Tactile Systems Technology (TCMD) 10-Q 10 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 10, 2016
Document and Entity Information
Entity Registrant Name	TACTILE SYSTEMS TECHNOLOGY INC
Entity Central Index Key	1,027,838
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,016
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		16,813,826

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 39,294	$ 7,060
Accounts receivable, net	13,021	14,151
Inventories	6,248	5,781
Deferred income taxes	1,781	1,766
Prepaid expenses	808	602
Total current assets	61,152	29,360
Property and equipment, net	1,399	1,346
Other assets
Patent costs, net	2,304	2,489
Medicare accounts receivable – long term	1,644	2,039
Deferred income taxes	387	402
Other non-current assets	50	1,337
Total other assets	4,385	6,267
Total assets	66,936	36,973
Current liabilities:
Accounts payable	4,808	3,336
Accrued payroll and related taxes	4,250	3,355
Accrued expenses	1,212	916
Future product royalties	265	991
Income taxes payable	172	904
Total current liabilities	10,707	9,502
Long-term liabilities
Deferred compensation	150	193
Total liabilities	10,857	9,695
Stockholders' Equity (Deficit):
Common stock; $0.001 par value, 300,000,000 shares authorized, 16,812,655 shares issued and 16,746,645 shares outstanding as of September 30, 2016, and 14,184,175 shares authorized, 3,222,902 shares issued and outstanding as of December 31, 2015	17	3
Additional paid-in capital	61,214
Accumulated deficit	(5,152)	(5,652)
Total stockholders’ equity (deficit)	56,079	(5,649)
Total liabilities and stockholders’ equity (deficit)	$ 66,936	36,973
Series B Preferred Stock
Convertible preferred stock
Convertible preferred stock, value		12,599
Series A Preferred Stock
Convertible preferred stock
Convertible preferred stock, value		$ 20,328

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Preferred stock, par value (in dollars per share)	$ 0.001
Preferred Stock, Shares Authorized	50,000,000
Preferred Stock, Shares Issued	0
Preferred Stock, Shares Outstanding	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common shares authorized	300,000,000	14,184,175
Common Stock, Shares, Issued	16,812,655	3,222,902
Common Stock, Shares, Outstanding	16,746,645	3,222,902
Series B Preferred Stock
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	0	5,319,066
Preferred Stock, Shares Issued	0	2,733,468
Preferred Stock, Shares Outstanding	0	2,733,468
Series A Preferred Stock
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	0	3,112,153
Preferred Stock, Shares Issued	0	3,108,589
Preferred Stock, Shares Outstanding	0	3,061,488

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Consolidated Statements of Operations
Revenues, net	$ 22,635	$ 16,820	$ 56,064	$ 41,712
Cost of goods sold	6,282	4,466	15,417	11,839
Gross profit	16,353	12,354	40,647	29,873
Operating expenses
Sales and marketing	8,979	6,199	23,858	17,297
Research and development	1,285	1,094	3,314	2,922
Reimbursement, general and administrative	5,115	3,599	12,495	9,448
Total operating expenses	15,379	10,892	39,667	29,667
Income from operations	974	1,462	980	206
Other income	10	3	20	18
Income before income taxes	984	1,465	1,000	224
Income tax expense	492	589	500	90
Net income	492	876	500	134
Convertible preferred stock dividends	224	470	1,247	1,396
Allocation of undistributed earnings to preferred stockholders	99	262
Net income (loss) attributable to common stockholders	$ 169	$ 144	$ (747)	$ (1,262)
Net income (loss) per common share attributable to common stockholders
Basic (in dollars per share)	$ 0.01	$ 0.05	$ (0.12)	$ (0.44)
Diluted (in dollars per share)	$ 0.01	$ 0.03	$ (0.12)	$ (0.44)
Weighted-average common shares used to compute net income (loss) per common share attributable to common stockholders
Basic (in shares)	12,253,877	3,148,294	6,317,875	2,854,112
Diluted (in shares)	13,982,799	4,799,308	6,317,875	2,854,112

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) - USD ($) $ in Thousands	Common StockSeries B Preferred Stock	Common StockSeries A Preferred Stock	Common Stock	Additional Paid In Capital.Series B Preferred Stock	Additional Paid In Capital.Series A Preferred Stock	Additional Paid In Capital.	Accumulated Deficit	Series B Preferred Stock	Series A Preferred Stock	Total
Balance at the beginning (in shares) at Dec. 31, 2014								2,733,468	3,061,488
Balance at the beginning at Dec. 31, 2014								$ 11,894	$ 19,188
Balances at the beginning (in shares) at Dec. 31, 2014			2,626,619
Balances at the beginning at Dec. 31, 2014			$ 3			$ 442	$ (6,872)			$ (6,427)
Increase (Decrease) in Stockholders' Equity
Stock-based compensation						232				232
Exercise of common stock options (in shares)			596,283
Exercise of common stock options			$ 5			862				867
Preferred stock dividend						(1,396)		$ 534	$ 862	(1,396)
Net income for the period							134			134
Balance at the end (in shares) at Sep. 30, 2015								2,733,468	3,061,488
Balance at the end at Sep. 30, 2015								$ 12,428	$ 20,050
Balances at the end (in shares) at Sep. 30, 2015			3,222,902
Balances at the end at Sep. 30, 2015			$ 8			140	(6,738)			(6,590)
Balance at the beginning (in shares) at Dec. 31, 2015								2,733,468	3,061,488
Balance at the beginning at Dec. 31, 2015								$ 12,599	$ 20,328
Balances at the beginning (in shares) at Dec. 31, 2015			3,222,902
Balances at the beginning at Dec. 31, 2015			$ 3				(5,652)			(5,649)
Increase (Decrease) in Stockholders' Equity
Stock-based compensation						902				$ 902
Exercise of common stock options (in shares)			234,135							234,948
Exercise of common stock options			$ 1			223				$ 224
Preferred stock dividend						(1,247)		$ 436	811	(1,247)
Sale of common stock from initial public offering, net of offerring expenses (in shares)			4,120,000
Sale of common stock from initial public offering, net of offerring expenses			$ 4			35,378				$ 35,382
Preferred stock dividends paid in cash									$ (8,207)
Common stock issued in lieu of series B preferred stock dividend (in shares)	956,842
Common stock issued in lieu of series B preferred stock dividend	$ 1			$ (1)
Conversion of preferred stock to common stock (in shares)								(2,733,468)	(3,061,488)	5,924,453
Conversion of preferred stock to common stock								$ (13,035)	$ (12,932)
Conversion of preferred stock to common stock (in shares)	2,733,468	3,190,985
Conversion of preferred stock to common stock	$ 3	$ 3		$ 13,032	$ 12,929			$ 13,035	$ 12,932
Common stock issued for series A & B preferred stock liquidation preference (in shares)			2,354,323
Common stock issued for series A & B preferred stock liquidation preference			$ 2			(2)
Net income for the period							500			$ 500
Balances at the end (in shares) at Sep. 30, 2016			16,812,655
Balances at the end at Sep. 30, 2016			$ 17			$ 61,214	$ (5,152)			$ 56,079

