2020 by Dr. Steven Dean of Ohio State Medical Center et al., it is estimated that more than 16 million people in the United States are living with lymphedema due to CVI.
Biggest changePhysicians 7 Table of Contents diagnose chronic venous insufficiency based on appearance, symptoms and imaging techniques and classify it based upon a scale endorsed by the Society for Vascular Surgery. Market Opportunity Lymphedema and CVI are costly and lifelong conditions with debilitating physical and psychological impacts on patients. Based on a study published in 2020 by Dr.
These include: ● establishment registration and device listing; 20 Table of Contents ● quality system regulation, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, current good manufacturing practice, as applicable, and other quality assurance procedures during all aspects of the manufacturing process; ● labeling regulations and the FDA prohibitions against the promotion of products for un-cleared, unapproved or "off-label" uses, and other requirements related to promotional activities; ● medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; ● corrections and removals reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation that may present a risk to health; and ● post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These include: ● establishment registration and device listing; 20 Table of Contents ● quality management system regulation, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, current good manufacturing practice, as applicable, and other quality assurance procedures during all aspects of the manufacturing process; ● labeling regulations and the FDA prohibitions against the promotion of products for un-cleared, unapproved or "off-label" uses, and other requirements related to promotional activities; ● medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; ● corrections and removals reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation that may present a risk to health; and ● post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
Our unique garments contain up to 32 air chambers, are made of a soft, pliable fabric and are designed with zippers and hook-and-loop fasteners to fit snugly around affected areas for maximum comfort and optimum pressure delivery. The garments come in a variety of sizes that can be easily adjusted to patients of all sizes.
Our unique ComfortEase garments contain up to 32 air chambers, are made of a soft, pliable fabric and are designed with zippers and hook-and-loop fasteners to fit snugly around affected areas for maximum comfort and optimum pressure delivery. The garments come in a variety of sizes that can be easily adjusted to patients of all sizes.
FTC Regulation Device advertising and promotional activity in certain circumstances is also subject to scrutiny by the Federal Trade Commission, as well as similar state consumer protection agencies, which enforce laws related 21 Table of Contents to false and deceptive trade practices.
FTC Regulation Device advertising and promotional activity in certain circumstances is also subject to scrutiny by the Federal Trade Commission (the “FTC”), as well as similar state consumer protection agencies, which enforce 21 Table of Contents laws related to false and deceptive trade practices.
At ResMed Inc., her responsibilities included managing marketing and legal due diligence teams and leading the collaboration between multiple teams following a significant market reorganization. Ms. Burns previously served in consulting and business development roles of increasing responsibility at a privately-held cardiology consulting practice that was subsequently acquired by GE Medical Systems, from 1994 to 1999. Sherri L.
At ResMed Inc., her responsibilities included managing marketing and legal due diligence teams and leading the collaboration between multiple teams following a significant market reorganization. Ms. Burns previously served in consulting and business development roles of increasing responsibility at a privately-held cardiology consulting practice that was subsequently acquired by GE Medical Systems, from 1994 to 1999.
Birkemeyer holds an M.B.A. from Northwestern University's Kellogg School of Management and a B.S. in Economics from the University of Pennsylvania’s Wharton School. Kristie T. Burns , age 53, has served as our Senior Vice President, Marketing & Clinical Affairs since joining the company in March 2021. Prior to joining our company, Ms.
Birkemeyer holds an M.B.A. from Northwestern University's Kellogg School of Management and a B.S. in Economics from the University of Pennsylvania’s Wharton School. Kristie T. Burns , age 54, has served as our Senior Vice President, Marketing & Clinical Affairs since joining the company in March 2021. Prior to joining our company, Ms.
Dodd served as a project coordinator with the World Health Organization. Elaine M. Birkemeyer , age 50, has served as our Chief Financial Officer since joining the Company in March 2023. Ms. Birkemeyer joined the Company from UnitedHealth Group Incorporated (“UnitedHealth”), where she had served as Chief Financial Officer, Optum Care Solutions, from May 2021 to March 2023.
Dodd served as a project coordinator with the World Health Organization. Elaine M. Birkemeyer , age 51, has served as our Chief Financial Officer since joining the Company in March 2023. Ms. Birkemeyer joined the Company from UnitedHealth Group Incorporated (“UnitedHealth”), where she had served as Chief Financial Officer, Optum Care Solutions, from May 2021 to March 2023.
As of December 31, 2024, we also employed a small group of respiratory specialists, who educate DME provider representatives, provide product demonstrations for targeted clinicians and support technical questions related to the AffloVest. 16 Table of Contents The chart below describes our DME model.
As of December 31, 2025, we also employed a small group of respiratory specialists, who educate DME provider representatives, provide product demonstrations for targeted clinicians and support technical questions related to the AffloVest. 16 Table of Contents The chart below describes our DME model.
Sales and Marketing Unlike many of our competitors, we generally utilize a direct-to-patient and -provider model to market our lymphedema products directly to patients and clinics, providing high-quality customer service and capturing both the manufacturer and distributor margins for the majority of this business.
Sales and Marketing Unlike many of our competitors, we generally utilize a direct-to-patient and -provider model to market our lymphedema products directly to patients and clinics, providing high-quality customer service and capturing both the manufacturer and distributor margins for most of this business.
We have strong and established payer relationships, including most of the largest private payers in the United States. Based on our estimates, we are contracted or enrolled as an in-network provider with payers covering nearly 275 million lives.
We have strong and established payer relationships, including most of the largest private payers in the United States. Based on our estimates, we are contracted or enrolled as an in-network provider with payers covering nearly 278 million lives.
Sheri L. Dodd , age 59, has served as a member of our Board of Directors since January 2021 and has served as our Chief Executive Officer since July 2024. Previously, Ms. Dodd served as President of Medtronic Canada at Medtronic plc. Since joining Medtronic in March 2010, Ms.
Sheri L. Dodd , age 60, has served as a member of our Board of Directors since January 2021 and has served as our Chief Executive Officer since July 2024. Previously, Ms. Dodd served as President of Medtronic Canada at Medtronic plc. Since joining Medtronic in March 2010, Ms.
Economic Impact of our Flexitouch System in Patients with Phlebolymphedema A retrospective longitudinal matched case-control analysis of de-identified private insurance claims published by the Journal of Vascular Surgery in 2018 indicated significant benefits attributable to our Flexitouch system as compared to alternative compression therapies currently employed to help reduce the notable economic burden of phlebolymphedema (chronic venous insufficiency-related lymphedema).
A retrospective longitudinal matched case-control analysis of de-identified private insurance claims published by the Journal of Vascular Surgery in 2018 indicated significant benefits attributable to our Flexitouch system as compared to alternative compression therapies currently employed to help reduce the notable economic burden of phlebolymphedema (chronic venous insufficiency-related lymphedema).
Burns served as Vice President of Solutions Marketing, ResMed Americas of ResMed Inc. (NYSE: RMD), a global leader in digital health and cloud-connected medical devices focused on sleep apnea and other chronic diseases, from December 2003 to February 2016. Ms. Burns held various marketing and leadership roles of increasing responsibility with ResMed Inc. beginning in 2003.
Burns served as Vice President of Solutions Marketing, ResMed Americas of ResMed Inc. (NYSE: RMD), a global leader in digital health and cloud-connected medical devices focused on 29 Table of Contents sleep apnea and other chronic diseases, from December 2003 to February 2016. Ms. Burns held various marketing and leadership roles of increasing responsibility with ResMed Inc. beginning in 2003.
A predecessor to our Flexitouch system received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) in July 2002, and we introduced the system to address the many limitations of self-administered home-based manual lymphatic drainage therapy. We began selling our more advanced Flexitouch system after 5 Table of Contents receiving 510(k) clearance from the FDA in October 2006.
A predecessor to our Flexitouch system received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) in July 2002, and we introduced the system to address the many limitations of self-administered home-based manual lymphatic drainage therapy. We began selling our more advanced Flexitouch system after receiving 510(k) clearance from the FDA in October 2006.
We are subject to numerous foreign, federal, state, and local environmental, health and safety laws and regulations relating to, among other matters, safe working conditions, product stewardship and end-of-life handling or disposition of products, and environmental protection, including those governing the generation, storage, handling, use, transportation and disposal of hazardous or potentially hazardous materials.
We are subject to numerous foreign, federal, state, and local environmental, health and safety laws and regulations relating to, among other matters, safe working conditions, product stewardship and end-of-life handling or disposition of products, and environmental protection, including those governing the 25 Table of Contents generation, storage, handling, use, transportation and disposal of hazardous or potentially hazardous materials.
By automating this technique, we believe our system offers an effective, cost-efficient, convenient and accessible at-home treatment for patients. Our Flexitouch Plus system consists of an electronic controller unit that offers 17 treatment settings and multiple contoured garment configurations for the trunk, chest, head, neck and the arm or leg.
By automating 10 Table of Contents this technique, we believe our system offers an effective, cost-efficient, convenient and accessible at-home treatment for patients. Our Flexitouch Plus system consists of an electronic controller unit that offers 17 treatment settings and multiple contoured garment configurations for the trunk, chest, head, neck and the arm or leg.
Despite any measures taken to protect our intellectual property, unauthorized parties may attempt to copy aspects of our systems or to obtain and use information that we regard as proprietary. Patents Our patent portfolio consists of four sets of patents, including patents relating to our Flexitouch system, our AffloVest system and other related technologies.
Despite any measures taken to protect our intellectual property, unauthorized parties may attempt to copy aspects of our systems or to obtain and use information that we regard as proprietary. Patents Our patent portfolio consists of a few sets of patents, including patents relating to our Flexitouch system, our AffloVest system and other related technologies.
In the year before use of our Flexitouch system, 15% of the patients reported 26 episodes of cellulitis, which decreased to five episodes after initiation of the Flexitouch system ( P =0.002) in subsequent median follow-up of 12.7 months. Eight percent of patients reported skin ulceration of the affected extremity in the year before presentation for treatment.
In the year before use of our Flexitouch system, 15% of the patients reported 26 episodes of cellulitis, which decreased to five episodes after initiation of the Flexitouch system (P=0.002) in subsequent median follow-up of 12.7 months. 8% of patients reported skin ulceration of the affected extremity in the year before presentation for treatment.
We intend to strengthen our distribution network by continuing to recruit, train and 9 Table of Contents retain talented sales representatives. With an expanded sales force, our goal is to expand the existing prescriber base. ● Demonstrate ongoing innovation to grow our technology platform and expand adoption of our therapies.
We intend to strengthen our distribution network by continuing to recruit, train and retain talented sales representatives. With an expanded sales force, our goal is to expand the existing prescriber base. ● Demonstrate ongoing innovation to grow our technology platform and expand adoption of our therapies.
Further, we intend to continue promoting this awareness through training and educating clinicians, advertising campaigns, exhibiting at tradeshows and physician meetings and publishing additional clinical and economic outcome data demonstrating the benefits of our solutions.
Further, we intend to continue promoting this awareness through training and educating clinicians, advertising campaigns, exhibiting at tradeshows and physician 9 Table of Contents meetings and publishing additional clinical and economic outcome data demonstrating the benefits of our solutions.
The information contained on or connected to our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this or any other report filed with the SEC. Information About our Executive Officers Certain information with respect to our executive officers as of February 14, 2025 is set forth below.
The information contained on or connected to our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this or any other report filed with the SEC. Information About our Executive Officers Certain information with respect to our executive officers as of February 17, 2026 is set forth below.
Overview of Lymphedema and Chronic Venous Insufficiency Lymphedema The lymphatic system, a fundamental part of the cardiovascular system, consists of lymph vessels and lymph organs that protect the body against harmful bacteria and transport lymph fluid from the body’s tissues 6 Table of Contents back to the cardiovascular system.
Overview of Lymphedema and Chronic Venous Insufficiency Lymphedema The lymphatic system, a fundamental part of the cardiovascular system, consists of lymph vessels and lymph organs that protect the body against harmful bacteria and transport lymph fluid from the body’s tissues back to the cardiovascular system.
In September 2016, we received 510(k) clearance from the FDA for the Flexitouch system in treating lymphedema of the head and neck. In June 2017, we announced that we received 510(k) clearance from the FDA for the Flexitouch Plus, the third-generation version of our Flexitouch system.
In September 2016, we received 510(k) clearance from the FDA for the Flexitouch system in treating lymphedema of the head and neck. In June 2017, we 5 Table of Contents announced that we received 510(k) clearance from the FDA for the Flexitouch Plus, the third-generation version of our Flexitouch system.
We also introduced a number of new learning and development options for our team members in 2023. ​ We continue to be diligent and remain focused on our employee engagement strategies, including through exit interview analyses, talent management and retention risk analyses and periodic employee engagement surveys. ​ Available Information We file annual, quarterly and current reports, proxy statements and other information with the SEC.
We also have a number of learning and development options for our team members. ​ We continue to be diligent and remain focused on our employee engagement strategies, including through exit interview analyses, talent management and retention risk analyses and periodic employee engagement surveys. ​ Available Information We file annual, quarterly and current reports, proxy statements and other information with the SEC.
Our proprietary Flexitouch, Entre and Nimbl systems are clinically proven at-home solutions for patients with vascular disorders such as lymphedema. Patients with lymphedema or chronic venous insufficiency are typically treated by vascular surgeons, vascular medicine physicians, oncology care teams, wound physicians, nurses and therapists. Our current lymphedema products are the Flexitouch Plus, Entre Plus and Nimbl systems.
Our proprietary Flexitouch, Entre and Nimbl systems are clinically proven at-home solutions for patients with vascular disorders such as lymphedema. Patients with lymphedema are typically treated by vascular surgeons, vascular medicine physicians, oncology care teams, wound physicians, nurses and therapists. Our current lymphedema products are the Flexitouch Plus, Entre Plus and Nimbl systems.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. 28 Table of Contents We also make financial information, news releases and other information available on our corporate website at www.tactilemedical.com.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. We also make financial information, news releases and other information available on our corporate website at www.tactilemedical.com.
These contracts allow us to be an in-network provider for patients, enabling them to access our systems at a competitive rate and copay comparable to other suppliers and easing our administrative burden in processing authorizations and claims.
These contracts allow us to be an in-network provider for patients, enabling them to access our systems at a competitive rate and copay comparable to other suppliers and easing our 17 Table of Contents administrative burden in processing authorizations and claims.
For the last several years we have enjoyed an 17 Table of Contents 80% or greater approval rate on commercial payers and 90% or greater approval rate on Medicare claims submitted (across all our products). We began doing business with Medicare in 2007.
For the last several years we have enjoyed an 80% or greater approval rate on commercial payers and 90% or greater approval rate on Medicare claims submitted (across all our products). We began doing business with Medicare in 2007.
We provide all employees training on workplace safety and require employees to follow standards and practices supporting a safe and healthy work environment. Talent and Retention: In 2024, we continued to focus on recruitment, hiring, and retention to ensure high quality talent and a strong fit for specific roles within the Company.
We provide all employees training on workplace safety and require employees to follow standards and practices supporting a safe and healthy work environment. 28 Table of Contents Talent and Retention: In 2025, we continued to focus on recruitment, hiring, and retention to ensure high quality talent and a strong fit for specific roles within the Company.
Lymph vessels are thin-walled capillaries that absorb fluids, bacteria and proteins, and propel them to lymph nodes, small lymph organs that filter and process the lymph fluid by eliminating waste and bacteria.
Lymph vessels are thin-walled capillaries that absorb fluids, bacteria and 6 Table of Contents proteins, and propel them to lymph nodes, small lymph organs that filter and process the lymph fluid by eliminating waste and bacteria.
Traditional Treatment and Limitations A traditional treatment for lymphedema is complete decongestive therapy consisting of manual lymphatic drainage, which is a specialized application of gentle pressure to the skin applied by a trained therapist that encourages drainage of lymph fluid, as well as decongestive exercises, skin care and compression with multilayered bandages, compression garments or pumps.
Treatment options include complete decongestive therapy consisting of manual lymphatic drainage (“MLD”), which is a specialized application of gentle pressure to the skin applied by a trained therapist that encourages drainage of lymph fluid, as well as decongestive exercises, skin care and compression with multilayered bandages, compression garments or pumps.
The direct channel allows us to focus on three of our primary call points, vascular, therapy and oncology. For AffloVest, we utilize the respiratory DME channel as our go-to-market method. Our utilization of DME provider representatives gives us access to a larger channel than competitors that market and sell directly.
The direct channel allows us to focus on our primary call points, which include vascular, therapy, oncology, and the Veterans Affairs hospital markets. For AffloVest, we utilize the respiratory DME channel as our go-to-market method. Our utilization of DME provider representatives gives us access to a larger channel than competitors that market and sell directly.
Based on our estimates, we are contracted or enrolled as an in-network provider with payers covering over 275 million lives in the United States. In 2024 we served over 79,000 patients with our compression therapy devices and cumulatively have served over 551,000 patients since they launched. AffloVest also benefits from a relatively mature reimbursement landscape.
Based on our estimates, we are contracted or enrolled as an in-network provider with payers covering over 278 million lives in the United States. In 2025, we served over 84,000 patients with our compression therapy devices and cumulatively have served over 635,000 patients since they launched. AffloVest also benefits from a relatively mature reimbursement landscape.
Our U.S. issued patents have varying patent terms, expiring between 2025 and through at least 2040, subject to payment of required maintenance fees, annuities and other charges.
Our 27 Table of Contents U.S. issued patents have varying patent terms, expiring between 2026 and through at least 2040, subject to payment of required maintenance fees, annuities and other charges.
