Tactile Systems Technology (TCMD) 10-Q 6 May 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 02, 2019
Document and Entity Information
Entity Registrant Name	TACTILE SYSTEMS TECHNOLOGY INC
Entity Central Index Key	0001027838
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		18,825,688

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 23,548	$ 20,099
Marketable securities	21,384	25,786
Accounts receivable, net	21,661	24,332
Net investment in leases	3,362
Inventories	11,321	11,189
Income taxes receivable	2,814	1,793
Prepaid expenses and other current assets	1,680	1,762
Total current assets	85,770	84,961
Non-current assets:
Property and equipment, net	4,616	4,810
Right of use operating lease assets	3,396
Intangible assets, net	5,244	5,339
Medicare accounts receivable, long-term	2,172	1,884
Deferred income taxes	11,077	8,820
Other non-current assets	1,242	1,257
Total non-current assets	27,747	22,110
Total assets	113,517	107,071
Current liabilities:
Accounts payable	5,832	5,110
Accrued payroll and related taxes	6,837	7,421
Accrued expenses	2,685	2,780
Future product royalties	3	5
Income taxes		51
Right of use operating lease liabilities	1,147
Other current liabilities	800	709
Total current liabilities	17,304	16,076
Non-current liabilities:
Accrued warranty reserve, non-current	1,854	1,725
Income taxes, non-current	42
Right of use operating lease liabilities, non-current	2,318
Total non-current liabilities	4,214	1,725
Total liabilities	21,518	17,801
Commitments and contingencies (see Note 10)
Stockholders’ equity:
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued and outstanding as of March 31, 2019 and December 31, 2018
Common stock, $0.001 par value, 300,000,000 shares authorized; 18,818,692 shares issued and outstanding as of March 31, 2019; 18,631,125 shares issued and outstanding as of December 31, 2018	19	19
Additional paid-in capital	80,788	79,554
Retained earnings	11,177	9,705
Accumulated other comprehensive income (loss)	15	(8)
Total stockholders’ equity	91,999	89,270
Total liabilities and stockholders’ equity	$ 113,517	$ 107,071

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	50,000,000	50,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common shares authorized	300,000,000	300,000,000
Common Stock, Shares, Issued	18,818,692	18,631,125
Common Stock, Shares, Outstanding	18,818,692	18,631,125

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Total revenue	$ 37,617	$ 26,848
Total cost of revenue	11,359	7,309
Gross profit	26,258	19,539
Operating expenses
Sales and marketing	17,391	12,557
Research and development	1,281	1,437
Reimbursement, general and administrative	9,388	7,372
Total operating expenses	28,060	21,366
Loss from operations	(1,802)	(1,827)
Other income	161	91
Loss before income taxes	(1,641)	(1,736)
Income tax benefit	(3,113)	(1,686)
Net income (loss)	$ 1,472	$ (50)
Net income per common share
Basic (in dollars per share)	$ 0.08	$ 0
Diluted (in dollars per share)	$ 0.08	$ 0
Weighted-average common shares used to compute net income per common share
Basic (in shares)	18,746,751	17,996,672
Diluted (in shares)	19,579,847	17,996,672
Sales revenue
Total revenue	$ 30,831	$ 23,647
Total cost of revenue	9,412	6,409
Gross profit	21,419	17,238
Rental revenue
Total revenue	6,786	3,201
Total cost of revenue	1,947	900
Gross profit	$ 4,839	$ 2,301

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Condensed Consolidated Statements of Comprehensive Income
Net income (loss)	$ 1,472	$ (50)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities	30	(7)
Income tax related to items of other comprehensive income (loss)	(7)	1
Total other comprehensive income (loss)	23	(6)
Comprehensive income (loss)	$ 1,495	$ (56)