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities
Net income	$ 500	$ 134
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	675	622
Deferred income taxes		90
Stock-based compensation expense	859	232
Deferred compensation		(6)
Change in allowance for doubtful accounts	465	250
Changes in assets and liabilities
Accounts receivable	665	1,092
Inventories	(467)	(1,849)
Prepaid expenses and other non-current assets	(233)	(708)
Medicare accounts receivable – long-term	395	(704)
Accounts payable	1,695	1,053
Accrued payroll and related taxes	895	246
Accrued expenses and income taxes payable	(387)	(173)
Future product royalties	(726)	(445)
Net cash provided by (used in) operating activities	4,336	(166)
Cash flows from investing activities
Purchases of property and equipment	(518)	(420)
Patent costs	(24)	(18)
Net cash used in investing activities	(542)	(438)
Cash flows from financing activities
Payments on notes payable		(7)
Proceeds from exercise of common stock options and warrants	224	867
Dividends paid on preferred stock	(8,207)
Fees paid for IPO	(4,777)
Proceeds from IPO	41,200
Net cash provided by financing activities	28,440	860
Net change in cash and cash equivalents	32,234	256
Cash and cash equivalents – beginning of period	7,060	5,416
Cash and cash equivalents – end of period	39,294	5,672
Supplemental cash flow disclosure
Cash paid for taxes	$ 1,261	$ 226

Nature of Operations and Basis

Nature of Operations and Basis of Presentation	9 Months Ended
	Sep. 30, 2016
Nature of Operations and Basis of Presentation
Nature of Operations and Basis of Presentation	Note 1. Nature of Operations and Basis of Presentation Nature of Operations Tactile Systems Technology, Inc. (“we,” “us,” and “our”) is the sole manufacturer and distributor of the Flexitouch and Entré Systems, medical devices that help control symptoms of lymphedema, a chronic and progressive medical condition that is often an unintended consequence of cancer treatment, and the ACTitouch System, a medical device used to treat venous leg ulcers and chronic venous insufficiency. We provide our products for use in the home and sell them through vascular, wound and lymphedema clinics throughout the United States. We do business as “Tactile Medical.” Basis of Presentation Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. The results for the nine months ended September 30, 2016 are not necessarily indicative of results to be expected for the year ending December 31, 2016, or for any other interim period or for any future year. Our business is affected by seasonality. In the first quarter of each year, when most patients have started a new insurance year and have not paid their annual deductibles, we experience substantially reduced demand for our products. We typically experience higher sales in the third and fourth quarters as a result of patients having paid their annual insurance deductibles in full, thereby reducing their out-of-pocket costs for our products, or because patients often spend the remaining balances in their flexible spending accounts. The condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our final prospectus dated July 27, 2016 filed with the SEC on July 28, 2016. We were originally incorporated in Minnesota under the name Tactile Systems Technology, Inc. on January 30, 1995. During 2006, we established a merger corporation and subsequently, on July 21, 2006, merged with and into this merger corporation. The resulting corporation assumed the name Tactile Systems Technology, Inc. The purpose of this merger was to reincorporate the company in Delaware, increase the number of authorized common shares to 8.9 million and assign a par value of $0.001 to our common stock. In September 2013, we began doing business as “Tactile Medical.” In connection with preparing for our initial public offering, our board of directors and stockholders approved a one-for-2.820044 reverse stock split of our capital stock. The reverse stock split became effective in June 2016. All share and per share amounts in these financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to this reverse stock split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital. On August 2, 2016 we closed the initial public offering of our common stock, which resulted in the sale of 4,120,000 shares of our common stock at a public offering price of $10.00 per share. We received net proceeds from the initial public offering of approximately $35.4 million, after deducting underwriting discounts and approximately $2.9 million of transaction expenses. In connection with the closing of the initial public offering, all of our outstanding redeemable convertible preferred stock automatically converted to common stock on August 2, 2016. At August 2, 2016, we did not have any redeemable convertible preferred stock issued or outstanding. The significant increase in common stock outstanding in connection with the initial public offering is expected to impact the year-over-year comparability of our earnings per share calculations in future periods. Basis of Consolidation The condensed consolidated financial statements include the accounts of Tactile Systems Technology, Inc. and its wholly owned subsidiary, Swelling Solutions, Inc., after elimination of intercompany accounts and transactions. JOBS Act Accounting Election As an emerging growth company under the Jumpstart Our Business Startups (“JOBS”) Act, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We have elected to take advantage of the extended transition period for adopting new or revised accounting standards that have different effective dates for public and private companies until such time as those standards apply to private companies. Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. We continue to refine our estimates of the Medicare and other accounts receivable and related revenue recognition based on information available to us related to historical approval rates. Significant Accounting Policies During the nine months ended September 30, 2016 there were no material changes in our significant accounting policies. See Note 1 to the condensed consolidated financial statements included in our final Prospectus dated July 27, 2016, filed with the SEC on July 28, 2016, for information regarding our significant accounting policies. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance creating Accounting Standards Codification (“ASC”) Section 606, “Revenue from Contracts with Customers.” The new section will replace Section 605, “Revenue Recognition,” and creates modifications to various other revenue accounting standards for specialized transactions and industries. The section is intended to conform revenue accounting principles with a concurrently issued International Financial Reporting Standards to reconcile previously differing treatment between United States practices and those of the rest of the world and to enhance disclosures related to disaggregated revenue information. The updated guidance, which was amended July 9, 2015, is effective for annual reporting periods beginning on or after December 15, 2017, and interim periods within those annual periods. We will adopt the new provisions of this accounting standard at the beginning of fiscal year 2018, because early adoption is not allowed. We are currently evaluating the impact of this new standard on our consolidated financial statements. In November 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-l7, “Income Taxes: Balance Sheet Classification of Deferred Taxes,” which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. The ASU is effective for annual periods beginning after December 15, 20l7, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for all entities. We are currently evaluating the impact of this new standard on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), which supersedes the existing guidance for lease accounting, “Leases” (Topic 840). ASU 2016-02 requires lessees to recognize a lease liability and a right of use asset for all leases. Lessor accounting remains largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at or entered into after the date of initial adoption, with an option to elect to use certain transition relief. We are currently evaluating the impact of this new standard on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes and statutory tax withholding requirements and classification within the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2016. We are currently evaluating the impact of this new standard on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses,” to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently evaluating the impact of this new standard on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments,” to provide clarity on how certain cash receipt and cash payment transactions are presented and classified within the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the impact of this new standard on our consolidated financial statements. Cash and Cash Equivalents Cash and cash equivalents consist of all cash on hand, deposits and funds invested in available for sale securities with original maturities of three months or less at the time of purchase. At September 30, 2016, our cash was held primarily in checking and money market accounts.