ACT options include huff coughing, chest physiotherapy performed by a therapist or caregiver, active cycle breathing, positive expiratory pressure devices and HFCWO vests. These treatments need to be performed daily to support bronchial hygiene for at-risk respiratory patients.
ACT options include huff coughing, chest physiotherapy performed by a therapist or caregiver, active cycle breathing, positive expiratory pressure devices and HFCWO vests. These treatments need to be performed daily to support bronchial hygiene for at-risk respiratory patients. Adherence to treatments and effectiveness of treatments are a significant challenge for patients with these chronic conditions.
Lymphedema is progressive in nature, worsens over time, and has no known cure. Chronic venous insufficiency is a condition that occurs when the venous wall and/or valves in the veins are not working effectively, making it difficult for blood to return to the heart from the affected region(s). Phlebolymphedema is the convergence of lymphedema and chronic venous insufficiency.
Chronic venous insufficiency is a condition that occurs when the venous wall and/or valves in the veins are not working effectively, making it difficult for blood to return to the heart from the affected region(s). Phlebolymphedema is the convergence of lymphedema and chronic venous insufficiency.
Adherence to treatments and effectiveness of treatments are a significant challenge for patients with these chronic conditions. ​ AffloVest is a HFCWO therapy vest that has eight anatomically positioned oscillating motors that create individual pressure waveforms to target all lobes of the lungs to loosen, thin and mobilize lung secretions. ​ Our Strategy Our goal is to become the leader in the at-home treatment of select underserved chronic diseases.
AffloVest is a HFCWO therapy vest that has eight anatomically positioned oscillating motors that create individual pressure waveforms to target all lobes of the lungs to loosen, thin and mobilize lung secretions. Our Strategy Our goal is to become the leader in the at-home treatment of select underserved chronic diseases.
In the United States, we and some of our manufacturers are required to manufacture our products in compliance with the FDA's Quality System Regulation, which covers the methods and documentation of the design, testing, control, manufacturing, labeling, quality assurance, packaging, storage and shipping for our products.
In the United States, we and some of our manufacturers are required to manufacture our products in compliance with the FDA's Quality Management System Regulation, as updated to take effect on February 2, 2026, which covers the methods and documentation of the design, testing, control, manufacturing, labeling, quality assurance, packaging, storage and shipping for our products.
Reimbursement, Payer Relations and Customer Support Process Private insurers and other payers represented approximately 60% and 54% of our revenue in 2024 and 2023, respectively, while Medicare represented approximately 18% and 24% of our revenue in 2024 and 2023, respectively, Veterans Administration hospitals represented approximately 11% and 10% of our revenue in 2024 and 2023, respectively, and DME distributors represented approximately 11% and 12% of our revenue in 2024 and 2023, respectively.
Reimbursement, Payer Relations and Customer Support Process Private insurers and other payers represented approximately 51% and 60% of our revenue in 2025 and 2024, respectively, while Medicare represented approximately 24% and 18% of our revenue in 2025 and 2024, respectively, Veterans Administration hospitals represented approximately 9% and 11% of our revenue in 2025 and 2024, respectively, and DME distributors represented approximately 16% and 11% of our revenue in 2025 and 2024, respectively.
As of December 31, 2024, we employed 169 account managers and 111 specialists for our lymphedema products and a team of 18 specialists supporting our airway clearance products. This compares to 150 account managers and 104 specialists for our lymphedema products and a team of 16 specialists supporting our airway clearance products as of December 31, 2023.
As of December 31, 2025, we employed 166 account managers and 166 specialists for our lymphedema products and a team of 19 specialists supporting our airway clearance products. This compares to 169 account managers and 111 specialists for our lymphedema products and a team of 18 specialists supporting our airway clearance products as of December 31, 2024.
A LCD, administered by the two Medicare Administrative Contractors responsible for processing durable medical equipment claims, and which had set forth additional coverage criteria impacting Medicare coverage for our products was retired on November 14, 2024. The validity of the coverage criteria in the LCD remains under dispute in the District Court of the District of Columbia.
A LCD, administered by the two Medicare Administrative Contractors responsible for processing durable medical equipment claims, and which had set forth additional coverage criteria impacting Medicare coverage for our products was retired on November 14, 2024.
Comparison of our Flexitouch System with Simple Pneumatic Compression Devices A prospective, randomized controlled trial published in Supportive Care in Cancer demonstrated that our Flexitouch system provides better clinical outcomes as compared to those achieved with a simple pneumatic compression device for home-based treatment of breast cancer-related lymphedema. The study was conducted in the United States and involved 36 patients.
Comparison of our Flexitouch System with Simple Pneumatic Compression Devices A prospective, randomized controlled trial published in Supportive Care in Cancer in 2012 demonstrated that our Flexitouch system provides better clinical outcomes as compared to those achieved with a simple pneumatic compression device for home-based treatment of breast cancer-related lymphedema.
When the lymphatic system becomes overwhelmed, damaged, or blocked for an extended period of time, lasting swelling (referred to as chronic edema) occurs. Symptoms related to lymphedema can present anywhere in the body, including the head, neck, arms, legs, trunk and genitals. For most patients with lymphedema, it has a negative impact on their quality of life.
When the lymphatic system becomes overwhelmed, damaged, or blocked for an extended period of time, lasting swelling (referred to as chronic edema) occurs. Symptoms related to lymphedema can present anywhere in the body, including the head, neck, arms, legs, trunk and genitals.
The time required to obtain clearance or approval by a foreign country may be longer or shorter than that required for FDA clearance or approval, and the requirements may be different. Many countries also impose product standards, packaging requirements, environmental 25 Table of Contents requirements, labeling requirements, and import restrictions on medical devices.
The time required to obtain clearance or approval by a foreign country may be longer or shorter than that required for FDA clearance or approval, and the requirements may be different. Many countries also impose product standards, packaging requirements, environmental requirements, labeling requirements, and import restrictions on medical devices. Each country has its own tariff regulations, duties and tax requirements.
In 2023, our second-generation system, Entre Plus, was introduced. Nimbl Nimbl, our next generation pneumatic compression platform, received 510(k) clearance in June 2024, and beginning in October 2024, is commercially available throughout the United States for the treatment of upper extremity lymphedema.
Nimbl, our next generation pneumatic compression platform, received 510(k) clearance in June 2024 and, beginning in October 2024, is commercially available throughout the United States for treatment of upper extremity lymphedema, and subsequently was commercially launched for lower extremity lymphedema in February 2025.
Each country has its own tariff regulations, duties and tax requirements. Failure to comply with applicable foreign regulatory requirements may subject a company to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, criminal prosecution or other consequences.
Failure to comply with applicable foreign regulatory requirements may subject a company to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, criminal prosecution or other consequences.
The device is battery-powered and affords patients the ability to ambulate while receiving treatment, as well as increases the likelihood that their treatment will travel with them. The AffloVest treats patients with retained pulmonary secretions resulting from bronchiectasis, cystic fibrosis and a host of neuromuscular disorders. The AffloVest offers various treatment modes and intensities.
The AffloVest is the first truly portable high-frequency chest wall oscillation (HFCWO) vest. The device is battery-powered and affords patients the ability to ambulate while receiving treatment, as well as increases the likelihood that their treatment will travel with them. The AffloVest treats patients with retained pulmonary secretions resulting from bronchiectasis, cystic fibrosis and a host of neuromuscular disorders.
We sell the AffloVest to DME providers in the U.S. whose representatives service patients and bill third-party payers for the product. The DME provider representatives obtain the prescription and coordinate with patients and payers to determine insurance eligibility and payment.
The chart below describes our U.S. direct-to-patient and -provider model for the majority of our lymphedema business. We sell the AffloVest to DME providers in the U.S. whose representatives service patients and bill third-party payers for the product. The DME provider representatives obtain the prescription and coordinate with patients and payers to determine insurance eligibility and payment.
Outpatient hospital costs for the non-cancer patients declined by 65% from $1,726 to $606 (p Flexitouch System Impact on Limb Volume and Patient-Reported Outcomes A prospective study published in the European Journal of Vascular and Endovascular Surgery demonstrated that use of our Flexitouch system is associated with statistically significant reduction in limb volume, improvement in quality of life and no significant adverse effects.
Flexitouch System Impact on Limb Volume and Patient-Reported Outcomes A prospective study published in the European Journal of Vascular and Endovascular Surgery demonstrated that use of our Flexitouch system is associated with statistically significant reduction in limb volume, improvement in quality of life and no significant adverse effects.
We are also subject to announced and unannounced inspections by the FDA, and these inspections may include the manufacturing facilities or other sites of our subcontractors to audit any part of our quality system. We were inspected three times since January 2010 by the FDA and found to be in compliance with the Quality System Regulation.
We are also subject to announced and unannounced inspections by the FDA, and these inspections may include the manufacturing facilities or other sites of our subcontractors to audit any part of our quality system.
As of December 31, 2024, we owned about 171 issued patents globally, of which 65 were issued U.S. patents. As of December 31, 2024, we owned about 20 pending patent applications pending globally, of which 7 were pending patent applications in the United States.
As of December 31, 2025, we owned about 172 issued patents globally, of which 61 were issued U.S. patents. As of December 31, 2025, we owned about 21 pending patent applications pending globally, of which 10 were pending patent applications in the United States.
We market AffloVest as an at-home therapy intended to promote airway clearance. These products have received 510(k) clearance from the FDA to be marketed in the United States.
We market AffloVest as an at-home therapy to mobilize lung secretions through high frequency chest wall oscillation. These products have received 510(k) clearance from the FDA to be marketed in the United States.
Our Entre system is a basic pneumatic compression device used for the at-home treatment of venous disorders including lymphedema and chronic venous insufficiency, including venous leg ulcers. Our Entre system is a pump with garments covering the arm or leg with eight chambers that inflate in sequence and remain inflated for a preset time period.
Entre Plus System Our Entre system, introduced in 2013, is a basic pneumatic compression device used for the at-home treatment of lymphedema, chronic edema, venous insufficiency, and chronic wounds. Our Entre system is a pump with garments covering the arm or leg with eight chambers that inflate in sequence. In 2023, our second-generation system, Entre Plus, was introduced.
The premarket approval application process is much more demanding and in-depth than the 510(k) premarket notification process and requires the payment of significant user fees.
A premarket approval application must be submitted to the FDA if the device cannot be cleared through the 510(k) process. The premarket approval application process is much more demanding and in-depth than the 510(k) premarket notification process and requires the payment of significant user fees.
The below chart reflects these models: Our direct-to-patient and -provider lymphedema business is composed of a direct sales force, patient training and support, reimbursement capabilities and clinical expertise to educate, expand awareness, coordinate referrals and obtain payment for our products. The chart below describes our U.S. direct-to-patient and -provider model for the majority of our lymphedema business.
The below chart reflects these models: Our direct-to-patient and -provider lymphedema business is composed of a direct sales force, patient training and support, reimbursement capabilities and clinical expertise. These functions focus on patient and provider education, expanding awareness, coordinating referrals, and obtaining payment for our products.
This was driven by 59% fewer mean annual hospitalizations (0.13 vs 0.32; P Impact on Clinical Outcomes and Healthcare Costs with Use of our Flexitouch System A retrospective study published by the American Medical Association in JAMA Dermatology demonstrated significant improvement in key clinical endpoints and immediate cost reductions for individuals with lymphedema following receipt of our Flexitouch system.
Impact on Clinical Outcomes and Healthcare Costs with Use of our Flexitouch System A retrospective study published in JAMA Dermatology demonstrated significant improvement in key clinical endpoints and immediate cost reductions for individuals with lymphedema following receipt of our Flexitouch system.
Our research and development and clinical operations functions include scientists, clinical monitors and project managers with expertise in pneumatics, electronics, garment design, embedded software, mechanical design, sensors, manufacturing technologies and clinical trial management. Our current research and development efforts are focused primarily on improving design for ease-of-use, enhancing clinical functionality and reducing production costs of our solutions.
Our expertise includes pneumatics, electronics, garment design, embedded software, mechanical design, sensors, manufacturing technologies and clinical trial management. Our current research and development efforts are focused on improving design for ease-of-use, reducing production costs of our solutions and further differentiating our products from our competitors.
The AffloVest product line generated $33.6 million, or 11%, of our revenue in 2024 and $32.7 million, or 12%, of our revenue in 2023. To support the growth of our business, we continue to invest in our commercial infrastructure, consisting of our direct sales force, DME sales team, patient education team, reimbursement capabilities and clinical expertise.
To support the growth of our business, we continue to invest in our commercial infrastructure, consisting of our direct sales force, DME sales team, patient education team, reimbursement capabilities, and clinical expertise.
Twelve patients demonstrated measurable improvement in multiple lung function tests: Forced Vital Capacity (“FVC”) increased 15.22%, Forced Expiratory Volume 1 (“FEV1”) increased 17.41% and Forced Expiratory Flow (“FEF”) 25-75% increased 11.21% respectively.
These patients ranged from 11 to 18 years old and used AffloVest for periods of one month to almost a full year. Twelve patients demonstrated measurable improvement in multiple lung function tests: Forced Vital Capacity (“FVC”) increased 15.22%, Forced Expiratory Volume 1 (“FEV1”) increased 17.41% and Forced Expiratory Flow (“FEF”) 25-75% increased 11.21% respectively.
Flexitouch Plus System Our Flexitouch Plus system is a fully automated, programmable, advanced pneumatic compression device, or APCD, designed for treatment of lymphedema in the home setting. Our Flexitouch Plus system has received 510(k) clearance for the treatment of lymphedema, phlebolymphedema, lipedema, certain types of other edema, venous insufficiencies and certain types of leg ulcers.
Flexitouch Plus System Our Flexitouch Plus system is a programmable advanced pneumatic compression device designed to stimulate the lymphatic system. It is indicated for the treatment of lymphedema, phlebolymphedema, lipedema, certain types of other edema, venous insufficiencies and certain types of leg ulcers.
Our revenue increased 7% during the year ended December 31, 2024, compared to the year ended December 31, 2023. Lymphedema is a type of chronic swelling, or edema, which occurs in the arms, legs, neck, trunk or other body parts when the lymphatic vessels are unable to adequately drain protein-rich lymph fluid from these regions.
Lymphedema is a type of chronic swelling, or edema, which occurs in the arms, legs, neck, trunk, chest or other body parts when the lymphatic vessels are unable to adequately drain protein-rich lymph fluid from these regions. Lymphedema is progressive in nature, worsens over time, and has no known cure.
CVI is prevalent among patients who are obese or pregnant and may also be caused by high blood pressure, trauma, lack of exercise, smoking, deep vein thrombosis and inflammation of the vein walls.
The inability of the lymphatic system to adequately drain the interstitial fluid that accumulates in severe chronic venous hypertension causes this ‘combined’ condition, phlebolymphedema. CVI is prevalent among patients who are obese or pregnant and may also be caused by high blood pressure, trauma, lack of exercise, smoking, deep vein thrombosis and inflammation of the vein walls.
The group using our Flexitouch system experienced an average reduction in edema of 29% compared to a 16% increase in the group using a simple pneumatic compression device. ​ 13 Table of Contents Study of Patient-Reported Satisfaction with Use of our Flexitouch System A retrospective study published in the Oncology Nursing Forum demonstrated that patients using our Flexitouch system were satisfied with the device and perceived it to be beneficial in managing their lymphedema.
Study of Patient-Reported Satisfaction with Use of our Flexitouch System A retrospective study published in the Oncology Nursing Forum in 2008 demonstrated that patients using our Flexitouch system were satisfied with the device and perceived it to be beneficial in managing their lymphedema. The study was conducted in the United States and involved 155 patients with lymphedema.
On September 8, 2021, we acquired the assets of the AffloVest airway clearance product line. AffloVest is a portable, battery-powered, wearable vest that provides airway clearance to treat patients with chronic respiratory conditions such as bronchiectasis or conditions resulting from neuromuscular disorders.
AffloVest is a portable, battery-powered, wearable vest that provides airway clearance to treat patients with chronic respiratory conditions such as bronchiectasis or conditions resulting from neuromuscular disorders. The AffloVest product line generated $51.1 million, or 16%, of our revenue in 2025, and $33.6 million, or 11%, of our revenue in 2024.
For people with cancer, the build-up of lymph fluid can be caused by surgery, especially when lymph nodes are removed, radiation therapy that can damage lymph nodes and vessels, infections that damage surrounding tissue or cause scarring, and other conditions. In the fourth quarter of 2016 we expanded the indications for use of the Flexitouch system. We received U.S.
Recurrent skin infections such as cellulitis, a serious skin infection, are common complications of lymphedema. For people with cancer, the build-up of lymph fluid can be caused by surgery, especially when lymph nodes are removed, radiation therapy that can damage lymph nodes and vessels, infections that damage surrounding tissue or cause scarring, and other conditions.
Beginning in November 2022, Flexitouch Plus controllers include Bluetooth capability that enables therapy data from the controller to be reported through Kylee, a companion application.
A typical therapy session using our Flexitouch Plus system lasts up to one hour, with additional treatment options available if prescribed by a clinician. Beginning in November 2022, Flexitouch Plus controllers include Bluetooth capability that enables therapy data from the controller to be reported through Kylee, a companion application.
In addition, clinically and statistically significant improvements occurred in all areas of physical and emotional health (p Flexitouch System Impact on Patient-Reported Improved Quality-of-Life A prospective observational study published in Annals of Vascular Surgery demonstrated that use of our Flexitouch system is associated with patient-reported overall improvement in quality-of-life and lower extremity-related symptoms.
Ninety percent of the 155 study patients reported being "satisfied" with our Flexitouch system. Of these patients, more than 65% reported being "extremely satisfied." Flexitouch System Impact on Patient-Reported Improved Quality-of-Life A prospective observational study published in Annals of Vascular Surgery demonstrated that use of our Flexitouch system is associated with patient-reported overall improvement in quality-of-life and lower extremity-related symptoms.