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive (Loss) Income	Treasury Stock	Total
Balances at the beginning at Dec. 31, 2017	$ 18	$ 70,224	$ 3,082	$ (44)	$ (493)	$ 72,787
Balances at the beginning (in shares) at Dec. 31, 2017	17,846,379
Increase (Decrease) in Stockholders' Equity
Stock-based compensation		1,481				1,481
Exercise of common stock options and vesting of restricted stock units		138				138
Exercise of common stock options and vesting of restricted stock units (in shares)	230,532
Taxes paid for net share settlement of restricted stock units		(1,188)				(1,188)
Taxes paid for net share settlement of restricted stock units (in shares)	(40,202)
Comprehensive income (loss) for the period			(50)	(6)		(56)
Balances at the end at Mar. 31, 2018	$ 18	70,655	3,032	(50)	$ (493)	73,162
Balances at the end (in shares) at Mar. 31, 2018	18,036,709
Balances at the beginning at Dec. 31, 2018	$ 19	79,554	9,705	(8)		89,270
Balances at the beginning (in shares) at Dec. 31, 2018	18,631,125
Increase (Decrease) in Stockholders' Equity
Stock-based compensation		2,783				2,783
Exercise of common stock options and vesting of restricted stock units		861				861
Exercise of common stock options and vesting of restricted stock units (in shares)	231,814
Taxes paid for net share settlement of restricted stock units		(2,410)				(2,410)
Taxes paid for net share settlement of restricted stock units (in shares)	(44,247)
Comprehensive income (loss) for the period			1,472	23		1,495
Balances at the end at Mar. 31, 2019	$ 19	$ 80,788	$ 11,177	$ 15		$ 91,999
Balances at the end (in shares) at Mar. 31, 2019	18,818,692

Condensed Consolidated Statem_4

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities
Net income (loss)	$ 1,472	$ (50)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	996	463
Deferred income taxes	(2,264)
Stock-based compensation expense	2,783	1,481
Changes in assets and liabilities:
Accounts receivable	2,671	3,414
Net investment in leases	(3,362)
Inventories	(132)	(3,616)
Income taxes	(1,030)	(1,952)
Prepaid expenses and other assets	97	63
Right of use operating lease assets	(3,396)
Medicare accounts receivable – long-term	(288)	(253)
Accounts payable	722	885
Accrued payroll and related taxes	(584)	(1,850)
Accrued expenses and other liabilities	125	(756)
Right of use operating lease liabilities	3,465
Future product royalties	(2)	(2)
Net cash provided by (used in) operating activities	1,273	(2,173)
Cash flows from investing activities
Proceeds from sales of securities available-for-sale		1,000
Proceeds from maturities of securities available-for-sale	4,500	4,000
Purchases of property and equipment	(731)	(432)
Intangible assets costs	(44)
Net cash provided by investing activities	3,725	4,568
Cash flows from financing activities
Taxes paid for net share settlement of restricted stock units	(2,410)	(1,188)
Proceeds from exercise of common stock options	861	138
Net cash used in financing activities	(1,549)	(1,050)
Net increase in cash and cash equivalents	3,449	1,345
Cash and cash equivalents – beginning of period	20,099	23,968
Cash and cash equivalents – end of period	23,548	25,313
Supplemental cash flow disclosure
Cash paid for taxes	181	284
Capital expenditures incurred but not yet paid	$ 176	$ 96

Nature of Business and Operatio

Nature of Business and Operations	3 Months Ended
	Mar. 31, 2019
Nature of Business and Operations
Nature of Business and Operations	Note 1. Nature of Business and Operations Tactile Systems Technology, Inc. (“we,” “us,” and “our”) is the sole manufacturer and distributor of the Flexitouch and Entre systems, medical devices that help control symptoms of lymphedema, a chronic and progressive medical condition, the Actitouch system, a medical device used to treat venous leg ulcers and chronic venous insufficiency, and the Airwear wrap, a medical device used for the management of venous insufficiency, venous hypertension, venous ulcerations and lymphedema. We provide our products for use in the home and sell or rent them through vascular, wound and lymphedema clinics throughout the United States. We do business as “Tactile Medical.” 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, resulting in us being reincorporated as a Delaware corporation. The resulting corporation assumed the name Tactile Systems Technology, Inc. In September 2013, we began doing business as “Tactile Medical.” 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. 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 yet met their annual out-of-pocket payment obligations, we experience substantially reduced demand for our products. We typically experience higher revenues 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, and because patients often spend the remaining balances in their healthcare flexible spending accounts at that time. 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 or do not have plans that include patient deductibles for purchases or rentals of our products.