Patent Costs, Net

Patent Costs, Net	9 Months Ended
	Sep. 30, 2016
Patent Costs, Net
Patent Costs, Net	Note 2. Patent Costs, Net Our patents, all of which are subject to amortization, are summarized as follows: As of As of (In thousands) September 30, 2016 December 31, 2015 Patents $ $ Less: accumulated amortization Net patents $ $ Amortization expense was $0.2 million for the nine-month periods ended September 30, 2016 and September 30, 2015, and $0.1 million for the three-month periods ended September 30, 2016 and September 30, 2015. Future amortization expenses are expected as follows: (In thousands) 2016 (October 1 - December 31) $ 2017 2018 2019 2020 Thereafter Total $

Accrued Expenses

Accrued Expenses	9 Months Ended
	Sep. 30, 2016
Accrued Expenses
Accrued Expenses	Note 3. Accrued Expenses Accrued expenses consisted of the following: As of As of (In thousands) September 30, 2016 December 31, 2015 Accrued warranty $ $ Accrued clinical Other Total $ $

Line of Credit _ Bank

Line of Credit — Bank	9 Months Ended
	Sep. 30, 2016
Line of Credit — Bank
Line of Credit — Bank	Note 4. Line of Credit — Bank We have a $2.0 million line of credit with a bank that bears interest based on the prime rate, which was 3.50% as of September 30, 2016, and expires on May 11, 2017. Our credit line is secured by substantially all of our assets, including property and equipment, accounts receivable and inventory. Our credit line contains customary conditions as to borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, merge with or acquire other entities, and incur indebtedness or encumbrances. There was no outstanding balance on the line of credit as of September 30, 2016 or as of December 31, 2015.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2016
Commitments and Contingencies
Commitments and Contingencies	Note 5. Commitments and Contingencies Lease Obligations In March 2008, we entered into a non-cancelable operating lease agreement for building space for our corporate headquarters that provides for monthly rent, real estate taxes and operating expenses that was extended to July 31, 2021. Rent expense was $0.6 million for both the nine-month periods ended September 30, 2016 and September 30, 2015, and $0.2 million for both the three-month periods ended September 30, 2016 and September 30, 2015. In July 2016, we entered into a non-cancelable operating lease agreement for building space to accommodate the relocation of our manufacturing, quality, and research and development functions. The lease agreement extends through October 2021 and provides for monthly rent, real estate taxes and operating expenses. Because we did not take possession of this leased facility prior to September 30, 2016, no associated rent expense has been recorded in our statement of operations as of September 30, 2016. We also have operating lease agreements for certain computer and office equipment that expire in 2020. The leases provide an option to purchase the related equipment at fair market value at the end of the lease. Future base minimum lease payments for all lease obligations are expected to be as follows for the years ending December 31: Computer/Office (In thousands) Building Equipment Total 2016 (October 1 - December 31) $ $ $ 2017 2018 2019 2020 Thereafter — Total $ $ $ Major Vendors We had purchases from three vendors that accounted for 36% and 45% of total purchases for the nine-month periods ended September 30, 2016 and September 30, 2015, respectively, and 35% of total purchases for each of the three-month periods ended September 30, 2016 and September 30, 2015. Purchase Commitment We issued purchase orders in February 2016 totaling $7.6 million for inventory that we expect to receive between October 2016 and July 2017. Employment Agreements We have entered into employment agreements with certain of our officers. The agreements provide for payment of severance ranging from nine to 15 months of then-current annualized base salary in the event of termination by us without cause or by the employee for good reason or, in the case of two of the officers, death, disability, or as a result of a qualifying termination after a change in control. The agreements also provide for payment of an amount equal to nine to 15 months of the then-current annual target bonus in the event of termination by us without cause or by the employee for good reason, or, in the case of two of the officers, death, disability, or as a result of a qualifying termination after a change in control. In addition, the agreements provide for the vesting of certain equity compensation through the date of termination in the event of termination by us without cause or by the employee for good reason. Deferred Compensation Deferred compensation consisted of 66,010 shares of restricted common stock as of September 30, 2016. These shares of restricted common stock were issued upon the conversion of 45,523 shares of restricted Series A preferred stock outstanding immediately prior to the completion of our initial public offering. The restricted shares vest upon the earlier of a change in control, as defined in the restricted stock agreement, or May 2, 2017. Retirement Plan We maintain a 401(k) retirement plan for our employees in which eligible employees can contribute a percentage of their pre-tax compensation. We may also make discretionary contributions to the 401(k) plan. We made contributions of $120,000 and $100,000 for the nine -month periods ended September 30, 2016 and September 30, 2015, respectively, and $45,000 and $36,000 for the three-month periods ended September 30, 2016 and September 30, 2015, respectively.