We intend to continue to invest in additional studies to support peer-reviewed, published articles that evidence the clinical and economic benefits of our solutions as compared to traditional treatments. To date, more than 25 studies regarding the safety and efficacy of our products have been completed, in which over 2,100 subjects have been included.
We have developed a significant body of clinical data supporting the efficacy and safety of our products. We intend to continue to invest in studies to support peer-reviewed, published articles that demonstrate the clinical and economic benefits of our solutions as compared to traditional treatments.
Ulcers develop in areas with edema as swelling interferes with the movement of oxygen and nutrients through tissues, and if left untreated, these ulcers can quickly become infected or even gangrenous. Physicians diagnose chronic venous insufficiency based on appearance, symptoms and imaging techniques and classify it based upon a scale endorsed by the Society for Vascular Surgery.
Ulcers develop in areas with edema as swelling interferes with the movement of oxygen and nutrients through tissues, and if left untreated, these ulcers can quickly become infected or even gangrenous.
Among the cancer-related lymphedema patients, total costs per patient, excluding durable medical equipment costs, were reduced by 37%, from $2,597 to $1,642 (p=0.002) following receipt of our Flexitouch system.
Among the cancer-related lymphedema patients, total costs per patient, excluding durable medical equipment costs, were reduced by 37%.
As more of the bronchial wall thickens, mucus gets trapped, creating a breeding ground for infection. The inability to fully clear mucus and pathogens from the lungs can result in a chronic cycle of infections and inflammation. Airway clearance therapies help break this vicious cycle and need to be used regularly to maintain a healthy respiratory system.
The inability to fully clear mucus and pathogens from the lungs can result in a progressive, chronic process of infections, inflammation, and permanent lung damage, often referred to as a ‘vicious vortex’. Airway clearance therapies help interrupt the vicious vortex and need to be used regularly to maintain a healthy respiratory system in these patients.
This model allows us to engage directly with patients and clinicians, which are both critical audiences to which we can provide clinical evidence and education. For our respiratory therapy products, we have a durable medical equipment (“DME”) distribution model, utilizing mature comprehensive respiratory DME provider representatives to service patients.
This model allows us to engage directly with patients and clinicians, which are both critical audiences to which we can provide clinical evidence and education.
The AffloVest is reimbursed under HCPCS code E0483, high frequency chest wall oscillation for bronchiectasis, and over 70 other ICD-10 diagnosis codes.
The AffloVest is reimbursed under HCPCS code E0483, high frequency chest wall oscillation for bronchiectasis, and over 70 other ICD-10 diagnosis codes. Research Our research scope includes engineering, scientific and clinical research in the areas of our therapies for the treatment of lymphedema, cancer-related lymphedema, chronic venous insufficiency, bronchiectasis and other chronic respiratory conditions.
The American Cancer Society estimates that there are 430,000 survivors of head and neck cancers in the United States, and more than 65,000 new patients are diagnosed each year. In a 2016 clinical publication, researchers at Vanderbilt University School of Medicine estimated that more than 75% of patients with head and neck cancer develop lymphedema requiring treatment.
FDA clearance to market a first-of-its-kind system to treat patients suffering from lymphedema of the head and neck, The American Cancer Society estimates that there are 430,000 survivors of head and neck cancers in the United States, and more than 65,000 new patients are diagnosed each year.
The user can set and store their personalized default treatment settings. Our AffloVest system has received 510(k) clearance as a HFCWO device and is intended for promoting airway clearance and improvement of bronchial drainage by enhancing mobilization of bronchial secretions where manipulation of the thorax is the physician’s choice of treatment.
Our AffloVest system has received 510(k) clearance as a HFCWO device and is intended for promoting airway clearance and improvement of bronchial drainage by enhancing mobilization of bronchial secretions where manipulation of the thorax is the physician’s choice of treatment. 11 Table of Contents Clinical Results and Studies Overview A key part of our success is our ability to demonstrate the effectiveness of our products by funding studies that generate clinical and economic outcome data supporting our products.
Our research and development expenses, including spending on our clinical evidence development efforts, totaled $8.8 million and $7.8 million for the years ended December 31, 2024 and 2023, respectively.
We coordinate our development efforts with external advisors and our intellectual property strategies in order to enhance our ability to obtain patent and other intellectual property protection. Our research and development expenses, including spending on our clinical evidence development efforts, totaled $8.5 million and $8.8 million for the years ended December 31, 2025 and 2024, respectively.
Chronic Venous Insufficiency and Phlebolymphedema The most common form of lymphedema in the Western world is phlebolymphedema, a mixed etiology swelling due to chronic venous insufficiency (“CVI”) and lymphatic insufficiency. The inability of the lymphatic system to adequately drain the interstitial fluid that accumulates in severe chronic venous hypertension causes this ‘combined’ condition, phlebolymphedema.
The International Society of Lymphology categorizes the progression of lymphedema from Stage 0, the least severe stage, to Stage 3, the most severe stage. Chronic Venous Insufficiency and Phlebolymphedema The most common form of lymphedema in the Western world is phlebolymphedema, a mixed etiology swelling due to chronic venous insufficiency (“CVI”) and lymphatic insufficiency.
This, in addition to the estimated five million individuals living in the U.S. with cancer-related and primary 7 Table of Contents lymphedema, increases the prevalence estimates to over 20 million individuals.
Steven Dean of Ohio State Medical Center et al., it is estimated that more than 16 million people in the United States were living with lymphedema due to CVI. This, in addition to the estimated five million individuals living in the U.S. with cancer-related and primary lymphedema, increases the prevalence estimates to over 20 million individuals.
The patients were randomized to our Flexitouch system or a simple pneumatic compression device used for home treatment of one-hour per day for 12 weeks. The simple pneumatic compression device used in the study was a Bio Compression 2004 Sequential Circulator pneumatic compression device.
However, it is one of the only published randomized controlled trials comparing PCDs, and we believe is currently the only published study of PCDs that reported comprehensively on adverse events. The patients were randomized to our Flexitouch system or a simple pneumatic compression device used for home treatment of one-hour per day for 12 weeks.
We sell the AffloVest product to accredited DME providers, whose representatives gather and submit documentation for payer reimbursement, train patients on use of the device, and provide ongoing patient support. For the year ended December 31, 2024, we generated revenue of $293.0 million and had net income of $17.0 million.
For our respiratory therapy product, we have a durable medical equipment (“DME”) distribution model, through which we sell the AffloVest product to accredited DME providers, whose representatives gather and submit documentation for payer reimbursement, train patients on use of the device, and provide ongoing patient support.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely impact our financial condition or results of operations. 64 Table of Contents Risks Related to Ownership of Our Common Stock The trading price of the shares of our common stock has been and could continue to be highly volatile, and purchasers of our common stock may not be able to resell their shares of our common stock at or above the price at which they purchased their shares and could incur substantial losses.
Biggest changeOur efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely impact our financial condition or results of operations.
These factors include: ● increased sales and marketing costs to increase awareness of our products; ● costs to develop new and enhanced features for current products and research and development costs for new products; ● the time, resources and expense required to develop and conduct clinical trials and seek additional regulatory clearances and approvals for additional treatment indications for our products and for any additional products we develop or acquire; ● the costs of preparing, filing, prosecuting, defending and enforcing patent claims and other patent related costs, including litigation costs and the results of such litigation; 35 Table of Contents ● any product liability or other lawsuits related to our products and the costs associated with defending them or the costs related to the results of such lawsuits; ● the costs to attract and retain personnel with the skills required for effective operations; ● the costs associated with being a public company; and ● costs associated with entering and maintaining international markets.
These factors include: ● increased sales and marketing costs to increase awareness of our products; ● costs to develop new and enhanced features for current products and research and development costs for new products; ● the time, resources and expense required to develop and conduct clinical trials and seek additional regulatory clearances and approvals for additional treatment indications for our products and for any additional products we develop or acquire; 35 Table of Contents ● the costs of preparing, filing, prosecuting, defending and enforcing patent claims and other patent related costs, including litigation costs and the results of such litigation; ● any product liability or other lawsuits related to our products and the costs associated with defending them or the costs related to the results of such lawsuits; ● the costs to attract and retain personnel with the skills required for effective operations; ● the costs associated with being a public company; and ● costs associated with entering and maintaining international markets.
Therefore, it is important to our business that we continue to enhance our product offerings and introduce new products. Developing products is expensive and time-consuming and could divert management's attention away from our business. We may not be successful in developing new products or enhancements to 36 Table of Contents existing products.
Therefore, it is important to our business that we continue to enhance our product offerings and 36 Table of Contents introduce new products. Developing products is expensive and time-consuming and could divert management's attention away from our business. We may not be successful in developing new products or enhancements to existing products.
The market price for our common stock may be influenced by many factors, including: ● the passage of legislation or other regulatory developments in the United States or foreign countries; ● actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us; ● changes in the structure of healthcare payment systems, especially in light of current or proposed reforms to the U.S. healthcare system; ● our ability to develop and commercialize additional products; ● announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures or capital commitments; ● market conditions in medical device sectors and issuance of securities analysts' research reports or recommendations; ● sales of our stock by us, our insiders and our other stockholders; ● the trading volume of our common stock; ● speculation in the press or investment community; ● perceived impacts on our business, patient population and/or addressable market due to effect of changes to the causes or risk factors for diseases that our products treat, such as the impact of GLP-1 drugs on obesity; ● general economic, industry and market conditions, or other events or factors, many of which are beyond our control; ● additions or departures of key personnel; and ● intellectual property, product liability or other litigation against us.
The market price for our common stock may be influenced by many factors, including: ● the passage of legislation or other regulatory developments in the United States or foreign countries; ● actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us; ● changes in the structure of healthcare payment systems, especially in light of current or proposed reforms to the U.S. healthcare system; ● our ability to develop and commercialize additional products; ● announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures or capital commitments; ● market conditions in medical device sectors and issuance of securities analysts' research reports or recommendations; ● sales of our stock by us, our insiders and our other stockholders; ● the trading volume of our common stock; ● speculation in the press or investment community; ● perceived impacts on our business, patient population and/or addressable market due to effect of changes to the causes or risk factors for diseases that our products treat, such as the impact of GLP-1 drugs on obesity; ● general economic, industry and market conditions, or other events or factors, many of which are beyond our control; ● additions or departures of key personnel; and 67 Table of Contents ● intellectual property, product liability or other litigation against us.
The FDA and other U.S. and foreign governmental agencies regulate, among other things, with respect to medical devices: ● design, development and manufacturing; ● establishment registration and product listing; ● testing, labeling, content and language of instructions for use, storage and servicing; ● clinical trials; ● product safety; 42 Table of Contents ● marketing, sales and distribution; ● unique device identifiers; ● premarket clearance and approval; ● record keeping procedures; ● advertising and promotion; ● recalls and field safety corrective actions; ● post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; ● post-market approval studies; and ● product and component import and export.
The FDA and other U.S. and foreign governmental agencies regulate, among other things, with respect to medical devices: ● design, development and manufacturing; ● establishment registration and product listing; ● testing, labeling, content and language of instructions for use, storage and servicing; ● clinical trials; ● product safety; ● marketing, sales and distribution; ● unique device identifiers; ● premarket clearance and approval; 43 Table of Contents ● record keeping procedures; ● advertising and promotion; ● recalls and field safety corrective actions; ● post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; ● post-market approval studies; and ● product and component import and export.
The following examples are illustrative: ● others may be able to make products that are similar to our products but that are not covered by the claims of the patents that we own or license from others; ● others may independently develop similar or alternative technologies or otherwise circumvent any of our technologies without infringing our intellectual property rights; ● we might not have been the first to conceive and reduce to practice the inventions covered by the patents or patent applications that we own, license or will own or license; ● we might not have been the first to file patent applications covering certain subject matter of the patents or patent applications that we own or for which we have obtained a license, or will own or for which we will obtain a license; ● it is possible that our pending patent applications will not result in issued patents; ● issued patents that we own may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; ● our competitors might conduct research and development activities in countries where we do not have patent rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● ownership of our patents or patent applications may be challenged by third parties; and ● the patents of third parties or pending or future applications of third parties, if issued, may have an adverse effect on our business.
The following examples are illustrative: ● others may be able to make products that are similar to our products but that are not covered by the claims of the patents that we own or license from others; ● others may independently develop similar or alternative technologies or otherwise circumvent any of our technologies without infringing our intellectual property rights; ● we might not have been the first to conceive and reduce to practice the inventions covered by the patents or patent applications that we own, license or will own or license; ● we might not have been the first to file patent applications covering certain subject matter of the patents or patent applications that we own or for which we have obtained a license, or will own or for which we will obtain a license; 64 Table of Contents ● it is possible that our pending patent applications will not result in issued patents; ● issued patents that we own may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; ● our competitors might conduct research and development activities in countries where we do not have patent rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● ownership of our patents or patent applications may be challenged by third parties; and ● the patents of third parties or pending or future applications of third parties, if issued, may have an adverse effect on our business.
For our respiratory therapy products, we rely on DME providers for all aspects of sales, reimbursement, training and support. Our future success with respect to our respiratory therapy products depends largely on our ability to maintain and expand relationships with our current, and to enter into relationships with new, distributors of our airway clearance products.
For our respiratory therapy product, we rely on DME providers for all aspects of sales, reimbursement, training and support. Our future success with respect to our respiratory therapy product depends largely on our ability to maintain and expand relationships with our current, and to enter into relationships with new, distributors of our airway clearance products.
Manufacturers must report detailed payment data and submit legal attestation to the accuracy of such data for each calendar year by the 90th day of the subsequent calendar year; ● federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and ● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payer, including commercial insurers; state laws that require device companies to comply with the industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of certain health information, many of which differ from each other in significant ways and often are not preempted by HIPAA.
Manufacturers must report detailed payment data and submit legal attestation to the accuracy of such data for each calendar year by the 90th day of the subsequent calendar year; ● federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and ● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payer, including commercial insurers; state laws that require device companies to comply with the industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state laws that require device 54 Table of Contents manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of certain health information, many of which differ from each other in significant ways and often are not preempted by HIPAA.
If our manufacturing facilities or those of any of our component manufacturers or suppliers are found to be in violation of applicable laws and regulations, or we or our manufacturers or suppliers fail to take satisfactory corrective action in response to an adverse inspection, the FDA could take enforcement action, including one or more of the following non-exclusive sanctions: ● untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; 49 Table of Contents ● customer notifications or repair, replacement, refunds, recall, detention or seizure of our products; ● operating restrictions or partial suspension or total shutdown of production; ● refusing or delaying our requests for 510(k) clearance or premarket approval of new products or modified products; ● withdrawing 510(k) clearances or premarket approvals that have already been granted; ● refusal to grant import of our products or components; ● refusal to grant export approval for our products; or ● criminal prosecution.
If our manufacturing facilities or those of any of our component manufacturers or suppliers are found to be in violation of applicable laws and regulations, or we or our manufacturers or suppliers fail to take satisfactory corrective action in response to an adverse inspection, the FDA could take enforcement action, including one or more of the following non-exclusive sanctions: ● untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; ● customer notifications or repair, replacement, refunds, recall, detention or seizure of our products; ● operating restrictions or partial suspension or total shutdown of production; ● refusing or delaying our requests for 510(k) clearance or premarket approval of new products or modified products; ● withdrawing 510(k) clearances or premarket approvals that have already been granted; ● refusal to grant import of our products or components; ● refusal to grant export approval for our products; or ● criminal prosecution.
In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws and our indemnification agreements with our directors and officers provide that we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises 66 Table of Contents at our request, to the fullest extent permitted by Delaware law; Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe such person's conduct was unlawful and that we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification.
In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws and our indemnification agreements with our directors and officers provide that we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law; Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe such person's conduct was unlawful and that we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification.
Acquisitions involve significant risks and uncertainties, including: ● incurring significantly higher than anticipated capital expenditures and operating expenses; ● failing to assimilate the operations, customers and personnel of the acquired company or business; ● disrupting our ongoing business; ● dissipating our management resources; ● dilution to existing stockholders from the issuance of equity securities; ● liabilities or other problems associated with the acquired business; ● failing to achieve the anticipated benefits of the acquisition; ● incurring debt on terms unfavorable to us or that we are unable to repay; 40 Table of Contents ● becoming subject to adverse tax consequences, substantial depreciation or deferred compensation charges; ● improper compliance with laws and regulations; ● failing to maintain uniform standards, controls and policies; and ● impairing relationships with employees and business partners as a result of changes in management.
Acquisitions involve significant risks and uncertainties, including: ● incurring significantly higher than anticipated capital expenditures and operating expenses; ● failing to assimilate the operations, customers and personnel of the acquired company or business; ● disrupting our ongoing business; ● dissipating our management resources; ● dilution to existing stockholders from the issuance of equity securities; ● liabilities or other problems associated with the acquired business; ● failing to achieve the anticipated benefits of the acquisition; ● incurring debt on terms unfavorable to us or that we are unable to repay; ● becoming subject to adverse tax consequences, substantial depreciation or deferred compensation charges; ● improper compliance with laws and regulations; ● failing to maintain uniform standards, controls and policies; and ● impairing relationships with employees and business partners as a result of changes in management.
Other factors that may cause fluctuation in our quarterly results or variations from our forecasts include: ● physician adoption of our products; ● timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors; ● unanticipated pricing pressure; ● the hiring, retention and continued productivity of our sales representatives; 37 Table of Contents ● our ability to expand the geographic reach of our distribution, sales and marketing efforts; ● our ability to obtain regulatory clearance or approval for our products in development or for our current products outside the United States; ● the impact of results from clinical research and trials on our existing products and products in development; ● delays in receipt of anticipated purchase orders; ● delays in, or failure of, component deliveries from our suppliers; and ● positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry.