Basis of Presentation

Basis of Presentation	3 Months Ended
	Mar. 31, 2019
Basis of Presentation
Basis of Presentation	Note 2. 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. We have reclassified certain prior year amounts to conform to the current year’s presentation. The results for the three months ended March 31, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019, or for any other interim period or for any future year. The condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018. Principles of Consolidation Our accompanying unaudited condensed consolidated financial statements include the accounts of Tactile Systems Technology, Inc. and its wholly owned subsidiary, Swelling Solutions, Inc. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and to disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Comprehensive Income Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Our comprehensive income represents net income adjusted for unrealized gains and losses on available-for-sale marketable securities. JOBS Act Accounting Election Prior to December 31, 2018, we were an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and as a result we were 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 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. However, as of the last business day of our second fiscal quarter of 2018, the market value of our common stock that was held by non-affiliates exceeded $700 million, and as a result, we no longer qualified as an emerging growth company as of December 31, 2018 and are no longer able to take advantage of the extended transition period for adopting new or revised accounting standards. Therefore, beginning December 31, 2018, we were required to adopt new or revised accounting standards when they are applicable to public companies that are not emerging growth companies.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2019
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	Note 3. Summary of Significant Accounting Policies Significant Accounting Policies Excluding the adoption of ASC 842 “Leases”, as described below, there were no material changes in our significant accounting policies during the three months ended March 31, 2019. See Note 3 - “Summary of Significant Accounting Policies” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 for information regarding our significant accounting policies. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (Topic 842) (“ASC 842”), which supersedes the existing guidance for lease accounting, “Leases” (Topic 840) (“ASC 840”). ASC 842 requires lessees to recognize a lease liability and a right of use asset for all leases that extend beyond one year. As a result of our change in filing status, we adopted this standard using the modified retrospective transition approach at the adoption date of January 1, 2019. This approach does not require restatement of previous periods. We completed a qualitative and quantitative assessment of our leases from both a lessee and lessor perspective. As part of our process, we elected to utilize certain practical expedients that were provided for transition relief. Accordingly, we did not reassess expired or existing contracts, lease classifications or related initial direct costs as part of our assessment process for either lessee or lessor leases. Additionally, we elected the practical expedient to treat lease and nonlease components of fixed payments due to the lessor as one, and therefore no separate allocation was required on the initial implementation date of January 1, 2019, and thereafter. The adoption of this standard, from a lessee perspective, resulted in us recording Right of Use (“ROU”) operating lease assets and liabilities of approximately $3.1 million on the Condensed Consolidated Balance Sheet as of January 1, 2019, with no impact to retained earnings. In addition, we elected as an accounting policy, not to record leases with an initial term of less than 12 months. From a lessor perspective, the application of ASC 842 to our rental revenue, which was recognized as month-to-month, cancelable leases in accordance with ASC 840 through December 31, 2018, resulted in recognizing rental revenue as a sales-type lease under ASC 842 thereafter. Rental sales agreements that commenced prior to December 31, 2018, will continue to be recognized as month-to-month, cancelable leases until they are completed, as we elected the practical expedient to not reassess the lease classification for leases in existence upon adoption. As such, rental agreements commencing after January 1, 2019 were recorded as sales-type leases with the associated revenue and cost of revenue recognized on the lease commencement date and a corresponding net investment in leases on the Condensed Consolidated Balance Sheet. (See Note 10 – “Commitments and Contingencies” and Note 12 – “Revenue” for additional information and required disclosures.) 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 will be effective for us for interim and annual periods beginning January 1, 2020. Therefore, we plan to further evaluate the anticipated impact of the adoption of this ASU on our condensed consolidated financial statements in future periods. In July 2018, the FASB issued ASU No. 2018-07 “Improvements to Non-employee Share-Based Payment Accounting,” which expands the scope of ASC 718 – “Stock Based Compensation” to include share-based payment transactions for acquiring goods and services from non-employees. The ASU was effective for us beginning January 1, 2019, including interim periods within the fiscal year. We have early adopted ASU 2018-07 for the quarter ended March 31, 2019 and it did not have a material impact on our condensed consolidated financial statements.