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Sep. 30, 2016
Stockholders' Equity
Stockholders' Equity	Note 6. Stockholders' Equity In September and October 2012, we received gross proceeds of $10.4 million for issuance of 2,733,468 shares of our Series B preferred stock at $3.80 per share. The Series B preferred stock included a liquidation preference of the original investment plus an accruing dividend at a rate of 6%, compounded annually, whether or not declared. The accruing dividend was payable upon a voluntary or involuntary liquidation or dissolution of our company, upon conversion of the Series B preferred stock to common stock, upon redemption of the Series B preferred stock or at such time as we paid a dividend on other shares of our capital stock. The accruing dividend could have been paid in cash or, at the option of the stockholder, additional shares of Series B preferred stock determined by dividing the amount of the accruing dividend by the Series B preferred stock purchase price as adjusted. There were $2.6 million of undeclared cumulative preferred dividends as of August 2, 2016, the date we closed our initial public offering and paid those dividends in the form of shares of our common stock. Holders of shares of Series B preferred stock were entitled to votes equal to the number of shares of common stock into which such Series B preferred stock could be converted. Each share of Series B preferred stock could be converted into equal shares of common stock at the option of the Series B preferred stock holder at any time. In addition, the Series B preferred stock shares were automatically convertible into common shares upon the sale of shares of common stock to the public at a price per share of at least $11.42 in a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $30 million of proceeds to our company, net of underwriting discounts and commissions and after which the common stock is listed on an United States national securities exchange. Each Series B Preferred stockholder was also entitled to receive the number of common shares equal to the Series B preferred stock original issue price divided by the initial public offering price per share. In addition, each Series B Preferred stockholder was entitled to receive the number of common shares equal to (1) the accrued dividends on the shares of Series B preferred stock divided by the original issue price of the Series B preferred stock and (2) the accrued dividends on the shares of Series B preferred stock divided by the initial public offering price per share in the offering. From 2007 through 2009, we received gross proceeds of $13.0 million for the issuance of 3,061,488 shares of our Series A preferred stock at $4.23 per share. The Series A preferred stock included a liquidation preference of the original investment plus an accruing dividend at a rate of 6%, compounded annually, whether or not declared. The accruing dividend was payable upon a voluntary or involuntary liquidation or dissolution of our company or upon conversion of the Series A preferred stock to common stock, upon redemption of the Series A preferred stock or at such time as we paid a dividend on other shares of our capital stock. The accruing dividend would be paid in cash. There were $8. 2 million of undeclared cumulative preferred dividends as of August 2, 2016, the date we closed our initial public offering and paid those dividends in cash . Holders of shares of Series A preferred stock were entitled to votes equal to the number of shares of common stock into which such Series A preferred stock could be converted. Purchasers of the Series A preferred stock received anti-dilution rights whereby if we issued or sold additional shares of preferred or common shares at a purchase price below $4.23 per share, we would issue additional shares to these purchasers of Series A preferred stock to effectively reduce their purchase price. The Series B preferred stock was sold at a price less than the Series A preferred stock. As a result, we issued 83,972 shares of common stock for this anti-dilution provision. Each share of Series A preferred stock could be converted into equal shares of common stock at the option of the Series A preferred stock holder at any time. In addition, the Series A preferred stock shares were automatically convertible into common shares upon the sale of shares of common stock to the public at a minimum price of $11.42 per share in a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $30 million of proceeds to our company, net of underwriting discounts and commissions. Each Series A Preferred stockholder was also entitled to receive the number of common shares equal to the Series A preferred stock original issue price divided by the initial public offering price per share. At the time of its issuance, we determined that the Series B and Series A preferred stock contained two embedded features: (1) optional redemption by the holder and (2) optional conversion by the holder. We determined that each of the embedded features met the definition of a derivative and that the Series B and Series A preferred stock should be considered an equity host for the purposes of assessing the embedded derivatives for potential bifurcation. The following was noted regarding these embedded features: Optional Redemption by the Holder. We determined that the redemption feature was not clearly and closely related to the equity host instrument but does not meet the definition of a derivative. As such, the redemption feature did not require bifurcation under the guidance for derivatives. Optional Conversion by the Holder. The optional conversion feature was determined to be clearly and closely related to the Series B and Series A preferred stock host. As such the conversion feature did not require bifurcation under ASC 815-“Derivatives and Hedging”. The Series B and Series A preferred stock was assessed under ASC 470, "Debt," to determine if there was a beneficial conversion feature. We determined there was no beneficial conversion feature. We completed the initial public offering of our common stock on August 2, 2016, in which we sold 4,120,000 shares of our common stock at a public offering price of $10.00 per share. Immediately prior to the completion of the initial public offering, all then-outstanding shares of our Series A and Series B preferred stock were converted into 5,924,453 shares of our common stock. Our Series A preferred stock converted to common stock at a ratio of 1-for-1.03 and our Series B preferred stock converted to common stock at a ratio of 1-for-1. In addition, immediately prior to the completion of the initial public offering, we issued 2,354,323 additional shares of our common stock that our Series A and Series B preferred stockholders were entitled to receive in connection with the conversion of the preferred stock, and we issued 956,842 shares of our common stock to pay accrued dividends on our Series B preferred stock. We also paid $8.2 million in cumulative accrued dividends to our Series A convertible preferred stockholders in conncection with the initial public offering, including $0.1 million of dividends paid to the holders of the common restricted shares. Stock-Based Compensation Our equity compensation plans provide for the grant of incentive and nonqualified stock options, as well as other stock-based awards, including restricted stock and restricted stock units, to employees, non-employee directors and other consultants who provide services to us. Restricted stock awards result in the issuance of new shares when granted. For other stock-based awards, new shares are issued when the award is exercised, vested or released according to the terms of the agreement. In June 2016, we adopted the 2016 Equity Incentive Plan (the “2016 Plan”), pursuant to which an aggregate of 4.8 million shares of our common stock may be awarded to employees, directors and consultants as equity awards in the form of stock grants, restricted stock awards, stock options, restricted stock units, performance shares and other equity awards. With the adoption of the 2016 Plan, the board of directors decided we would no longer grant any options under our other existing equity compensation plans. At September 30, 2016, there were 4.5 million shares remaining available for grant under the 2016 Plan. We recorded stock-based compensation expense of $0.7 million and $0.9 million for the three-month and nine -month periods ended September 30, 2016, respectively, and $0.1 million and $0.2 million for the three-month and nine -month periods ended September 30, 2015, respectively. This expense was allocated as follows: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (In thousands) Cost of goods sold $ $ $ $ Sales and marketing Research and development — — Reimbursement, general and administrative Total stock-based compensation expense $ $ $ $ Stock Options We have granted stock option awards which generally vest over four years and have a contractual term of ten years from the date of grant. Our stock option activity was as follows: Weighted Average Options Exercise Price (#) ($/share) Outstanding at December 31, 2015 $ Granted Exercised Forfeited Outstanding at September 30, 2016 $ Of the total outstanding options at September 30, 2016, 1,283 ,036 were exercisable with a weighted average exercise price of $1.02 per share. The total outstanding options had a weighted average remaining contractual life of 5.7 years. At September 30, 2016, there was approximately $2.0 million of unrecognized stock option expense under our equity compensation plans, which is expected to be recognized on a straight-line basis over a weighted average period of 2.7 years. Restricted Stock Units In conjunction with our initial public offering, we granted 307,594 restricted stock units (“RSUs”) under the 2016 Plan to executives, other employees and non-employee directors, which RSUs had an aggregate grant date fair value of $3.1 million. These RSUs include only a time-based service condition. The compensation expense of these RSUs was determined using the fair value of the company’s common stock on the date of grant, and compensation expense will be recognized on a straight-line basis over the requisite vesting period. At September 30, 2016, there was $2.9 million of total unrecognized compensation expense related to these unvested RSUs, which is expected be recognized over a weighted average period of 2.5 years. Employee Stock Purchase Plan Our employee stock purchase plan (“ESPP”), which was approved by our board of directors on April 27, 2016 and by our stockholders on June 20, 2016, allows participating employees to purchase shares of our common stock at a discount through payroll deductions. The plan is available to all of our employees and employees of participating subsidiaries. Participating employees may purchase common stock, on a voluntary after tax-basis, at a price equal to 85% of the lower of the closing market price per share of our common stock on the first or last trading day of each stock purchase period. The plan ordinarily consists of six-month purchase periods, beginning on May 16 and November 16 of each calendar year, but the initial purchase period began on July 27, 2016 and will end on May 15, 2017. A total of 1.6 million shares of common stock are reserved for issuance under the plan, and this share reserve will automatically be supplemented each January 1 through the year 2026 by an amount equal to the least of (1) 1% of the shares of our common stock outstanding on the immediately preceding December 31, (2) 500,000 shares or (3) such lesser amount as our board of directors may determine. No purchases were made under the plan in the nine months ended September 30, 2016. We recognized $0.2 million in stock-based compensation expense related to the ESPP for each of the three-month and nine-month periods ended September 30, 2016. We did not recognize any stock-based compensation expense related to the ESPP in either of the three-month or nine-month periods ended September 30, 2015.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2016
Income Taxes
Income Taxes	Note 7. Income Taxes We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjust the provision for discrete tax items recorded in the period. Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. These differences relate primarily to different methods used for income tax purposes including depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable and inventory reserves. We recorded income tax expense of $0.5 million for the three-month and nine -month periods ended September 30, 2016, respectively. We recorded income tax expense of $0. 6 million and $0.1 million for the three-month and nine -month periods ended September 30, 2015, respectively. Our provisions for income taxes included current federal and state income tax expense, as well as deferred federal and state income tax expense. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the condensed consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. With few exceptions, we are no longer subject to U.S. federal, state or local income tax examinations by tax authorities for the years before 2011. We are not currently under examination by any taxing jurisdiction. In the event of any future tax assessments, we have elected to record the income taxes and any related interest and penalties as income tax expense on our statement of operations.