Other factors that may cause fluctuation in our quarterly results or variations from our forecasts include: ● physician adoption of our products; ● timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors; ● unanticipated pricing pressure; ● the hiring, retention and continued productivity of our sales representatives; ● our ability to expand the geographic reach of our distribution, sales and marketing efforts; ● our ability to obtain regulatory clearance or approval for our products in development or for our current products outside the United States; ● the impact of results from clinical research and trials on our existing products and products in development; ● delays in receipt of anticipated purchase orders; ● delays in, or failure of, component deliveries from our suppliers; and ● positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry.
Any future funding requirements will depend on many factors, including: ● market acceptance of our products; ● the scope, rate of progress and cost of our clinical studies; ● the cost of our research and development activities; ● the cost of filing and prosecuting patent applications and defending and enforcing our patent or other intellectual property rights; 57 Table of Contents ● the cost of defending, in litigation or otherwise, any claims that we infringe third-party patents or other intellectual property rights; ● the cost and timing of additional regulatory clearances or approvals; ● the cost and timing of establishing additional sales, marketing and distribution capabilities; ● costs associated with any product recall that may occur; ● the effect of competing technological and market developments; ● the extent to which we acquire or invest in products, technologies and businesses; and ● the costs of operating as a public company.
Any future funding requirements will depend on many factors, including: ● market acceptance of our products; ● the scope, rate of progress and cost of our clinical studies; ● the cost of our research and development activities; ● the cost of filing and prosecuting patent applications and defending and enforcing our patent or other intellectual property rights; ● the cost of defending, in litigation or otherwise, any claims that we infringe third-party patents or other intellectual property rights; ● the cost and timing of additional regulatory clearances or approvals; ● the cost and timing of establishing additional sales, marketing and distribution capabilities; ● costs associated with any product recall that may occur; ● the effect of competing technological and market developments; ● the extent to which we acquire or invest in products, technologies and businesses; and ● the costs of operating as a public company.
Healthcare fraud and abuse and health information privacy and security laws potentially applicable to our operations include: ● the federal Anti-Kickback Statute, which applies to our marketing practices, educational programs, pricing policies and any relationships with healthcare providers, by prohibiting, among other things, soliciting, receiving, offering or providing remuneration, whether directly or indirectly and overtly or covertly, intended to induce the referral of an individual for (i) the furnishing or the arranging for the 51 Table of Contents furnishing of items or services reimbursable under a federal healthcare program, such as Medicare or Medicaid; or (ii) the purchase, lease or order of, or the arrangement or recommendation of the purchasing, leasing or ordering of, of an item or service reimbursable under a federal healthcare program.
Healthcare fraud and abuse and health information privacy and security laws potentially applicable to our operations include: ● the federal Anti-Kickback Statute, which applies to our marketing practices, educational programs, pricing policies and any relationships with healthcare providers, by prohibiting, among other things, soliciting, receiving, offering or providing remuneration, whether directly or indirectly and overtly or covertly, intended to induce the referral of an individual for (i) the furnishing or the arranging for the furnishing of items or services reimbursable under a federal healthcare program, such as Medicare or Medicaid; or (ii) the purchase, lease or order of, or the arrangement or recommendation of the purchasing, leasing or ordering of, of an item or service reimbursable under a federal healthcare program.
If a third-party claims that we infringe on their intellectual property or technology, we could face a number of issues, including: ● infringement and other intellectual property claims which, with or without merit, can be expensive and time-consuming to litigate and can divert management's attention from our core business; ● substantial damages for past infringement, which we may have to pay if a court decides that our product infringes on a competitor's patent; ● a court prohibiting us from selling or licensing our product, unless the patent holder licenses the patent to us; 60 Table of Contents ● if a license is available from a patent holder, we may have to pay substantial royalties or grant cross licenses to our patents; and ● redesigning our products and processes so they do not infringe, which may not be possible or could require substantial funds and time.
If a third-party claims that we infringe on their intellectual property or technology, we could face a number of issues, including: ● infringement and other intellectual property claims which, with or without merit, can be expensive and time-consuming to litigate and can divert management's attention from our core business; ● substantial damages for past infringement, which we may have to pay if a court decides that our product infringes on a competitor's patent; ● a court prohibiting us from selling or licensing our product, unless the patent holder licenses the patent to us; ● if a license is available from a patent holder, we may have to pay substantial royalties or grant cross licenses to our patents; and ● redesigning our products and processes so they do not infringe, which may not be possible or could require substantial funds and time.
Our failure to comply with applicable regulatory requirements could lead governmental authorities or a court to take action against us, including, but not limited to: ● issuing untitled (notice of violation) letters or public warning letters to us; ● imposing fines and penalties on us; ● obtaining an injunction or administrative detention preventing us from manufacturing or selling our products; ● seizing products to prevent sale or transport or export; ● bringing civil or criminal charges against us; 44 Table of Contents ● recalling our products or mandating a product correction; ● detaining our products or their components at U.S.
Our failure to comply with applicable regulatory requirements could lead governmental authorities or a court to take action against us, including, but not limited to: ● issuing untitled (notice of violation) letters or public warning letters to us; ● imposing fines and penalties on us; ● obtaining an injunction or administrative detention preventing us from manufacturing or selling our products; ● seizing products to prevent sale or transport or export; ● bringing civil or criminal charges against us; ● recalling our products or mandating a product correction; ● detaining our products or their components at U.S.
If our third-party suppliers fail to deliver the required commercial quantities of materials on a timely basis and at commercially reasonable prices, and we are unable to find one or more replacement suppliers 31 Table of Contents capable of production at a substantially equivalent cost in substantially equivalent volumes and quality on a timely basis, the continued commercialization of our products, the supply of our products to customers and the development of any future products would be delayed, limited or prevented, which could have an adverse impact on our business.
If our third-party suppliers fail to deliver the required commercial quantities of materials on a timely basis and at commercially reasonable prices, and we are unable to find one or more replacement suppliers capable of production at a substantially equivalent cost in substantially equivalent volumes and quality on a timely basis, the continued commercialization of our products, the supply of our products to customers and the development of any future products would be delayed, limited or prevented, which could have an adverse impact on our business.
In the event our actual revenue and operating results do not meet our forecasts or the forecasts or estimates of the research analysts that cover us for a particular period, the market price of our common stock may decline substantially. If physicians fail to properly document medical records for patients using our products, our business could be adversely impacted.
In the event our actual revenue and operating results do not meet our forecasts or the forecasts or estimates of the research analysts that cover us for a particular period, the market price of our common stock may decline substantially. 38 Table of Contents If physicians fail to properly document medical records for patients using our products, our business could be adversely impacted.
Other U.S. states have passed, or are considering passing, consumer privacy laws. We will continue to monitor and assess the impact of these state laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
Other U.S. states have passed, or are considering passing, consumer privacy laws. 56 Table of Contents We will continue to monitor and assess the impact of these state laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
The FDA regulations require the submission and clearance of a new 510(k) premarket notification, or possibly, premarket approval, for significant changes or modifications made in the design, components, method of manufacture or intended use of a device including changes or modifications to a 510(k)-cleared device that could significantly affect the device's safety or effectiveness, or would constitute a major change or modification in the device's intended use.
The FDA regulations require the submission and clearance of a new 510(k) premarket notification, or possibly, premarket approval, for significant changes or modifications made in the design, components, method 49 Table of Contents of manufacture or intended use of a device including changes or modifications to a 510(k)-cleared device that could significantly affect the device's safety or effectiveness, or would constitute a major change or modification in the device's intended use.
As a result, we are subject to a number of risks related to credit and debit card payments, including that we pay interchange and other fees, which may increase over time and could require us to either increase the prices we charge for our products or experience an increase in 32 Table of Contents our costs and expenses.
As a result, we are subject to a number of risks related to credit and debit card payments, including that we pay interchange and other fees, which may increase over time and could require us to either increase the prices we charge for our products or experience an increase in our costs and expenses.
Acquisitions could include significant goodwill and intangible assets, which may result in future impairment charges that would reduce our stated earnings. If we commercialize any products outside of the United States, a variety of risks associated with international operations could impact our strategy and adversely affect our future growth.
Acquisitions could include significant goodwill and intangible assets, which may result in future impairment charges that would reduce our stated earnings. 41 Table of Contents If we commercialize any products outside of the United States, a variety of risks associated with international operations could impact our strategy and adversely affect our future growth.
Foreign Corrupt Practices Act, regulations of the U.S. Office of Foreign Assets Controls and U.S. anti-money laundering regulations, as well as exposure of our foreign operations to liability under these regulatory regimes; and 41 Table of Contents ● business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
Foreign Corrupt Practices Act, regulations of the U.S. Office of Foreign Assets Controls and U.S. anti-money laundering regulations, as well as exposure of our foreign operations to liability under these regulatory regimes; and ● business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Third-party claims of intellectual property infringement or misappropriation may adversely affect our business and could prevent us from developing or commercializing our products.
If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. 62 Table of Contents Third-party claims of intellectual property infringement or misappropriation may adversely affect our business and could prevent us from developing or commercializing our products.
The FDA audits compliance with the QSR through periodic announced and unannounced inspections of manufacturing sites and other applicable facilities. We and our component manufacturers have been, and anticipate in the future being, subject to such inspections. We cannot provide assurance that any future inspection will not result in adverse findings with respect to our QSR compliance.
The FDA audits compliance with the QMSR through periodic announced and unannounced inspections of manufacturing sites and other applicable facilities. We and our component manufacturers have been, and anticipate in the future being, subject to such inspections. We cannot provide assurance that any future inspection will not result in adverse findings with respect to our QSMR compliance.
Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional pre-clinical studies or clinical trials. Any of these occurrences could have an adverse impact on our business.
Approval procedures vary among jurisdictions and can involve requirements and 47 Table of Contents administrative review periods different from, and greater than, those in the United States, including additional pre-clinical studies or clinical trials. Any of these occurrences could have an adverse impact on our business.
The Budget Control Act of 2011 requires, among other things, mandatory across-the-board reductions in Federal spending, also known as sequestration. The American Taxpayer Relief Act of 2012 postponed sequestration for two months. As required by law, a sequestration order was issued on March 1, 2013.
The Budget Control Act of 2011 requires, among other things, mandatory across-the-board reductions 52 Table of Contents in Federal spending, also known as sequestration. The American Taxpayer Relief Act of 2012 postponed sequestration for two months. As required by law, a sequestration order was issued on March 1, 2013.
Additionally, certain states have adopted comparable privacy and data security laws and regulations, some of which may be more stringent than HIPAA. If we do not comply with existing or new laws and regulations related to patient health information, we could be subject to criminal or civil sanctions.
Additionally, certain states have adopted comparable privacy and data security laws and regulations, some of which may be more stringent than HIPAA. 55 Table of Contents If we do not comply with existing or new laws and regulations related to patient health information, we could be subject to criminal or civil sanctions.
However, trade secrets and/or confidential know-how can be difficult to maintain as confidential. 62 Table of Contents To protect this type of information against disclosure or appropriation by competitors, our policy is to require our employees, consultants, contractors and advisors to enter into confidentiality agreements with us.
However, trade secrets and/or confidential know-how can be difficult to maintain as confidential. To protect this type of information against disclosure or appropriation by competitors, our policy is to require our employees, consultants, contractors and advisors to enter into confidentiality agreements with us.
Our trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential collaborators or customers in our markets of interest.
Our trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may 66 Table of Contents not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential collaborators or customers in our markets of interest.
If we are unable to expand coverage of our products by additional commercial payers, or if third-party payers that currently cover or reimburse for our products reverse 30 Table of Contents or limit their coverage or reimbursement in the future, our business and results of operations could be adversely affected.
If we are unable to expand coverage of our products by additional commercial payers, or if third-party payers that currently cover or reimburse for our products reverse or limit their coverage or reimbursement in the future, our business and results of operations could be adversely affected.
If too few securities or industry analysts commence or maintain coverage of our company, the trading price for our common stock would likely be negatively affected. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, the price of our common stock would likely decline.
If too few securities or industry analysts commence or maintain coverage of our company, the trading price for our common stock would likely be negatively affected. 68 Table of Contents If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, the price of our common stock would likely decline.
The process of obtaining a premarket approval is much more costly and uncertain than the 510(k) clearance process and generally takes from approximately one to five years, or longer, from the time the application is submitted to the FDA until an approval is obtained.
The process of obtaining a premarket approval is much more costly and 44 Table of Contents uncertain than the 510(k) clearance process and generally takes from approximately one to five years, or longer, from the time the application is submitted to the FDA until an approval is obtained.
Responding to any action or threat of action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and 52 Table of Contents divert our management's attention from the operation of our business.
Responding to any action or threat of action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management's attention from the operation of our business.
In connection with our and our independent registered public accounting firm’s evaluations of our internal control over financial reporting, we may need to upgrade our systems, including 56 Table of Contents information technology; implement additional financial and management controls, reporting systems and procedures; and hire additional accounting and finance staff.
In connection with our and our independent registered public accounting firm’s evaluations of our internal control over financial reporting, we may need to upgrade our systems, including information technology; implement additional financial and management controls, reporting systems and procedures; and hire additional accounting and finance staff.
The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent family's prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our products.
The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent family's prosecution history. Our interpretation of the relevance or the scope of a patent 61 Table of Contents or a pending application may be incorrect, which may negatively impact our ability to market our products.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. 63 Table of Contents Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on any issued patent and/or pending patent applications are due to be paid to 59 Table of Contents the USPTO and foreign patent agencies in several stages over the lifetime of a patent or patent application.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on any issued patent and/or pending patent applications are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of a patent or patent application.
Healthcare costs have risen significantly over the past decade, which has resulted in or led to numerous cost reform initiatives by legislators, regulators and third-party payers. Cost reform has triggered a consolidation trend in the healthcare industry to aggregate purchasing power, which may create more requests for pricing concessions in the future.
Healthcare costs have risen significantly over the past decade, which has resulted in or led to numerous cost reform initiatives by legislators, regulators and third-party payers. Cost reform has triggered a consolidation trend in the healthcare industry to aggregate purchasing power, which may create more requests for pricing 34 Table of Contents concessions in the future.
It is not always possible to identify and deter employee and other third-party misconduct, and the steps we take to detect, prevent and remedy any such activity may 55 Table of Contents not protect us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws.
It is not always possible to identify and deter employee and other third-party misconduct, and the steps we take to detect, prevent and remedy any such activity may not protect us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws.
The advantage of the De Novo process is that it generally requires less data than a premarket approval. The 43 Table of Contents disadvantage is that it may require more data than a 510(k) and most often will include human clinical data.
The advantage of the De Novo process is that it generally requires less data than a premarket approval. The disadvantage is that it may require more data than a 510(k) and most often will include human clinical data.
If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and there could be an adverse impact on our business. Our ability to maintain our competitive position depends on our ability to attract, integrate and retain key executives and highly qualified personnel.
If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and there could be an adverse impact on our business. 39 Table of Contents Our ability to maintain our competitive position depends on our ability to attract, integrate and retain key executives and highly qualified personnel.
Product liability claims may be brought against us by patients, clinicians or 54 Table of Contents others selling or otherwise coming into contact with our products, among others. If we cannot successfully defend ourselves against product liability claims, we will incur substantial liabilities and reputational harm.
Product liability claims may be brought against us by patients, clinicians or others selling or otherwise coming into contact with our products, among others. If we cannot successfully defend ourselves against product liability claims, we will incur substantial liabilities and reputational harm.
Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products, and further, competitors may export otherwise infringing products to territories where we have patent protection, but enforcement rights are not as strong as those in 58 Table of Contents the United States.
Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products, and further, competitors may export otherwise infringing products to territories where we have patent protection, but enforcement rights are not as strong as those in the United States.
Customs; ● delaying the introduction of our products into the market; ● delaying pending requests for clearance or approval of new uses or modifications to our existing products; and ● withdrawing or denying approvals or clearances for our products.
Customs; ● delaying the introduction of our products into the market; 45 Table of Contents ● delaying pending requests for clearance or approval of new uses or modifications to our existing products; and ● withdrawing or denying approvals or clearances for our products.
If the quality of our products does 39 Table of Contents not meet the expectations of physicians or patients, then our brand and reputation could suffer and our business could be adversely impacted.
If the quality of our products does not meet the expectations of physicians or patients, then our brand and reputation could suffer and our business could be adversely impacted.
Our lymphedema products accounted for 89% and 88% of our revenue for the years ended December 31, 2024 and 2023, respectively. We expect that sales of our lymphedema products will continue to account for a majority of our revenue going forward.
Our lymphedema products accounted for 84% and 89% of our revenue for the years ended December 31, 2025 and 2024, respectively. We expect that sales of our lymphedema products will continue to account for a majority of our revenue going forward.
The Federal Communications Commission maintains oversight of the Federal Telephone Consumer Privacy Act (“TCPA”) governing how entities engage with consumers via telephone, including text communications, typically thought of as “telephone solicitations.” Several states have issued or may issue similar statutes or regulations.
The Federal Communications Commission maintains oversight of the TCPA governing how entities engage with consumers via telephone, including text communications, typically thought of as “telephone solicitations.” Several states have issued or may issue similar statutes or regulations.
We also expect that our operations will be affected by other new environmental and health and safety laws and regulations on an ongoing basis.
We also expect that our operations will be affected by other new environmental and 58 Table of Contents health and safety laws and regulations on an ongoing basis.