Net Income (Loss) Per Share Att

Net Income (Loss) Per Share Attributable to Common Stockholders	9 Months Ended
	Sep. 30, 2016
Net Income (Loss) Per Share Attributable to Common Stockholders
Net Income (Loss) Per Share Attributable to Common Stockholders	Note 8. Net Income (Loss) Per Share Attributable to Common Stockholders The following table sets forth the computation of our basic and diluted net income (loss) per share attributable to common stockholders: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 (In thousands, except per share data) Net income $ $ $ $ Convertible preferred stock dividends Allocation of undistributed earnings to preferred stockholders — — Net income (loss) attributable to common stockholders $ $ $ $ Weighted average shares outstanding Effect of common stock options, warrants, restricted stock units and employee stock purchase plan shares — — Weighted-average shares used to compute diluted net income (loss) per share Net income (loss) per share - Basic $ $ $ $ Net income (loss) per share - Diluted $ $ $ $ As of September 30, 2016, total common shares outstanding and the potentially dilutive shares totaled approximately 18.5 million shares. The following potentially dilutive securities were excluded from the computation of weighted shares outstanding for the three-month and nine -month periods ended September 30, 2016 and September 30, 2015 because these securities would have had an anti-dilutive impact: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Convertible preferred stock outstanding — — — Restricted stock units — — — Common stock options — Employee stock purchase plan shares — — — Common stock warrants — — Total —

Nature of Operations and Basi15

Nature of Operations and Basis of Presentation (Policies)	9 Months Ended
	Sep. 30, 2016
Nature of Operations and Basis of Presentation
Nature of Operations	Nature of Operations Tactile Systems Technology, Inc. (“we,” “us,” and “our”) is the sole manufacturer and distributor of the Flexitouch and Entré Systems, medical devices that help control symptoms of lymphedema, a chronic and progressive medical condition that is often an unintended consequence of cancer treatment, and the ACTitouch System, a medical device used to treat venous leg ulcers and chronic venous insufficiency. We provide our products for use in the home and sell them through vascular, wound and lymphedema clinics throughout the United States. We do business as “Tactile Medical.”
Basis of Presentation	Basis of Presentation Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. The results for the nine months ended September 30, 2016 are not necessarily indicative of results to be expected for the year ending December 31, 2016, or for any other interim period or for any future year. Our business is affected by seasonality. In the first quarter of each year, when most patients have started a new insurance year and have not paid their annual deductibles, we experience substantially reduced demand for our products. We typically experience higher sales in the third and fourth quarters as a result of patients having paid their annual insurance deductibles in full, thereby reducing their out-of-pocket costs for our products, or because patients often spend the remaining balances in their flexible spending accounts. The condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our final prospectus dated July 27, 2016 filed with the SEC on July 28, 2016. We were originally incorporated in Minnesota under the name Tactile Systems Technology, Inc. on January 30, 1995. During 2006, we established a merger corporation and subsequently, on July 21, 2006, merged with and into this merger corporation. The resulting corporation assumed the name Tactile Systems Technology, Inc. The purpose of this merger was to reincorporate the company in Delaware, increase the number of authorized common shares to 8.9 million and assign a par value of $0.001 to our common stock. In September 2013, we began doing business as “Tactile Medical.” In connection with preparing for our initial public offering, our board of directors and stockholders approved a one-for-2.820044 reverse stock split of our capital stock. The reverse stock split became effective in June 2016. All share and per share amounts in these financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to this reverse stock split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital. On August 2, 2016 we closed the initial public offering of our common stock, which resulted in the sale of 4,120,000 shares of our common stock at a public offering price of $10.00 per share. We received net proceeds from the initial public offering of approximately $35.4 million, after deducting underwriting discounts and approximately $2.9 million of transaction expenses. In connection with the closing of the initial public offering, all of our outstanding redeemable convertible preferred stock automatically converted to common stock on August 2, 2016. At August 2, 2016, we did not have any redeemable convertible preferred stock issued or outstanding. The significant increase in common stock outstanding in connection with the initial public offering is expected to impact the year-over-year comparability of our earnings per share calculations in future periods.
Basis of Consolidation	Basis of Consolidation The condensed consolidated financial statements include the accounts of Tactile Systems Technology, Inc. and its wholly owned subsidiary, Swelling Solutions, Inc., after elimination of intercompany accounts and transactions.
JOBS Act Accounting Election	JOBS Act Accounting Election As an emerging growth company under the Jumpstart Our Business Startups (“JOBS”) Act, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We have elected to take advantage of the extended transition period for adopting new or revised accounting standards that have different effective dates for public and private companies until such time as those standards apply to private companies.
Estimates	Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. We continue to refine our estimates of the Medicare and other accounts receivable and related revenue recognition based on information available to us related to historical approval rates.
Significant Accounting Policies	Significant Accounting Policies During the nine months ended September 30, 2016 there were no material changes in our significant accounting policies. See Note 1 to the condensed consolidated financial statements included in our final Prospectus dated July 27, 2016, filed with the SEC on July 28, 2016, for information regarding our significant accounting policies.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance creating Accounting Standards Codification (“ASC”) Section 606, “Revenue from Contracts with Customers.” The new section will replace Section 605, “Revenue Recognition,” and creates modifications to various other revenue accounting standards for specialized transactions and industries. The section is intended to conform revenue accounting principles with a concurrently issued International Financial Reporting Standards to reconcile previously differing treatment between United States practices and those of the rest of the world and to enhance disclosures related to disaggregated revenue information. The updated guidance, which was amended July 9, 2015, is effective for annual reporting periods beginning on or after December 15, 2017, and interim periods within those annual periods. We will adopt the new provisions of this accounting standard at the beginning of fiscal year 2018, because early adoption is not allowed. We are currently evaluating the impact of this new standard on our consolidated financial statements. In November 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-l7, “Income Taxes: Balance Sheet Classification of Deferred Taxes,” which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. The ASU is effective for annual periods beginning after December 15, 20l7, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for all entities. We are currently evaluating the impact of this new standard on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), which supersedes the existing guidance for lease accounting, “Leases” (Topic 840). ASU 2016-02 requires lessees to recognize a lease liability and a right of use asset for all leases. Lessor accounting remains largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at or entered into after the date of initial adoption, with an option to elect to use certain transition relief. We are currently evaluating the impact of this new standard on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes and statutory tax withholding requirements and classification within the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2016. We are currently evaluating the impact of this new standard on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses,” to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently evaluating the impact of this new standard on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments,” to provide clarity on how certain cash receipt and cash payment transactions are presented and classified within the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the impact of this new standard on our consolidated financial statements.
Cash and Cash Equivalents	Cash and Cash Equivalents Cash and cash equivalents consist of all cash on hand, deposits and funds invested in available for sale securities with original maturities of three months or less at the time of purchase. At September 30, 2016, our cash was held primarily in checking and money market accounts.

Patent Costs, Net (Tables)

Patent Costs, Net (Tables)	9 Months Ended
	Sep. 30, 2016
Patent Costs, Net
Schedule of finite lived intangible assets	As of As of (In thousands) September 30, 2016 December 31, 2015 Patents $ $ Less: accumulated amortization Net patents $ $
Schedule of future amortization expense	(In thousands) 2016 (October 1 - December 31) $ 2017 2018 2019 2020 Thereafter Total $

Accrued Expenses (Tables)

Accrued Expenses (Tables)	9 Months Ended
	Sep. 30, 2016
Accrued Expenses
Schedule of Accrued Expenses	As of As of (In thousands) September 30, 2016 December 31, 2015 Accrued warranty $ $ Accrued clinical Other Total $ $

Commitments and Contingencies (

Commitments and Contingencies (Tables)	9 Months Ended
	Sep. 30, 2016
Commitments and Contingencies
Schedule of future minimum lease payments	Future base minimum lease payments for all lease obligations are expected to be as follows for the years ending December 31: Computer/Office (In thousands) Building Equipment Total 2016 (October 1 - December 31) $ $ $ 2017 2018 2019 2020 Thereafter — Total $ $ $

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	9 Months Ended
	Sep. 30, 2016
Stockholders' Equity
Schedule of allocation of stock-based compensation expense	This expense was allocated as follows: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (In thousands) Cost of goods sold $ $ $ $ Sales and marketing Research and development — — Reimbursement, general and administrative Total stock-based compensation expense $ $ $ $
Schedule of stock option activity	Weighted Average Options Exercise Price (#) ($/share) Outstanding at December 31, 2015 $ Granted Exercised Forfeited Outstanding at September 30, 2016 $