These changes could adversely affect our business and results of operations. There have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system that could affect our future revenue and profitability and the future revenue and profitability of our customers.
There have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system that could affect our future revenue and profitability and the future revenue and profitability of our customers.
We can be subject to lawsuits, whether or not our product is proven to be defective and whether or not our employees have 48 Table of Contents adequately trained the physicians.
We can be subject to lawsuits, whether or not our product is proven to be defective and whether or not our employees have adequately trained the physicians.
If we fail to maintain or protect our information systems and data integrity effectively, we could: ● lose existing customers; ● have difficulty attracting new customers; ● have problems in determining product cost estimates and establishing appropriate pricing; ● suffer outages or disruptions in our operations or supply chain; ● have difficulty preventing, detecting, and controlling fraud; ● have disputes with customers, physicians, and other healthcare professionals; ● have regulatory sanctions or penalties imposed; ● incur increased operating expenses; ● be subject to issues with product functionality that may result in a loss of data, risk to patient safety, field actions and/or product recalls; ● incur expenses or lose revenue as a result of a data privacy breach; or ● suffer other adverse consequences.
If we fail to maintain or protect our information systems and data integrity effectively, we could: ● lose existing customers; ● have difficulty attracting new customers; ● have problems in determining product cost estimates and establishing appropriate pricing; ● suffer outages or disruptions in our operations or supply chain; ● have difficulty preventing, detecting, and controlling fraud; ● have disputes with customers, physicians, and other healthcare professionals; ● have regulatory sanctions or penalties imposed; ● incur increased operating expenses; ● be subject to issues with product functionality that may result in a loss of data, risk to patient safety, field actions and/or product recalls; ● incur expenses or lose revenue as a result of a data privacy breach; or ● suffer other adverse consequences. 32 Table of Contents We cannot assure you that cyber-attacks or data breaches will not occur or that systems issues will not arise in the future.
Government Regulation, Compliance and Legal Risks We are subject to extensive federal and state regulation, and if we fail to comply with applicable regulations, we could be required to repay amounts previously received, and could suffer severe criminal or civil sanctions or be required to make significant changes to our operations that could adversely affect our business, financial condition and operating results.
Government Regulation, Compliance and Legal Risks We are subject to extensive federal and state regulation, and if we or our partners fail to comply with applicable requirements, we could face substantial penalties, such as being required to repay amounts previously received, and could suffer severe criminal or civil sanctions or be required to make significant changes to our operations that could adversely affect our business, financial condition and operating results.
Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.
Depending on decisions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.
Current or worsening economic conditions, including inflation, rising interest rates or a recession, could adversely affect our business and financial condition. 33 Table of Contents General global economic downturns and macroeconomic trends, including inflation, capital market volatility, interest rate fluctuations, and economic slowdown or recession, may result in unfavorable conditions that could negatively affect demand for our products and exacerbate some of the other risks that affect our business, financial condition and results of operations.
General global economic downturns and macroeconomic trends, including inflation, capital market volatility, interest rate fluctuations, and economic slowdown or recession, may result in unfavorable conditions that could negatively affect demand for our products and exacerbate some of the other risks that affect our business, financial condition and results of operations.
If we or our component manufacturers fail to comply with the FDA's Quality System Regulation, our manufacturing operations could be interrupted, and our product sales and operating results could suffer.
If we or our component manufacturers fail to comply with the FDA's Quality Management System Regulation, our manufacturing operations could be interrupted or our business otherwise may be negatively impacted, and our product sales and operating results could suffer.
Filing, prosecuting and defending patents on products in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States may be less extensive than those in the United States.
Risks Related to Our Intellectual Property We may not be able to protect our intellectual property rights throughout the world. Filing, prosecuting and defending patents on products in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States may be less extensive than those in the United States.
If the actual number of patients who would benefit from our products and the total 38 Table of Contents addressable market for our products is smaller than we have estimated, our future growth could be adversely impacted. We may be unable to manage our growth effectively.
If the actual number of patients who would benefit from our products and the total addressable market for our products is smaller than we have estimated, our future growth could be adversely impacted. We may be unable to manage our growth effectively. Our past growth has provided, and our future growth may create, challenges to our organization.
Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business.
If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business.
Further, we believe that a reduction or elimination of coverage or reimbursement of our products by Medicare would likely cause some commercial third-party payers to implement similar reductions in their coverage or reimbursement of our products.
We believe any reduction or elimination of coverage or reimbursement of our products by Medicare would likely cause many commercial third-party payers to implement similar reductions or elimination of their coverage or reimbursement of our products.
Losing any license could subject us to financial penalties and/or prohibit us from selling our current 47 Table of Contents or future products to patients in a particular state and our business, financial condition and results of operations could be adversely affected as a result of any such prohibition.
If we were found to be noncompliant, we could lose our licensure in that state. Losing any license could subject us to financial penalties and/or prohibit us from selling our current or future products to patients in a particular state and our business, financial condition and results of operations could be adversely affected as a result of any such prohibition.
We and many of our component manufacturers are required to comply with the FDA's Quality System Regulation, or QSR, which covers the procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our devices.
We and many of our component manufacturers are required to comply with the FDA's Quality System Management Regulation, or QMSR, which covers the procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our devices. The QMSR went into effect on February 2, 2026, replacing the former QSR.
Successful growth is also dependent upon our ability to implement appropriate financial and management controls, systems and procedures. In order to manage our operations and growth, we will need to continue to improve our operational and management controls, reporting and information technology systems and financial internal control procedures.
In order to manage our operations and growth, we will need to continue to improve our operational and management controls, reporting and information technology systems and financial internal control procedures.
If it is determined that certain of these tax rules apply to us, we could be required to pay substantial tax amounts, and significant penalties and interest for past amounts that may have been due, in addition to taxes going forward. These tax assessments, penalties and interest, and future requirements, may adversely affect our financial condition and results of operations.
If it is determined that certain of these tax rules apply to us, we could be required to pay substantial tax amounts, and significant penalties and interest for past amounts that 60 Table of Contents may have been due, in addition to taxes going forward.
We expect that market demand, government regulation, third-party coverage and reimbursement policies and societal pressures will continue to change the healthcare industry worldwide, resulting in further business consolidations and alliances among our payers, which may exert increasing downward pressure on the prices of our products in the future. ​ 34 Table of Contents Changes in government trade policies, including additional tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations.
We expect that market demand, government regulation, third-party coverage and reimbursement policies and societal pressures will continue to change the healthcare industry worldwide, resulting in further business consolidations and alliances among our payers, which may exert increasing downward pressure on the prices of our products in the future.
We will likely need to conduct additional clinical studies in the future to support new indications for our products or for clearances or approvals of new product lines, or for the approval of the use of our products in some foreign countries.
We will likely need to conduct additional clinical studies in the future to support new indications for our products or for clearances or approvals of new product lines, or for the approval of the use of our products in some foreign countries. Clinical testing can take many years, can be expensive and carries uncertain outcomes.
The United States government from time to time has adopted new approaches to trade policy, including in some cases renegotiating or terminating certain existing bilateral or multi-lateral trade agreements, or imposing tariffs on certain foreign goods, including certain raw materials that are included in our products.
Changes in government trade policies, including additional tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations. ​ The United States government from time to time has adopted new approaches to trade policy, including in some cases renegotiating or terminating certain existing bilateral or multi-lateral trade agreements, or imposing tariffs on certain foreign goods, including certain raw materials that are included in our products.
Accordingly, the market price of our common stock may decline. Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our products. Defending against claims of patent infringement or misappropriation of trade secrets could be costly and time-consuming, regardless of the outcome.
Accordingly, the market price of our common stock may decline. 63 Table of Contents Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our products.
In addition, the ACA provides that the government may assert that a claim, including items or services resulting from a violation of the Federal Anti-Kickback Statute, constitutes a false or fraudulent claim for purposes of the false claims statutes.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it. In addition, the ACA provides that the government may assert that a claim, including items or services resulting from a violation of the Federal Anti-Kickback Statute, constitutes a false or fraudulent claim for purposes of the false claims statutes.
In addition, we are unable to predict what changes to the HIPAA Privacy Standards and Security Standards might be made in the future or how those changes could affect our business.
In addition, we are unable to predict what changes to the HIPAA Privacy Standards and Security Standards might be made in the future or how those changes could affect our business. Any new legislation or regulation in the area of privacy and security of personal information, including personal health information, could also adversely affect our business operations.
Our ability to obtain components and materials may be affected by matters outside our control, including that our suppliers may cancel our arrangements on short notice, we may be relatively less important as a customer to certain suppliers and our suppliers may have disruptions to their operations.
Our ability to obtain components and materials may be affected by matters outside our control, including that our suppliers may cancel our arrangements on short notice, we may be relatively less important as a customer to certain suppliers and our suppliers may have disruptions to their operations. 31 Table of Contents If we are required to establish additional or replacement suppliers for any of our components or materials, it may not be accomplished quickly and our operations could be disrupted.
Because of the breadth of these laws and the narrowness of the safe harbors and exceptions, some of our business activities could be subject to challenge under one or more of such laws. Such a challenge, regardless of the outcome, could have a material adverse effect on our business, business relationships, reputation, financial condition and results of operations.
Because of the breadth of these laws and the narrowness of the safe harbors and exceptions, some of our business activities could be subject to challenge under one or more of such laws.
Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their control. If we fail to comply with state and federal fraud and abuse laws, including anti-kickback, false claims and anti-inducement laws, we could face substantial penalties and our business, operations and financial condition could be adversely affected.
If we fail to comply with state and federal fraud and abuse laws, including anti-kickback, false claims and anti-inducement laws, we could face substantial penalties and our business, operations and financial condition could be adversely affected.
Our past growth has provided, and our future growth may create, challenges to our organization. We intend to continue to grow and may experience periods of rapid growth and expansion. Future growth will impose significant added responsibilities on management, including the need to identify, recruit, train, integrate, retain and motivate additional employees.
We intend to continue to grow and may experience periods of rapid growth and expansion. Future growth will impose significant added responsibilities on management, including the need to identify, recruit, train, integrate, retain and motivate additional employees. In addition, rapid and significant growth will place a strain on our administrative personnel, information technology systems and other operational infrastructure.
Litigation may be necessary to defend against these and other claims challenging our right to and use of confidential and proprietary information. If we fail in defending any such claims, in addition to paying monetary damages, we may lose our rights therein. Such an outcome could have a material adverse effect on our business.
If we fail in defending any such claims, in addition to paying monetary damages, we may lose our rights therein. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees.
Our employees, distributors, independent contractors, consultants, collaborators and suppliers may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading. We are exposed to the risk that our employees, distributors and other third parties, in spite of our compliance training and programs, may engage in fraudulent conduct or other illegal activity.
We are exposed to the risk that our employees, distributors and other third parties, in spite of our compliance training and programs, may engage in fraudulent conduct or other illegal activity.
Device and drug manufacturers are also required to report and disclose any investment interests held by physicians and their immediate family members during the preceding calendar year. Failure to submit required information may result in significant civil monetary penalties for all payments, transfers of value or ownership or investment interests not reported in an annual submission.
Failure to submit required information may result in significant civil monetary penalties for all payments, transfers of value or ownership or investment interests not reported in an annual submission. Manufacturers are required to collect data and are required to submit their data reports to CMS for each calendar year by the 90th day of the subsequent calendar year.
We may also be subject to claims that former employees, collaborators or other third parties have an ownership interest in our patents or other intellectual property. We may be subject to ownership disputes in the future, arising, for example, from conflicting obligations of consultants or others who are involved in developing our products.
Further, we may be subject to ownership disputes in the future, arising, for example, from conflicting obligations of consultants or others who are involved in developing our products.
This 2% reduction based on the sequestration was suspended in 2020 due to the public health emergency, and Congress extended the sequestration moratorium through March 31, 2022.
This 2% reduction based on the sequestration was suspended in 2020 due to the public health emergency, and Congress extended the sequestration moratorium through March 31, 2022. From April 1, 2022 through June 30, 2022, the reduction went back into effect at a 1% reduction level, and beginning July 1, 2022, the reduction returned to a 2% reduction level.
Many physicians and clinicians may have experience with, and/or invested substantial resources in, developing expertise in traditional or alternative treatments for lymphedema, which may make them less willing to adopt our products. If our lymphedema products fail to achieve wide market acceptance for any reason, our business, financial condition and results of operations could be adversely affected.
Many physicians and clinicians may have experience with, and/or invested substantial resources 33 Table of Contents in, developing expertise in traditional or alternative treatments for lymphedema, which may make them less willing to adopt our products.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur onboarding process for any third-party service provider includes execution of a business associate agreement that defines the service provider’s responsibility to notify us in the event of any known or suspected cyber incident.
Biggest changeOur onboarding process for any third-party service provider includes execution of a business associate agreement that defines the service provider’s responsibility to notify us in the event of any known or suspected cyber incident. 69 Table of Contents We maintain a thorough business continuity and resilience program designed to ensure our operations will withstand significant disruption and minimize impact on our patients and employees in the face of a significant challenge.
However, we are subject to ongoing risks from 67 Table of Contents cybersecurity threats that could materially affect us, including our business strategy, results of operations, or financial condition, as further described in Part I, Item 1A, "Risk Factors" of this Annual Report on Form 10-K.
However, we are subject to ongoing risks from cybersecurity threats that could materially affect us, including our business strategy, results of operations, or financial condition, as further described in Part I, Item 1A, "Risk Factors" of this Annual Report on Form 10-K.
Our Director of Information Security has 25 years of technology leadership experience, including 19 years directly overseeing cybersecurity programs in the healthcare device manufacturing industry, and holds the Certified Information Systems Security Professional (CISSP) certification.
Our Director of Information Security has 26 years of technology leadership experience, including 20 years directly overseeing cybersecurity programs in the healthcare device manufacturing industry, and holds the Certified Information Systems Security Professional (CISSP) certification.
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We maintain a thorough business continuity and resilience program designed to ensure our operations will withstand significant disruption and minimize impact on our patients and employees in the face of a significant challenge.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease approximately 63,000 square feet of office, assembly and warehouse space at another facility in Minneapolis, Minnesota, that has an expiration date in March 2027. We believe that these facilities are adequate to meet our business requirements for the near term and that additional space will be available on commercially reasonable terms, if required.
Biggest changeWe also lease approximately 63,000 square feet of office, assembly and warehouse space at another facility near Minneapolis, Minnesota, that has an expiration date in March 2027. We believe that these facilities are adequate to meet our business requirements for the near term and that additional space will be available on commercially reasonable terms, if required. 70 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. Information pertaining to certain legal proceedings in which we are involved can be found in Note 12 – “Commitments and Contingencies” to our consolidated financial statements included in Part II, Item 8 of this report and is incorporated herein by reference.
Biggest changeItem 3. Legal Proceedings. Information pertaining to certain legal proceedings in which we are involved can be found in Note 11 – “Commitments and Contingencies” to our consolidated financial statements included in Part II, Item 8 of this report and is incorporated herein by reference.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeStockholder returns over the indicated periods should not be considered indicative of future stockholder returns. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Index ​ ​ ​ ​ 12/31/2019 ​ ​ 12/31/2020 ​ ​ 12/31/2021 ​ ​ 12/31/2022 ​ ​ 12/31/2023 ​ ​ 12/31/2024 Tactile Systems Technology, Inc. ​ $ 100 $ 67 ​ $ 28 $ 17 ​ $ 21 ​ $ 25 Nasdaq Composite Index ​ ​ ​ ​ 100 ​ ​ 144 ​ ​ 174 ​ ​ 117 ​ ​ 167 ​ ​ 215 Russell 2000 Index ​ ​ ​ ​ 100 ​ ​ 118 ​ ​ 135 ​ ​ 106 ​ ​ 121 ​ ​ 134 S&P Healthcare Equipment Select Industry Index ​ ​ ​ ​ 100 ​ ​ 133 ​ ​ 137 ​ ​ 105 ​ ​ 99 ​ ​ 104 ​ ​ ​ ​ ​ 70 Table of Contents Item 6. [Reserved .] ​
Biggest changeStockholder returns over the indicated periods should not be considered indicative of future stockholder returns. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Index ​ ​ ​ ​ 12/31/2020 ​ ​ 12/31/2021 ​ ​ 12/31/2022 ​ ​ 12/31/2023 ​ ​ 12/31/2024 ​ ​ 12/31/2025 Tactile Systems Technology, Inc. ​ $ 100 $ 42 ​ $ 26 $ 32 ​ $ 38 ​ $ 65 Nasdaq Composite Index ​ ​ ​ ​ 100 ​ ​ 121 ​ ​ 81 ​ ​ 116 ​ ​ 150 ​ ​ 180 Russell 2000 Index ​ ​ ​ ​ 100 ​ ​ 114 ​ ​ 89 ​ ​ 103 ​ ​ 113 ​ ​ 126 S&P Healthcare Equipment Select Industry Index ​ ​ ​ ​ 100 ​ ​ 103 ​ ​ 79 ​ ​ 74 ​ ​ 78 ​ ​ 78 ​ ​ ​ ​ ​ 72 Table of Contents Item 6. [Reserved .] ​
The graph assumes that $100 was invested on December 31, 2019, in our common stock and each of the indices and that all dividends, if any, were reinvested. No cash dividends have been declared on our common stock.
The graph assumes that $100 was invested on December 31, 2020, in our common stock and each of the indices and that all dividends, if any, were reinvested. No cash dividends have been declared on our common stock.
Item 4. Mine Safety Disclosures. Not Applicable. 68 Table of Contents PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock has been listed on The Nasdaq Stock Market LLC under the symbol "TCMD" since July 28, 2016.