Net Income (Loss) Per Share A20

Net Income (Loss) Per Share Attributable to Common Stockholders (Tables)	9 Months Ended
	Sep. 30, 2016
Net Income (Loss) Per Share Attributable to Common Stockholders
Schedule of computation of the basic and diluted net income (loss) per share attributable to common stockholders	Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 (In thousands, except per share data) Net income $ $ $ $ Convertible preferred stock dividends Allocation of undistributed earnings to preferred stockholders — — Net income (loss) attributable to common stockholders $ $ $ $ Weighted average shares outstanding Effect of common stock options, warrants, restricted stock units and employee stock purchase plan shares — — Weighted-average shares used to compute diluted net income (loss) per share Net income (loss) per share - Basic $ $ $ $ Net income (loss) per share - Diluted $ $ $ $
Schedule of potentially dilutive securities outstanding excluded from the computation of weighted shares outstanding because such securities have an antidilutive impact due to losses reported	Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Convertible preferred stock outstanding — — — Restricted stock units — — — Common stock options — Employee stock purchase plan shares — — — Common stock warrants — — Total —

Nature of Operations and Basi21

Nature of Operations and Basis of Presentation (Details)	1 Months Ended
	Jun. 30, 2016	Sep. 30, 2016$ / sharesshares	Dec. 31, 2015$ / sharesshares	Jul. 21, 2006$ / sharesshares
Basis of Presentation
Common shares authorized		300,000,000	14,184,175	8,900,000
Common stock, par value (in dollars per share) | $ / shares		$ 0.001	$ 0.001	$ 0.001
Reverse stock split ratio	0.354604396
Redeemable convertible preferred stock issued (in shares)		0
Redeemable convertible preferred stock outstanding (in shares)		0

Nature of Operations and Basi22

Nature of Operations and Basis of Presentation - Initial public offering - (Details) - USD ($) $ / shares in Units, $ in Thousands	Aug. 02, 2016	Sep. 30, 2016	Dec. 31, 2009
Subsidiary, Sale of Stock
Net proceeds from the initial public offering		$ 41,200
IPO expenses paid		4,777
Series A Preferred Stock
Subsidiary, Sale of Stock
IPO price per share (in dollars per share)			$ 4.23
Cumulative accrued dividends		$ 8,200
IPO
Subsidiary, Sale of Stock
Number of shares of common stock sold	4,120,000
IPO price per share (in dollars per share)	$ 10
Net proceeds from the initial public offering	$ 35,400
Expense Relating To Initial Public Offering	$ 2,900

Patent Costs, Net (Details)

Patent Costs, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Finite-Lived Intangible Assets
Amortization expense	$ 100	$ 100	$ 200	$ 200
Patents
Finite-Lived Intangible Assets
Patents	3,428		3,428		$ 3,403
Less: accumulated amortization	(1,124)		(1,124)		(914)
Net patents	2,304		2,304		2,489
Future Amortization
2016 (October 1 - December 31)	69		69
2,017	279		279
2,018	279		279
2,019	279		279
2,020	279		279
Thereafter	1,119		1,119
Net patents	$ 2,304		$ 2,304		$ 2,489

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accrued Expenses
Accrued warranty	$ 540	$ 360
Accrued clinical	71	130
Other	601	426
Accrued expenses, total	$ 1,212	$ 916

Line of Credit _ Bank (Details)

Line of Credit — Bank (Details) - Line of Credit - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Line of Credit Facility
Maximum borrowing capacity	$ 2,000
Outstanding line of credit	$ 0	$ 0
Prime Rate
Line of Credit Facility
Variable interest rate	3.50%

Commitments and Contingencies26

Commitments and Contingencies (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Jul. 31, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Operating Leased Assets
Rent expense	$ 0	$ 200	$ 200	$ 600	$ 600
2016 (October 1 - December 31)		159		159
2,017		715		715
2,018		732		732
2,019		744		744
2,020		754		754
Thereafter		506		506
Total		3,610		3,610
Building
Operating Leased Assets
2016 (October 1 - December 31)		154		154
2,017		695		695
2,018		714		714
2,019		733		733
2,020		753		753
Thereafter		506		506
Total		3,555		3,555
Computer/Office Equipment
Operating Leased Assets
2016 (October 1 - December 31)		5		5
2,017		20		20
2,018		18		18
2,019		11		11
2,020		1		1
Total		$ 55		$ 55

Commitments and Contingencies -

Commitments and Contingencies - Major Vendors (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016item	Sep. 30, 2015item	Sep. 30, 2016item	Sep. 30, 2015item	Feb. 29, 2016USD ($)
Concentration Risk
Number of vendors | item	3	3	3	3
Purchase commitments
Purchase commitments | $					$ 7.6
Purchases | Vendor
Concentration Risk
Concentration percentage	35.00%	35.00%	36.00%	45.00%

Commitments and Contingencies28

Commitments and Contingencies - Deferred Compensation (Details) - shares	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Deferred Compensation, Share-based Payments | Series A Preferred Stock | Restricted Stock
Deferred Compensation Arrangement with Individual, Share-based Payments
Shares issued	66,010	45,523
Certain Officers | Minimum
Deferred Compensation Arrangement with Individual, Share-based Payments
Severance term (in months)	9 months
Number of months of bonus payable	9 months
Certain Officers | Maximum
Deferred Compensation Arrangement with Individual, Share-based Payments
Severance term (in months)	15 months
Number of months of bonus payable	15 months

Commitments and Contingencies29

Commitments and Contingencies - Retirement Plan (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
401(k)
Defined Contribution Plan Disclosure
Discretionary contributions	$ 45,000	$ 36,000	$ 120,000	$ 100,000

Stockholders' Equity - Series A

Stockholders' Equity - Series A & B Preferred Stock (Details)	Aug. 02, 2016USD ($)	Oct. 31, 2012USD ($)item$ / sharesshares	Sep. 30, 2016USD ($)$ / sharesshares	Dec. 31, 2009USD ($)item$ / sharesshares
Preferred stock
Shares issued | shares			0
Undeclared cumulative preferred dividends	$ 8,200,000
Series B Preferred Stock
Preferred stock
Gross proceeds from issuance		$ 10,400,000
Shares issued | shares		2,733,468
Share price (in dollars per share) | $ / shares		$ 3.80
Dividend rate (as a percent)		6.00%
Undeclared cumulative preferred dividends	$ 2,600,000
Automatic redemption price in the event of a public offering, minimum (in dollars per share) | $ / shares			$ 11.42
Minimum proceeds from sale of stock, as threshold for automatic conversion			$ 30,000,000
Number of embedded features | item		2
Series A Preferred Stock
Preferred stock
Gross proceeds from issuance				$ 13,000,000
Shares issued | shares				3,061,488
Share price (in dollars per share) | $ / shares				$ 4.23
Dividend rate (as a percent)				6.00%
Preferred stock, antidilution trigger, price per share				$ 4.23
Number of shares issuable under terms of antidilution clause			$ 83,972
Automatic redemption price in the event of a public offering, minimum (in dollars per share) | $ / shares			$ 11.42
Minimum proceeds from sale of stock, as threshold for automatic conversion			$ 30,000,000
Number of embedded features | item				2

Stockholders' Equity - Stock-Ba

Stockholders' Equity - Stock-Based Compensation General Information (Details) - shares	Sep. 30, 2016	Jun. 30, 2016
2016 Plan
Share-based Compensation Arrangement by Share-based Payment Award
Number of shares authorized		4,800,000
Number of shares available for grant	4,500,000
Stock options | Other Equity Compensation Plans
Share-based Compensation Arrangement by Share-based Payment Award
Number of shares available for grant		0

Stockholders' Equity - Stock-32

Stockholders' Equity - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Stock-based compensation
Allocated Share-based Compensation Expense	$ 709	$ 87	$ 859	$ 232
Unrecognized stock-based compensation
Unrecognized stock-based compensation expense, Stock plans	2,000		$ 2,000
Unrecognized stock-based compensation expense, period for recognition			2 years 8 months 12 days
Cost of goods sold
Stock-based compensation
Allocated Share-based Compensation Expense	33	21	$ 71	52
Sales and marketing
Stock-based compensation
Allocated Share-based Compensation Expense	188	47	272	125
Research and development
Stock-based compensation
Allocated Share-based Compensation Expense	14		14
Reimbursement, general and administrative
Stock-based compensation
Allocated Share-based Compensation Expense	474	$ 19	502	$ 55
Restricted Stock Units | 2016 Plan
Unrecognized stock-based compensation
Unrecognized stock-based compensation expense, Restricted stock	$ 2,900		$ 2,900
Unrecognized stock-based compensation expense, period for recognition			2 years 6 months
Aggregate value			$ 3,100
Share-based awards granted			307,594

Stockholders' Equity - Stock Op

Stockholders' Equity - Stock Options (Details)	9 Months Ended
	Sep. 30, 2016$ / sharesshares
Options (#)
Outstanding at beginning of period | shares	1,840,448
Granted | shares	305,236
Exercised | shares	(234,948)
Forfeited | shares	(23,535)
Outstanding at end of period | shares	1,887,201
Weighted Average Exercise Price ($/share)
Outstanding at beginning of period | $ / shares	$ 1.18
Granted | $ / shares	10.60
Exercised | $ / shares	0.95
Forfeited | $ / shares	2.84
Outstanding at end of period | $ / shares	$ 2.33
Other information
Exercisable options, number | shares	1,283,036
Exercisable options, weighted-average exercise price | $ / shares	$ 1.02
Exercisable options, weighted-average remaining contractual life	5 years 8 months 12 days
Stock options
Stock-based compensation, general disclosures
Vesting period (in years)	4 years
Term (in years)	10 years

Stockholders' Equity - Employee

Stockholders' Equity - Employee Stock Purchase Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	Aug. 02, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Oct. 31, 2012	Dec. 31, 2009
Class of Stock
Allocated Share-based Compensation Expense		$ 709	$ 87	$ 859	$ 232
Stock Issued During Period Prior To Completion Of Initial Offering Shares New Issues				2,354,323
Conversion of Stock, Shares Converted				5,924,453
Employee Stock Purchase Plan
Class of Stock
Purchase price of common stock under plan (as a percent)				85.00%
Offering period (in months)				6 months
Shares reserved for issuance		1,600,000		1,600,000
Shares issued				0
Incremental share increase (in shares)				500,000
Incremental share increase (as a percent)				1.00%
Allocated Share-based Compensation Expense		$ 200		$ 200
IPO
Class of Stock
Number of shares of common stock sold	4,120,000
Share price (in dollars per share)	$ 10
Series B Preferred Stock
Class of Stock
Stock Issued During Period Required To Fund Stock Dividends Shares New Issues				956,842
Preferred stock to common stock conversion ratio				1
Share price (in dollars per share)						$ 3.80
Series A Preferred Stock
Class of Stock
Accrued Cumulative Dividends		$ 8,200		$ 8,200
Preferred stock to common stock conversion ratio				0.9708
Share price (in dollars per share)							$ 4.23
Payment of dividends				$ 100

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Taxes
Income tax expense	$ 492	$ 589	$ 500	$ 90

Net Income (Loss) Per Share A36

Net Income (Loss) Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net Income (Loss) Per Share Attributable to Common Stockholders
Net income	$ 492	$ 876	$ 500	$ 134
Convertible preferred stock dividends	224	470	1,247	1,396
Allocation of undistributed earnings to preferred stockholders	99	262
Net income (loss) attributable to common stockholders	$ 169	$ 144	$ (747)	$ (1,262)
Weighted average shares outstanding	12,253,877	3,148,294	6,317,875	2,854,112
Effect of common stock options, warrants, restricted stock units and employee stock purchase plan shares	1,728,922	1,651,014	0	0
Weighted average shares used to compute diluted net income (loss) per share	13,982,799	4,799,308	6,317,875	2,854,112
Net income (loss) per share — Basic	$ 0.01	$ 0.05	$ (0.12)	$ (0.44)
Net income (loss) per share — Diluted	$ 0.01	$ 0.03	$ (0.12)	$ (0.44)

Net Income (Loss) Per Share A37

Net Income (Loss) Per Share Attributable to Common Stockholders - Antidilutive shares (Details) - shares	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share	31,016	2,302,426	7,671,185
Number of potentially dilutive shares outstanding	18,500,000	18,500,000
Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share		373,604
Employee Stock Purchase Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share		35,821
Convertible preferred stock outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share			5,794,958
Common stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share	31,016	1,887,201	1,861,709
Common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share		5,800	14,518