Item 4. Mine Safety Disclosures. Not Applicable. PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock has been listed on The Nasdaq Stock Market LLC under the symbol "TCMD" since July 28, 2016.
Holders As of February 14, 2025, there were approximately 23 holders of record of our common stock. The actual number of holders of common stock is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and nominees.
Holders As of February 13, 2026, there were approximately 20 holders of record of our common stock. The actual number of holders of common stock is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and nominees.
The share repurchase program became effective on October 30, 2024 and expires on October 31, 2026. ​ Equity Compensation Plan Information The information required by this Item concerning equity compensation plans is incorporated herein by reference from Part III, Item 12 of this report. ​ 69 Table of Contents Stock Performance Graph The graph below compares the cumulative total stockholder return on our common stock with the cumulative total stockholder returns on the Nasdaq Composite Index, Russell 2000 Index and S&P Healthcare Equipment Select Industry Index for the periods indicated.
Equity Compensation Plan Information The information required by this Item concerning equity compensation plans is incorporated herein by reference from Part III, Item 12 of this report. ​ 71 Table of Contents Stock Performance Graph The graph below compares the cumulative total stockholder return on our common stock with the cumulative total stockholder returns on the Nasdaq Composite Index, Russell 2000 Index and S&P Healthcare Equipment Select Industry Index for the periods indicated.
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Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number ​ Approximate ​ ​ ​ ​ ​ ​ ​ ​ ​ of Shares ​ Dollar Value of ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchased as ​ Shares that ​ ​ ​ ​ ​ ​ ​ ​ ​ Part of Publicly ​ May Yet Be ​ ​ Total Number ​ Average ​ Announced ​ Purchased ​ ​ of Shares ​ Price Paid ​ Plans or ​ Under the Plans or Period ​ Purchased ​ Per Share (1) ​ Programs ​ Programs (2) October 2024 ​ — ​ ​ $ — ​ ​ — ​ $ — November 2024 ​ — ​ ​ ​ — ​ ​ — ​ ​ — December 2024 ​ 195,518 ​ ​ ​ 17.94 ​ ​ 195,518 ​ ​ 26,491,776 Total ​ 195,518 ​ ​ $ 17.94 ​ ​ 195,518 ​ $ 26,491,776 ​ (1) Amount includes commissions paid.
Added
Issuer Purchases of Equity Securities We did not make any repurchases under our share repurchase program during the quarter ended December 31, 2025. For more information regarding our share repurchase program, refer to Note 12.
Removed
(2) On November 4, 2024, we announced that our board of directors authorized a program to repurchase shares of our common stock in an aggregate amount not to exceed $30.0 million.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. ​ Selected Financial Data ​ 71 Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 71 Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk ​ 82 Item 8. ​ Financial Statements and Supplementary Data ​ 84
Biggest changeItem 6. ​ Selected Financial Data ​ 73 Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 73 Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk ​ 85 Item 8. ​ Financial Statements and Supplementary Data ​ 87

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFuture Cash Requirements Our material estimated future cash requirements under our contractual obligations and commercial commitments as of December 31, 2024, in total and disaggregated into current (payable in 2025) and long-term (payable after 2025) obligations, are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due By Period ​ ​ Less Than ​ ​ More Than (In thousands) Total 1 Year 1-3 Years 3-5 Years 5 Years Purchase commitments (1) ​ $ 22,752 ​ $ 22,752 ​ $ — ​ $ — ​ $ — Operating lease obligations (2) ​ ​ 21,131 ​ ​ 3,736 ​ ​ 7,119 ​ ​ 6,584 ​ ​ 3,692 Note payable payments (3) ​ ​ 26,250 ​ ​ 3,000 ​ ​ 23,250 ​ ​ — ​ ​ — Interest payments (4) ​ ​ 2,477 ​ ​ 1,622 ​ ​ 855 ​ ​ — ​ ​ — Total ​ $ 72,610 ​ $ 31,110 ​ $ 31,224 ​ $ 6,584 ​ $ 3,692 (1) We issued purchase orders in 2024 totaling $22.8 million for goods that we expect to receive and pay for in 2025.
Biggest changeWe made repurchases under the share repurchase program in the following periods, which include the market price of the shares, commissions and excise tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ December 31, ​ (In thousands, except share and per share data) ​ ​ 2025 ​ ​ 2024 ​ Number of shares repurchased ​ ​ 2,143,099 ​ ​ 195,518 ​ Total shares repurchased cost ​ $ 26,752 ​ $ 3,508 ​ Average total cost per repurchased share ​ $ 12.48 ​ $ 17.94 ​ ​ Future Cash Requirements Our material estimated future cash requirements under our contractual obligations and commercial commitments as of December 31, 2025, in total and disaggregated into current (payable in 2026) and long-term (payable after 2026) obligations, are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due By Period ​ ​ ​ ​ ​ ​ ​ ​ Less Than ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ More Than (In thousands) ​ ​ ​ Total ​ ​ ​ 1 Year ​ ​ ​ 1-3 Years ​ ​ ​ 3-5 Years ​ ​ ​ 5 Years Purchase commitments (1) ​ $ 31,921 ​ $ 31,921 ​ $ — ​ $ — ​ $ — Operating lease obligations (2) ​ ​ 17,395 ​ ​ 3,808 ​ ​ 6,586 ​ ​ 6,649 ​ ​ 352 Commitment Fees (3) ​ ​ 131 ​ ​ 51 ​ ​ 80 ​ ​ — ​ ​ — Total ​ $ 49,447 ​ $ 35,780 ​ $ 6,666 ​ $ 6,649 ​ $ 352 (1) We issued purchase orders in 2025 totaling $31.9 million for goods that we expect to receive and pay for in 2026.
Net Cash Used in Investing Activities Net cash used in investing activities during the year ended December 31, 2024, was $2.5 million, primarily consisting of $2.4 million in purchases of property and equipment primarily related to tenant improvements, production tooling and office equipment and $0.1 million related to the acquisition of patents and other intangible assets.
Net cash used in investing activities during the year ended December 31, 2024, was $2.5 million, primarily consisting of $2.4 million in purchases of property and equipment primarily related to tenant improvements, production tooling and office equipment and $0.1 million related to the acquisition of patents and other intangible assets.
On September 8, 2021, we entered into a First Amendment Agreement (the “Amendment”), which amended the Restated Credit Agreement (as amended by the Amendment, the “Credit Agreement”) with the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent.
On September 8, 2021, we entered into a First Amendment Agreement (the “Amendment”), which amended the 2021 Restated Credit Agreement (as amended by the Amendment, the “Credit Agreement”) with the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent.
(2) We currently lease approximately 150,000 square feet of office space for our corporate headquarters in Minneapolis, Minnesota, under a lease that expires in February 2031 and approximately 63,000 square feet of office, assembly and warehouse space at another facility in Minneapolis, Minnesota, under a lease that expires in March 2027.
(2) We currently lease approximately 150,000 square feet of office space for our corporate headquarters in Minneapolis, Minnesota, under a lease that expires in February 2031 and approximately 63,000 square feet of office, assembly and warehouse space at another facility near Minneapolis, Minnesota, under a lease that expires in March 2027.
The Amendment, among other things, added a $30.0 million incremental term loan to the $25.0 million revolving credit facility provided by the Restated Credit Agreement. The term loan is reflected on our consolidated financial statements as a note payable.
The Amendment, among other things, added a $30.0 million incremental term loan to the $25.0 million revolving credit facility provided by the 2021 Restated Credit Agreement. The term loan is reflected on our consolidated financial statements as a note payable.
We focus our efforts on advancing the standard of care in treating underserved chronic diseases in the home setting to improve patient outcomes and quality of life and help control rising healthcare expenditures.
We focus our efforts on advancing the standard of care in treating underserved chronic diseases in the home to improve patient outcomes and quality of life and help control rising healthcare expenditures.
Credit Agreement On April 30, 2021, we entered into an Amended and Restated Credit Agreement (the “Restated Credit Agreement”) with the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative Agent. The Restated Credit Agreement amended and restated in its entirety our prior credit agreement.
Credit Agreement On April 30, 2021, we entered into an Amended and Restated Credit Agreement (the “2021 Restated Credit Agreement”) with the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative Agent. The 2021 Restated Credit Agreement amended and restated in its entirety our prior credit agreement.
Inflation and changing prices did not have a material effect on our business during the year ended December 31, 2024, and we do not expect that inflation or changing prices will materially affect our business for at least the next twelve months.
Inflation and changing prices did not have a material effect on our business during the year ended December 31, 2025, and we do not expect that inflation or changing prices will materially affect our business for at least the next twelve months.
Discussion of 2022 results and year-over-year comparisons between 2023 and 2022 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 20, 2024.
Discussion of 2023 results and year-over-year comparisons between 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 18, 2025.
The AffloVest device is sold through respiratory durable medical equipment providers throughout the United States that service patients and bill third-party payers for the product. We also employ a small group of respiratory specialists, who educate DME representatives, provide product demonstrations for targeted 71 Table of Contents clinicians and support technical questions related to the AffloVest.
The AffloVest device is sold through respiratory durable medical equipment providers throughout the United States that service patients and bill third-party payers for the product. We employ a small group of respiratory specialists, who educate DME representatives, provide product demonstrations for targeted clinicians and support technical questions related to the AffloVest.
AffloVest is a portable, wearable vest that provides airway clearance to treat patients with chronic respiratory conditions such as bronchiectasis or conditions resulting from neuromuscular disorders. For the years ended December 31, 2024 and 2023, sales of AffloVest represented 11% and 12% of our revenue, respectively.
AffloVest is a portable, wearable vest that provides airway clearance to treat patients with chronic respiratory conditions such as bronchiectasis or conditions resulting from neuromuscular disorders. For the years ended December 31, 2025 and 2024, sales of AffloVest represented 16% and 11% of our revenue, respectively.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, and related disclosure of contingent 74 Table of Contents assets and liabilities, revenue and expenses at the date of the financial statements.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, and related disclosure of contingent assets and liabilities, revenue and expenses at the date of the financial statements.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations focuses on discussion of year-over-year comparisons between 2024 and 2023.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations focuses on discussion of year-over-year comparisons between 2025 and 2024.
We rely on third-party contract manufacturers for the sourcing of parts, the assembly of our controllers and the manufacturing of the garments used with our systems. We conduct final assembly of the garments used with our products, perform quality assurance and ship our products from our facility in Minnesota. We manufacture and ship the AffloVest device from our Minnesota-based facility.
We rely on third-party contract manufacturers for the sourcing of parts, the assembly of our controllers and the manufacturing of the garments used with our systems. We conduct final assembly of the garments used with our products, perform quality assurance and ship our products from our facility in Minnesota.
In addition, the Fourth Amendment provided for an additional term loan in the amount of $8.25 million, which we used for a paydown 80 Table of Contents of the revolving credit facility.
In addition, the Fourth Amendment provided for an additional term loan in the amount of $8.25 million, which we used for a paydown of the revolving credit facility.
Sales and rentals of our lymphedema products represented 89% and 88% of our revenue in the years ended December 31, 2024 and 2023, respectively. On September 8, 2021, we acquired the assets of the AffloVest airway clearance product line.
Sales and rentals of our lymphedema products represented 84% and 89% of our revenue in the years ended December 31, 2025 and 2024, respectively. On September 8, 2021, we acquired the assets of the AffloVest airway clearance product line.
The increase was primarily attributable to a: ● $5.0 million increase in personnel-related compensation expense as a result of increased headcount in our reimbursement operations, payer relations and corporate functions; ● $2.8 million increase in IT related expenses; and ● $1.3 million increase occupancy costs, depreciation expense and professional fees.
The increase was primarily attributable to a: ● $12.0 million increase in personnel-related compensation expense as a result of increased headcount in our reimbursement operations, payer relations and corporate functions; ● $3.8 million increase in IT-related-expenses; ● $1.0 million increase occupancy costs, depreciation expense and professional fees; and ● $0.8 million increase in expenses related to meetings and seminars.
Interest expense decreased $2.1 million, or 50%, to $2.1 million during the year ended December 31, 2024, compared to $4.1 million during the year ended December 31, 2023, primarily due to the decrease in the outstanding balance of our term loan.
Interest expense decreased $1.0 million, or 50%, to $1.0 million during the year ended December 31, 2025, compared to $2.1 million during the year ended December 31, 2024, primarily due to the decrease in the outstanding balance of our term loan.
We believe our cash and cash flows from operations will be sufficient to meet our working capital, capital expenditure, debt repayment and related interest, and other cash requirements for at least the next twelve months.
We believe our cash and cash flows from operations will be sufficient to meet our working capital, capital expenditures, debt repayment and related obligations, and other cash requirements for at least the next twelve months.
We intend to expand and support our respiratory DME partners, in an effort to help demonstrate High Frequency Chest Wall Oscillation (“HFCWO”) as a staple among the host of treatments they bring to chronic respiratory patients, thereby allowing us to continue to grow revenue from this product offering.
We intend to expand and support our respiratory DME partners, in an effort to help demonstrate HFCWO as a staple among the host of treatments they bring to chronic respiratory patients, thereby allowing us to continue to grow revenue from this product offering.
Share Repurchase Program On October 30, 2024, our Board of Directors authorized a program to repurchase up to $30.0 million of common stock. Under the program, purchases may be made from time to time in the open market, in privately negotiated purchases, or both.
On October 16, 2025, our Board of Directors authorized a new program to repurchase up to $25.0 million of our common stock. Under the program, purchases may be made from time to time in the open market, in privately negotiated purchases, or both.
As of December 31, 2024, we employed 169 account managers and 111 specialists for our lymphedema products and a team of 18 specialists supporting our airway clearance products. This compares to 150 account managers and 104 specialists for our lymphedema products and a team of 16 specialists supporting our airway clearance products as of December 31, 2023.
As of December 31, 2025, we employed 166 account managers and 166 specialists for our lymphedema products and a team of 19 specialists supporting our airway clearance products. This compares to 169 account managers and 111 specialists for our lymphedema products and a team of 18 specialists supporting our airway clearance products as of December 31, 2024.
Overview We are a medical technology company that develops and provides innovative medical devices for the treatment of underserved chronic diseases. Our mission is to help people suffering from chronic diseases live better and care for themselves at home.
Overview We are a medical technology company that develops and commercializes medical devices in the United States. Our mission is to help people suffering from chronic diseases live better and care for themselves at home.
To support the growth of our business, we continue to invest in our commercial infrastructure, consisting of our direct sales force, DME sales team, patient education team, reimbursement capabilities and clinical expertise. We market our lymphedema products in the United States using a direct-to-patient and -provider model.
To support the growth of our business, we continue to invest in our commercial infrastructure, consisting of a separate lymphedema and respiratory sales force, marketing team including clinical education programs, patient education team, reimbursement capabilities and clinical expertise. We market our lymphedema products using a direct-to-patient and -clinician model.
(4) Interest payment amounts on long-term debt are calculated using outstanding balances and interest rates in effect on December 31, 2024. 81 Table of Contents Adequacy of Resources Our future cash requirements may vary significantly from those now planned and will depend on many factors, including: ● the impact of inflation, rising interest rates or a recession on our business; ● sales and marketing resources needed to further penetrate our market; ● expansion of our operations; ● IT investments to scale our business; ● response of competitors to our solutions and applications; ● costs associated with clinical research activities; ● increases in interest rates; ● labor shortages and wage inflation; ● component price inflation; ● costs to develop and implement new products; and ● use of capital for acquisitions or licenses, if any.
(3) Represents commitment fees under the 2025 Restated Credit Agreement, due to no amounts outstanding under the agreement as of December 31, 2025. 84 Table of Contents Adequacy of Resources Our future cash requirements may vary significantly from those now planned and will depend on many factors, including: ● the impact of inflation, rising interest rates or a recession on our business; ● sales and marketing resources needed to further penetrate our market; ● expansion of our operations; ● IT investments to scale our business; ● response of competitors to our solutions and applications; ● costs associated with clinical research activities; ● increases in interest rates; ● labor shortages and wage inflation; ● component price inflation; ● costs to develop and implement new products; and ● use of capital for acquisitions or licenses, if any.
The timing and number of shares to be purchased will be based on the price of our common stock, general business and market conditions and other investment considerations and factors. The share repurchase program expires on October 31, 2026.
The timing and number of shares to be purchased will be based on the price of the Company's common stock, general business and market conditions and other investment considerations and factors. This share repurchase program expires on November 3, 2027.
Cash provided relating to the change in operating assets and liabilities primarily consisted of a decrease in accounts receivable of $23.8 million, a decrease in net investment in leases of $1.9 million and a decrease in inventories of $0.6 million, partially offset by a decrease in accrued expenses of $6.5 million, a decrease in accounts payable of $3.9 million, a decrease in income taxes payable of $0.7 million and a decrease in accrued payroll and related taxes of $0.3 million.
Cash provided relating to minimal change in operating assets and liabilities primarily consisted of a decrease in inventories of $4.6 million, an increase in accrued payroll and related taxes of $1.5 million, an increase in income taxes payable of $1.2 million, a decrease in accounts receivable of $1.1 million and an increase in accrued expenses and other liabilities of $0.8 million, partially offset by an increase in prepaid expenses and other assets of $6.9 million, an increase in net investment in leases of $1.2 million, a decrease in accounts payable of $0.8 million and an increase in right of use operating leases of $0.1 million.
Intangible Asset Amortization and Earn-out Intangible asset amortization and earn-out expense increased $2.4 million to $2.5 million during the year ended December 31, 2024, compared to $0.1 million during the year ended December 31, 2023.
Intangible Asset Amortization Intangible asset amortization expense decreased $0.1 million to $2.4 million during the year ended December 31, 2025, compared to $2.5 million during the year ended December 31, 2024.
In June 2017, we announced that we received 510(k) clearance from the FDA for the Flexitouch Plus, the third-generation version of our Flexitouch system. In December 2020, we received 510(k) clearance for two new indications for our Flexitouch Plus system: phlebolymphedema and lipedema.
In September 2016, we received 510(k) clearance from the FDA for the Flexitouch system in treating lymphedema of the head and neck. A third generation, Flexitouch Plus, received 510(k) clearance from the FDA in June 2017. In December 2020, we received 510(k) clearance from the FDA for two new indications for our Flexitouch Plus system: phlebolymphedema and lipedema.
We expect sales and marketing expenses to continue to increase in absolute dollars as we expand our commercial infrastructure to drive and support our planned revenue growth.
We expect sales and marketing expenses to continue to increase in absolute dollars as we expand our commercial infrastructure to drive and support our planned revenue growth. To the extent our revenue grows, we expect sales and marketing expenses to decrease as a percentage of revenue over time.
Current Economic Conditions General global economic downturns and macroeconomic trends, including heightened inflation, capital market volatility, interest rate fluctuations, increased unemployment and economic slowdown or recession, may result in unfavorable conditions that could negatively affect demand for our products and exacerbate some of the other risks that affect our business, financial condition and results of operations.
Current Economic Conditions General global economic downturns and macroeconomic trends, including heightened inflation, capital market volatility, interest rate fluctuations, increased unemployment and economic slowdown or recession, may result in unfavorable conditions that could negatively affect demand for our products and exacerbate some of the other risks that affect our business, financial condition and results of operations . 74 Table of Contents Components of our Results of Operations Revenue We derive revenue from sales and rentals of our Flexitouch Plus, Entre Plus and Nimbl systems to patients in the United States.
Sales and Marketing Expenses Sales and marketing expenses increased $4.9 million, or 5%, to $112.0 million during the year ended December 31, 2024, compared to $107.1 million during the year ended December 31, 2023.
Sales and Marketing Expenses Sales and marketing expenses increased $9.2 million, or 8%, to $121.2 million during the year ended December 31, 2025, compared to $112.0 million during the year ended December 31, 2024.
To the extent our revenue grows, we expect sales and marketing expenses to decrease as a percentage of revenue over time. 73 Table of Contents Research and Development Expenses Research and development, or R&D, expenses consist primarily of personnel-related expenses, third-party product development costs, laboratory supplies, consulting fees and related costs, clinical research expenses, expenses related to clinical and regulatory affairs, patent amortization costs, stock-based compensation and patent legal fees, including defense costs, and testing costs for new product launches.
Research and Development Expenses Research and development, or R&D, expenses consist primarily of personnel-related expenses, third-party product development costs, laboratory supplies, consulting fees and related costs, clinical research expenses, expenses related to clinical and regulatory affairs, patent amortization costs, stock-based compensation and patent legal fees, including defense costs, and testing costs for new product launches.
Net cash provided by financing activities during the year ended December 31, 2023, was $5.7 million, primarily consisting of net proceeds from the offering of our common stock of $34.6 million, $8.3 million in borrowings under our term loan, and $1.5 million in proceeds from the issuance of common stock under the ESPP, partially offset by payments of $25.0 million on the revolving credit facility, $10.6 million on the AffloVest earn-out, and $3.0 million on our term loan.
Net cash used in financing activities during the year ended December 31, 2024, was $4.8 million, primarily consisting of payments of $3.5 million for the repurchase of our common stock and payments of $3.0 million on our term loan, partially offset by $1.7 million in proceeds from the issuance of common stock under the ESPP.
Research and Development Expenses Research and development (“R&D”) expenses increased $1.0 million, or 13%, to $8.8 million during the year ended December 31, 2024, compared to $7.8 million during the year ended December 31, 2023, which was primarily attributable to a $0.6 million increase in professional fees and a $0.5 million increase in personnel-related expenses.
Research and Development Expenses Research and development (“R&D”) expenses decreased $0.4 million, or 4%, to $8.5 million during the year ended December 31, 2025, compared to $8.8 million during the year ended December 31, 2024, which was primarily attributable to a $0.9 million decrease in clinical study-related expenses and a $0.1 million decrease in personnel-related expenses.
Revenue from Medicare represented 18% and 24% of total revenue for the years ended December 31, 2024 and 2023, respectively. ​ The following table summarizes our revenue by product line for the years ended December 31, 2024 and 2023, both in dollars and percentage of total revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change (In thousands) 2024 ​ 2023 ​ $ ​ % Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lymphedema products ​ $ 259,361 ​ $ 241,721 ​ $ 17,640 ​ 7% Airway clearance products ​ ​ 33,623 ​ ​ 32,702 ​ ​ 921 ​ 3% Total ​ $ 292,984 ​ $ 274,423 ​ $ 18,561 ​ 7% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of total revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lymphedema products ​ 89% ​ 88% ​ ​ ​ ​ Airway clearance products ​ ​ 11% ​ ​ 12% ​ ​ ​ ​ ​ Total ​ 100% ​ 100% ​ ​ ​ ​ ​ Cost of Revenue and Gross Margin Cost of revenue decreased $3.0 million, or 4%, to $76.3 million during the year ended December 31, 2024, compared to $79.3 million during the year ended December 31, 2023.
Revenue from Medicare represented 24% and 18% of total revenue for the years ended December 31, 2025 and 2024, respectively. ​ The following table summarizes our revenue by product line for the years ended December 31, 2025 and 2024, both in dollars and percentage of total revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change (In thousands) ​ 2025 ​ 2024 ​ $ ​ % Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lymphedema products ​ $ 278,380 ​ $ 259,361 ​ $ 19,019 ​ 7% Airway clearance products ​ ​ 51,142 ​ ​ 33,623 ​ ​ 17,519 ​ 52% Total ​ $ 329,522 ​ $ 292,984 ​ $ 36,538 ​ 12% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of total revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lymphedema products ​ 84% ​ 89% ​ ​ ​ ​ Airway clearance products ​ ​ 16% ​ ​ 11% ​ ​ ​ ​ ​ Total ​ 100% ​ 100% ​ ​ ​ ​ ​ Cost of Revenue and Gross Margin Cost of revenue increased $3.1 million, or 4%, to $79.4 million during the year ended December 31, 2025, compared to $76.3 million during the year ended December 31, 2024.
Interest Income and Interest Expense Interest income increased $1.5 million, or 81%, to $3.4 million during the year ended December 31, 2024, compared to $1.9 million during the year ended December 31, 2023, primarily due to a higher cash balance and the movement of cash into a higher yielding Institutional Insured Liquid Deposit demand account in August 2023.
Interest Income and Interest Expense Interest income decreased $0.3 million, or 8%, to $3.1 million during the year ended December 31, 2025, compared to $3.4 million during the year ended December 31, 2024, primarily due to a lower cash balance and the higher yielding Institutional Insured Liquid Deposit demand account decreasing the rates.
Net cash provided by operating activities during the year ended December 31, 2023, was $35.9 million, resulting from net income of $28.5 million and a change in operating assets and liabilities of $15.1 million, which were partially offset by non-cash net income adjustments of $7.8 million.
Net cash provided by operating activities during the year ended December 31, 2024, was $40.7 million, resulting from net income of $17.0 million, non-cash net income adjustments of $16.0 million and a change in operating assets and liabilities of $7.7 million.
The decrease in cost of revenue was primarily attributable to lower manufacturing and warranty costs. Gross margin was 74% and 71% in the years ended December 31, 2024 and 2023, respectively.
The increase in cost of revenue was primarily attributable to higher sales. Gross margin was 76% and 74% in the years ended December 31, 2025 and 2024, respectively.
The increase was primarily attributable to a: ● $2.5 million increase in personnel-related compensation expense; ● $1.6 million increase in travel and entertainment expenses; ● $0.6 million increase in expenses related to meetings and tradeshows ; and ● $0.4 million increase in general office and printing expenses. These increases were partially offset by a $0.2 million decrease in educational grants.
The increase was primarily attributable to a: ● $7.4 million increase in personnel-related compensation expense; ● $1.1 million increase in travel and entertainment expenses; ● $0.4 million increase in expenses related to meetings and tradeshows ; ● $0.2 million increase in expenses for demonstration units; and ● $0.1 million increase in educational grants expense.
This seasonality applies only to purchases and rentals of our products by patients covered by commercial insurance and is not relevant to Medicare, Medicaid or the Veterans Administration, as those payers either do not have plans that have declining deductibles over the course of the plan year and/or do not have plans that include patient deductibles for purchases or rentals of our products. 78 Table of Contents Liquidity and Capital Resources Overview As of December 31, 2024, we had cash of $94.4 million and net accounts receivable of $44.9 million compared to cash of $61.0 million and net accounts receivable of $54.1 million as of December 31, 2023.
This seasonality applies only to purchases and rentals of our products by patients covered by commercial insurance and is not relevant to Medicare, Medicaid or the Veterans Administration, as those payers either do not have plans that have declining deductibles over the course of the plan year and/or do not have plans that include patient deductibles for purchases or rentals of our products.
Net cash used in investing activities during the year ended December 31, 2023, was $2.5 million, primarily consisting of $2.3 million in purchases of property and equipment primarily related to production tooling and office equipment and $0.2 million related to the acquisition of patents and other intangible assets. 79 Table of Contents Net Cash (Used in) Provided by Financing Activities Net cash used in financing activities during the year ended December 31, 2024, was $4.8 million, primarily consisting of payments of $3.5 million for the repurchase of our common stock and payments of $3.0 million on our term loan, partially offset by $1.7 million in proceeds from the issuance of common stock under our Employee Stock Purchase Plan (the “ESPP”).
Net Cash Used in Financing Activities Net cash used in financing activities during the year ended December 31, 2025, was $51.2 million, primarily consisting of payments of $26.6 million for the repurchase of our common stock and payments of $26.2 million on our term loan, partially offset by $1.4 million in proceeds from the issuance of common stock 81 Table of Contents under our Employee Stock Purchase Plan (the “ESPP”) and $0.2 million in proceeds from exercises of common stock options.
These increases were partially offset by a $0.1 million decrease in clinical studies. ​ 77 Table of Contents Reimbursement, General and Administrative Expenses Reimbursement, general and administrative expenses increased $9.1 million, or 15%, to $71.1 million during the year ended December 31, 2024, compared to $62.1 million during the year ended December 31, 2023.
These decreases were partially offset by a $0.6 million increase in professional fees. ​ 79 Table of Contents Reimbursement, General and Administrative Expenses Reimbursement, general and administrative expenses increased $17.6 million, or 25%, to $88.7 million during the year ended December 31, 2025, compared to $71.1 million during the year ended December 31, 2024.
Revenue growth has been driven by increased clinician, patient and payer awareness of lymphedema and the clinical efficacy of our Flexitouch Plus system, and the launch of our Entre Plus system in March 2023. We have expanded our direct sales force, which helps us drive and support our revenue growth and intend to continue this expansion.
Revenue growth has been driven by increased clinician, patient and payer awareness of lymphedema and the clinical efficacy of our Flexitouch Plus system, the launch of our Entre Plus system in March 2023, and the launch of Nimbl in October 2024.
Cash Flows The following table summarizes our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) 2024 2023 Net cash provided by (used in): ​ ​ ​ ​ ​ ​ Operating activities $ 40,655 ​ $ 35,855 Investing activities ​ ​ (2,497) ​ ​ (2,481) Financing activities ​ ​ (4,824) ​ ​ 5,730 Net increase in cash $ 33,334 ​ $ 39,104 ​ Net Cash Provided by Operating Activities Net cash provided by operating activities during the year ended December 31, 2024, was $40.7 million, resulting from net income of $17.0 million, non-cash net income adjustments of $16.0 million and a change in operating assets and liabilities of $7.7 million.
Our primary sources of capital since our initial public offering in 2016 have been from operating income, bank financing and our public offering in February 2023. 80 Table of Contents Cash Flows The following table summarizes our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Net cash provided by (used in): ​ ​ ​ ​ ​ ​ Operating activities $ 42,811 ​ $ 40,655 Investing activities ​ ​ (2,535) ​ ​ (2,497) Financing activities ​ ​ (51,197) ​ ​ (4,824) Net (decrease) increase in cash $ (10,921) ​ $ 33,334 ​ Net Cash Provided by Operating Activities Net cash provided by operating activities during the year ended December 31, 2025, was $42.8 million, resulting from non-cash net income adjustments of $23.6 million, net income of $19.1 million and a change in operating assets and liabilities of $0.1 million.
However, any reversal in these recent trends could have a negative impact on our future revenue. We sell or rent our Flexitouch Plus, Entre Plus and Nimbl systems either directly to patients or to the Veterans Administration on behalf of patients, who are referred to us by physicians, clinical lymphatic therapists or nurses.
We sell or rent our lymphedema systems either directly to patients or to the Veterans Administration on behalf of patients, who are referred to us by physicians, clinical lymphatic therapists or nurses.
We record a liability for future warranty claims at the time of sale for the warranty period offered to a customer in cost of revenue. If the assumptions used in calculating the provision were to materially change, such as incurring higher than anticipated warranty claims, an additional provision may be required.
If the assumptions used in calculating the provision were to materially change, such as incurring higher than anticipated warranty claims, an additional provision may be required. 75 Table of Contents We calculate gross margin as gross profit divided by revenue.
The increase in the airway clearance product line revenue was primarily attributable to the onboarding of a new DME partner in 2024. ​ 76 Table of Contents Revenue from the Veterans Administration represented 11% and 10% of total revenue for the years ended December 31, 2024 and 2023, respectively.
The increase in the airway clearance product line revenue was primarily driven by strong partnerships and prioritized placement agreements with our top 10 respiratory DME providers. ​ 78 Table of Contents Revenue from the Veterans Administration represented 9% and 11% of total revenue for the years ended December 31, 2025 and 2024, respectively.
Changes to the level of Medicare coverage for our products could reduce the number of Medicare patients who have access to our products. Our products currently are not subject to the competitive bidding process for supplying covered items to Medicare recipients. We also derive revenue from sales of our AffloVest product to accredited DME providers.
Our products currently are not subject to the competitive bidding process for supplying covered items to Medicare recipients. We also derive revenue from sales of our AffloVest product to accredited DME providers. These respiratory DME providers provide a full range of solutions for these patients with complex diseases, and represent a large, developed channel.
Reimbursement expenses also include consulting, travel to payer case manager seminars, professional development and training, and certification expenses. General and administrative expenses also include professional services such as legal, consulting and accounting services, stock-based compensation, travel expenses, insurance and acquisition costs.
Reimbursement expenses also include consulting, travel to payer case manager seminars, professional development and training, and certification expenses.
We calculate gross margin as gross profit divided by revenue. Our gross margin has been and will continue to be affected by a variety of factors, including product and payer mix, production volumes, manufacturing costs and cost-reduction strategies.
Our gross margin has been and will continue to be affected by a variety of factors, including product and payer mix, production volumes, manufacturing costs, and cost-reduction strategies. We continue to work to reduce product manufacturing costs through enhanced product design efforts, supply chain initiatives in an effort to offset anticipated price erosion and improving product quality.
Changes in contractual pricing, payment trends and rebate structures would impact, either positively or negatively, our sales and rental revenue. 75 Table of Contents ​ Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table presents our results of operations for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change (In thousands) ​ 2024 ​ 2023 ​ $ ​ % Condensed Consolidated Statement ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ of Operations Data: ​ ​ ​ ​ revenue ​ ​ ​ ​ revenue ​ ​ ​ ​ ​ ​ Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales revenue ​ $ 256,012 ​ 87 % ​ $ 239,493 ​ 87 % ​ $ 16,519 ​ 7 % Rental revenue ​ ​ 36,972 ​ 13 % ​ ​ 34,930 ​ 13 % ​ ​ 2,042 ​ 6 % Total revenue ​ ​ 292,984 ​ 100 % ​ ​ 274,423 ​ 100 % ​ ​ 18,561 ​ 7 % Cost of revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales revenue ​ ​ 64,815 ​ 22 % ​ ​ 66,713 ​ 24 % ​ ​ (1,898) ​ (3) % Cost of rental revenue ​ ​ 11,481 ​ 4 % ​ ​ 12,577 ​ 5 % ​ ​ (1,096) ​ (9) % Total cost of revenue ​ ​ 76,296 ​ 26 % ​ ​ 79,290 ​ 29 % ​ ​ (2,994) ​ (4) % Gross profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit - sales revenue ​ ​ 191,197 ​ 65 % ​ ​ 172,780 ​ 63 % ​ ​ 18,417 ​ 11 % Gross profit - rental revenue ​ ​ 25,491 ​ 9 % ​ ​ 22,353 ​ 8 % ​ ​ 3,138 ​ 14 % Gross profit ​ ​ 216,688 ​ 74 % ​ ​ 195,133 ​ 71 % ​ ​ 21,555 ​ 11 % Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales and marketing ​ ​ 112,009 ​ 38 % ​ ​ 107,119 ​ 39 % ​ ​ 4,890 ​ 5 % Research and development ​ ​ 8,832 ​ 3 % ​ ​ 7,823 ​ 3 % ​ ​ 1,009 ​ 13 % Reimbursement, general and administrative ​ ​ 71,135 ​ 24 % ​ ​ 62,074 ​ 22 % ​ ​ 9,061 ​ 15 % Intangible asset amortization and earn-out ​ ​ 2,531 ​ 1 % ​ ​ 76 ​ — % ​ ​ 2,455 ​ N.M. % Total operating expenses ​ ​ 194,507 ​ 66 % ​ ​ 177,092 ​ 64 % ​ ​ 17,415 ​ 10 % Income from operations ​ ​ 22,181 ​ 8 % ​ ​ 18,041 ​ 7 % ​ ​ 4,140 ​ (23) % Interest income ​ ​ 3,384 ​ 1 % ​ ​ 1,874 ​ 1 % ​ ​ 1,510 ​ 81 % Interest expense ​ ​ (2,085) ​ (1) % ​ ​ (4,147) ​ (2) % ​ ​ 2,062 ​ 50 % Other income ​ ​ 9 ​ — % ​ ​ 2 ​ — % ​ ​ 7 ​ N.M. % Income before income taxes ​ ​ 23,489 ​ 8 % ​ ​ 15,770 ​ 6 % ​ ​ 7,719 ​ (49) % Income tax expense (benefit) ​ ​ 6,529 ​ 2 % ​ ​ (12,745) ​ (5) % ​ ​ 19,274 ​ (151) % Net income ​ $ 16,960 ​ 6 % ​ $ 28,515 ​ 11 % ​ $ (11,555) ​ 41 % ​ “N.M.” Not Meaningful ​ Revenue Revenue increased $18.6 million, or 7%, to $293.0 million in the year ended December 31, 2024, compared to $274.4 million in the year ended December 31, 2023.
Changes in contractual pricing, payment trends and rebate structures would impact, either positively or negatively, our sales and rental revenue. 77 Table of Contents ​ Results of Operations Comparison of the Years Ended December 31, 2025 and 2024 The following table presents our results of operations for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change (In thousands) ​ 2025 ​ 2024 ​ $ ​ % Condensed Consolidated Statement ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ of Operations Data: ​ ​ ​ ​ revenue ​ ​ ​ ​ revenue ​ ​ ​ ​ ​ ​ Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales revenue ​ $ 292,593 ​ 89 % ​ $ 256,012 ​ 87 % ​ $ 36,581 ​ 14 % Rental revenue ​ ​ 36,929 ​ 11 % ​ ​ 36,972 ​ 13 % ​ ​ (43) ​ (0) % Total revenue ​ ​ 329,522 ​ 100 % ​ ​ 292,984 ​ 100 % ​ ​ 36,538 ​ 12 % Cost of revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales revenue ​ ​ 68,686 ​ 21 % ​ ​ 64,815 ​ 22 % ​ ​ 3,871 ​ 6 % Cost of rental revenue ​ ​ 10,690 ​ 3 % ​ ​ 11,481 ​ 4 % ​ ​ (791) ​ (7) % Total cost of revenue ​ ​ 79,376 ​ 24 % ​ ​ 76,296 ​ 26 % ​ ​ 3,080 ​ 4 % Gross profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit - sales revenue ​ ​ 223,907 ​ 68 % ​ ​ 191,197 ​ 65 % ​ ​ 32,710 ​ 17 % Gross profit - rental revenue ​ ​ 26,239 ​ 8 % ​ ​ 25,491 ​ 9 % ​ ​ 748 ​ 3 % Gross profit ​ ​ 250,146 ​ 76 % ​ ​ 216,688 ​ 74 % ​ ​ 33,458 ​ 15 % Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales and marketing ​ ​ 121,237 ​ 37 % ​ ​ 112,009 ​ 38 % ​ ​ 9,228 ​ 8 % Research and development ​ ​ 8,481 ​ 3 % ​ ​ 8,832 ​ 3 % ​ ​ (351) ​ (4) % Reimbursement, general and administrative ​ ​ 88,705 ​ 27 % ​ ​ 71,135 ​ 23 % ​ ​ 17,570 ​ 25 % Intangible asset amortization ​ ​ 2,444 ​ 1 % ​ ​ 2,531 ​ 1 % ​ ​ (87) ​ (3) % Total operating expenses ​ ​ 220,867 ​ 67 % ​ ​ 194,507 ​ 65 % ​ ​ 26,360 ​ 14 % Income from operations ​ ​ 29,279 ​ 9 % ​ ​ 22,181 ​ 8 % ​ ​ 7,098 ​ (32) % Interest income ​ ​ 3,097 ​ 1 % ​ ​ 3,384 ​ 1 % ​ ​ (287) ​ (8) % Interest expense ​ ​ (1,038) ​ — % ​ ​ (2,085) ​ (1) % ​ ​ 1,047 ​ 50 % Other income ​ ​ 1 ​ — % ​ ​ 9 ​ — % ​ ​ (8) ​ (89) % Income before income taxes ​ ​ 31,339 ​ 10 % ​ ​ 23,489 ​ 8 % ​ ​ 7,850 ​ (33) % Income tax expense ​ ​ 12,253 ​ 4 % ​ ​ 6,529 ​ 2 % ​ ​ 5,724 ​ 88 % Net income ​ $ 19,086 ​ 6 % ​ $ 16,960 ​ 7 % ​ $ 2,126 ​ (13) % ​ ​ Revenue Revenue increased $36.5 million, or 12%, to $329.5 million in the year ended December 31, 2025, compared to $293.0 million in the year ended December 31, 2024.
Our current lymphedema products are the Flexitouch Plus, Entre Plus and Nimbl systems and our airway clearance product is the AffloVest. A predecessor to our Flexitouch system received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) in July 2002, and we introduced the system to address the many limitations of self-administered home-based manual lymphatic drainage therapy.
Food and Drug Administration (the “FDA”) in July 2002, introducing a medical device technology to address the many limitations of self-administered home-based manual lymphatic drainage therapy. A second generation Flexitouch system received 510(k) clearance from the FDA in October 2006.
We continue to work to reduce product manufacturing costs through enhanced product design efforts as well as supply chain initiatives in an effort to offset anticipated price erosion. Our gross margin will likely fluctuate from quarter to quarter. Sales and Marketing Expenses Our sales and marketing expenses consist primarily of personnel-related expenses, including salaries, bonuses, commissions and benefits for employees.
Our gross margin will likely fluctuate from quarter to quarter. Sales and Marketing Expenses Our sales and marketing expenses consist primarily of personnel-related expenses, including salaries, bonuses, commissions and benefits for employees.
We introduced our Entre system in the United States in February 2013 and our Entre Plus system in March 2023. The Entre Plus system is sold or rented to patients who need a simple pump or who do not yet qualify for insurance reimbursement for an advanced compression device such as our Flexitouch Plus system.
The Entre system product line and Nimbl product line are considered basic, or simple, pneumatic compression devices. These systems are sold or rented to patients who need a simple pump or who do not yet qualify for insurance reimbursement for an advanced compression device e.g., a Flexitouch Plus system.
These respiratory DME providers provide a full range of solutions for these patients with complex diseases, and represent a large, developed channel. Respiratory DME partners serve the role of receiving prescriptions, verifying coverage criteria, shipping, billing and training the patient.
Respiratory DME partners serve the role of receiving prescriptions, verifying coverage criteria, shipping, billing and training the patient.
The program does not obligate us to repurchase any specific number of shares and may be suspended or discontinued at any time without prior notice. During the three months ended December 31, 2024, we repurchased 195,518 shares for approximately $3.5 million. We used cash on hand to fund these repurchases.
The program does not obligate the Company to repurchase any specific number of shares and may be suspended or discontinued at any time without prior notice.
The increase in revenue was attributable to an increase of $17.6 million, or 7%, in sales and rentals of the lymphedema product line and an increase of $0.9 million, or 3%, in sales of the airway clearance product line in the year ended December 31, 2024, compared to the year ended December 31, 2023. ​ The increase in the lymphedema product line revenue in the year ended December 31, 2024, was attributable to the growth of our field sales team and ongoing technology and workflow initiatives.
The increase in revenue was attributable to an increase of $19.0 million, or 7%, in sales and rentals of the lymphedema product line and an increase of $17.5 million, or 52%, in sales of the airway clearance product line in the year ended December 31, 2025, compared to the year ended December 31, 2024. ​ The increase in the lymphedema product line revenue in the year ended December 31, 2025, was driven by accelerating commercial momentum from our strong partnerships, execution of our go-to-market commercial strategy and disciplined focus on sales force productivity.
Approximately 11% of our revenue in 2024 and 10% of our revenue in 2023 72 Table of Contents came from the Veterans Administration. Approximately 18% of our revenue in 2024 and 24% of our revenue in 2023 came from Medicare patients.
Approximately 9% of our revenue in 2025 and 11% of our revenue in 2024 came from the Veterans Administration. Approximately 24% of our revenue in 2025 and 18% of our revenue in 2024 came from Medicare patients. Changes to the level of Medicare coverage for our products could reduce the number of Medicare patients who have access to our products.
Nimbl, our next-generation pneumatic compression platform, received 510(k) clearance in June 2024 and, beginning in October 2024, is commercially available throughout the United States for the treatment of upper extremity lymphedema with planned expansion to lower extremity in 2025.
Nimbl, our next-generation pneumatic compression platform, received 510(k) clearance in June 2024 and was commercially launched for upper extremity lymphedema in October 2024 and was commercially launched for lower extremity lymphedema in February 2025. Nimbl has replaced most orders for our Entre system and we 73 Table of Contents expect to continue to do so.
The negative non-cash net income adjustments consisted primarily of $19.4 million of deferred income taxes and a $2.5 million change in the fair value of earn-out liability, partially offset by $7.5 million of stock-based compensation expense and $6.5 million of depreciation and amortization expense.
The positive non-cash net income adjustments consisted primarily of $8.5 million of deferred income taxes, $8.4 million of stock-based compensation expense, $6.6 million of depreciation and amortization expense and $0.1 million of loss on disposal of property and equipment and intangibles.
Other Income (Expense), Net Other income (expense), net consists primarily of interest income related to investment income earned on our invested capital portfolio and interest expense related to our debt obligations.
General and administrative expenses also include professional services such as legal, consulting and accounting services, stock-based compensation, travel expenses, insurance and acquisition costs. 76 Table of Contents Interest Income (Expense) Interest income consists primarily of interest income related to investment income earned on our invested capital portfolio and interest expense consists primarily of interest expense related to our debt obligations.
Furthermore, we lease office equipment from time-to-time based on our needs and these commitments are classified as operating leases. (3) Reflects principal payment obligations under our term loan. Refer to Note 11 ‘‘Credit Agreement’’ to our consolidated financial statements included in this report for additional information regarding the maturities of debt principal.
Furthermore, we lease office equipment from time-to-time based on our needs and these commitments are classified as operating leases.
In July 2022, we launched Kylee™, a free mobile application that allows for patients to manage their conditions by tracking treatments and symptoms, as well as having direct access to educational resources. ​ For the year ended December 31, 2024, we generated revenue of $293.0 million and had net income of $17.0 million, compared to revenue of $274.4 million and net income of $28.5 million for the year ended December 31, 2023, and revenue of $246.8 million and a net loss of $17.9 million for the year ended December 31, 2022.
We also manufacture and ship the AffloVest device from our Minnesota-based facility. In July 2022, we launched Kylee™ a free mobile app that makes it easier for patients to manage their conditions by tracking treatments and symptoms, as well as having direct access to educational resources.
Income Tax Expense We recorded an income tax expense of $6.5 million and an income tax benefit of $12.7 million for the years ended December 31, 2024 and 2023, respectively.
Income Tax Expense Income tax expense increased $5.7 million, or 88%, to $12.3 million during the year ended December 31, 2025, compared to $6.5 million during the year ended December 31, 2024.
The Fifth Amendment permits the Company to make payments to repurchase shares of its common stock, as long as the Company is not in default before and after giving effect to such repurchases, and as long as such repurchases do not exceed $30.0 million. ​ On December 21, 2023, we made a payment of $16.8 million to repay in full the outstanding balance on the revolving credit facility. ​ As of December 31, 2024, we had outstanding borrowings of $26.3 million under the Credit Agreement, comprised entirely of the term loan.
In addition, the 2025 Restated Credit Agreement revised certain negative covenants, including the restricted payment covenant, which now permits the Company to repurchase shares of its common stock and make certain other payments, as long as the Company is not in default under the 2025 Restated Credit Agreement, has a consolidated total leverage ratio of no greater than 1.75 to 1.00, and has liquidity of not less than $30.0 million, in each case both before and after giving effect to such stock repurchases or the making of such payments.
Removed
We began selling our more advanced Flexitouch system after receiving 510(k) clearance from the FDA in October 2006. In September 2016, we received 510(k) clearance from the FDA for the Flexitouch system in treating lymphedema of the head and neck.
Added
We generally employ a direct-to-patient and -provider model within our lymphedema portfolio, through which we obtain patient referrals from clinicians, manage insurance claims on behalf of our patients and their clinicians, deliver our solutions directly to patients and train them on the proper use of our solutions.
Removed
Components of our Results of Operations Revenue We derive revenue from sales and rentals of our Flexitouch Plus, Entre Plus and Nimbl systems to patients in the United States.
Added
This model allows us to engage directly with patients and clinicians, which are both critical audiences to which we can provide clinical evidence and education.
Removed
The increase was related to there being no earn-out expense in the twelve months ended December 31, 2024, as final payment under the AffloVest acquisition earn-out arrangement was made on November 28, 2023, and therefore there was no change in fair value of an earn-out expense recorded in the twelve months ended December 31, 2024, compared to a decrease in the fair value of the earn-out expense of $2.5 million for the twelve months ended December 31, 2023, due to the lower than expected airway clearance product revenue.
Added
For our respiratory therapy product, we have a durable medical equipment (“DME”) distribution model, through which we sell the AffloVest product to accredited DME providers, whose representatives gather and submit documentation for payer reimbursement, train patients on use of the device, and provide ongoing patient support.
Removed
The primary driver of the change was the fact that we did not have a release of a valuation allowance on our deferred tax assets for 2024, while in 2023 there was a release of a valuation allowance to recognize the full value of our deferred tax assets because there was sufficient positive evidence to conclude that it was more likely than not that additional deferred taxes were realizable.
Added
Our current lymphedema products are the Flexitouch Plus, Entre Plus and Nimbl pneumatic compression pump systems and our airway clearance product is a High-Frequency Chest Wall Oscillation (“HFCWO”) device called AffloVest. The Flexitouch system product line is considered an advanced pneumatic compression device. The first generation Flexitouch system received 510(k) clearance from the U.S.
Removed
Our primary sources of capital since our initial public offering in 2016 have been from operating income, bank financing and our public offering in February 2023.
Added
We introduced the Entre system in the United States in February 2013, this device was manufactured by Thermotek, Inc. and received FDA clearance in 2010. In 2015, we received FDA clearance for our own first generation Entre system and the second generation, Entre Plus, was released in March 2023.
Removed
The principal of the term loan is required to be repaid in quarterly installments of $750,000. For additional information regarding the Credit Agreement, including interest rates, fees and maturities, see Note 11 – “Credit Agreement” of the consolidated financial statements contained in this report.
Added
Flexitouch Plus and Nimbl devices include Bluetooth technology, which is viewable using Kylee. ​ For the year ended December 31, 2025, we generated revenue of $329.5 million and had net income of $19.1 million, compared to revenue of $293.0 million and net income of $17.0 million for the year ended December 31, 2024, and revenue of $274.4 million and net income of $28.5 million for the year ended December 31, 2023.
Removed
As of December 31, 2024, approximately $26.5 million remained authorized under the stock repurchase program.
Added
We have expanded our direct sales force, which helps us drive and support our revenue growth and intend to continue this expansion. However, any reversal in these recent trends could have a negative impact on our future revenue.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe had accounts receivable from two insurers representing approximately 23% and 12% of accounts receivable as of December 31, 2024. We had accounts receivable from two insurers representing approximately 36% and 15% of accounts receivable as of December 31, 2023.
Biggest changeWe had accounts receivable from two insurers representing approximately 18% and 10% of accounts receivable as of December 31, 2025. We had accounts receivable from two insurers representing approximately 23% and 12% of accounts receivable as of December 31, 2024.
Credit Risk As of December 31, 2024 and 2023, our cash was maintained with one financial institution in the United States. We perform periodic evaluations of the relative credit standing of this financial institution and believe it has sufficient assets and liquidity to conduct its operations in the ordinary course of business with little or no credit risk to us.
Credit Risk As of December 31, 2025 and 2024, our cash was maintained with one financial institution in the United States. We perform periodic evaluations of the relative credit standing of this financial institution and believe it has sufficient assets and liquidity to conduct its operations in the ordinary course of business with little or no credit risk to us.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk We are exposed to market risk from changes in interest rates, primarily related to our investments and our borrowings. The principal objectives of our investment activities are to preserve principal, provide liquidity 82 Table of Contents and maximize income consistent with minimizing risk of material loss.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk We are exposed to market risk from changes in interest rates, primarily related to our investments and our borrowings. The principal objectives of our investment activities are to preserve principal, provide liquidity 85 Table of Contents and maximize income consistent with minimizing risk of material loss.
As we begin building relationships to commercialize our products internationally, our results of operations and cash flows may become increasingly subject to changes in foreign exchange rates. 83 Table of Contents
As we begin building relationships to commercialize our products internationally, our results of operations and cash flows may become increasingly subject to changes in foreign exchange rates. 86 Table of Contents
We have not experienced any losses on our cash to date. Our accounts receivable primarily relate to revenue from the sale of our products to patients in the United States. As of December 31, 2024 and 2023, our accounts receivable were $44.9 million and $54.1 million, respectively.
We have not experienced any losses on our cash to date. Our accounts receivable primarily relate to revenue from the sale of our products to patients in the United States. As of December 31, 2025 and 2024, our accounts receivable were $43.9 million and $44.9 million, respectively.

Other TCMD 10-K year-over-year comparisons