Marketable Securities

Marketable Securities	3 Months Ended
	Mar. 31, 2019
Marketable Securities
Marketable Securities	Note 4. Marketable Securities Our investments in marketable securities, all of which have original contractual maturities of ten to twenty-four months, are classified as available-for-sale and consist of the following: At March 31, 2019 Amortized Unrealized Fair (In thousands) Cost Gains Losses Value U.S. government and agency obligations $ 17,391 $ 13 $ 3 $ 17,401 Corporate debt securities and certificates of deposit 3,973 11 1 3,983 Marketable securities $ 21,364 $ 24 $ 4 $ 21,384 At December 31, 2018 Amortized Unrealized Fair (In thousands) Cost Gains Losses Value U.S. government and agency obligations $ 19,332 $ 5 $ 17 $ 19,320 Corporate debt securities and certificates of deposit 6,464 7 5 6,466 Marketable securities $ 25,796 $ 12 $ 22 $ 25,786 Net pre-tax unrealized gains for marketable securities at March 31, 2019, were recorded as a component of accumulated other comprehensive income in stockholders' equity. There were no sales of marketable securities during the three months ended March 31, 2019. Unrealized losses and fair value of marketable securities aggregated by investment category and the length of time the securities were in a continuous loss position were as follows: At March 31, 2019 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Losses Value Losses Value Losses U.S. government and agency obligations $ 7,474 $ 2 $ 999 $ 1 $ 8,473 $ 3 Corporate debt securities and certificates of deposit 1,498 1 — — 1,498 1 Marketable securities $ 8,972 $ 3 $ 999 $ 1 $ 9,971 $ 4 At December 31, 2018 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Losses Value Losses Value Losses U.S. government and agency obligations $ 11,884 $ 11 $ 2,993 $ 6 $ 14,877 $ 17 Corporate debt securities and certificates of deposit 2,993 3 999 2 3,992 5 Marketable securities $ 14,877 $ 14 $ 3,992 $ 8 $ 18,869 $ 22

Inventories

Inventories	3 Months Ended
	Mar. 31, 2019
Inventories
Inventories	Note 5. Inventories Inventories consisted of the following: (In thousands) At March 31, 2019 At December 31, 2018 Finished goods $ 4,656 $ 5,318 Component parts and work-in-process 6,665 5,871 Total inventories $ 11,321 $ 11,189

Intangible Assets

Intangible Assets	3 Months Ended
	Mar. 31, 2019
Intangible Assets
Intangible Assets	Note 6. Intangible Assets Our patents and other intangible assets, all of which are subject to amortization, are summarized as follows: Weighted- At March 31, 2019 At December 31, 2018 Average Gross Gross Amortization Carrying Accumulated Net Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Amount Amortization Amount Patents 11 years $ 4,298 $ 157 $ 4,141 $ 4,253 $ 71 $ 4,182 Defensive intangible assets 5 years 1,126 130 996 1,126 82 1,044 Customer accounts 4 years 125 18 107 125 12 113 Total $ 5,549 $ 305 $ 5,244 $ 5,504 $ 165 $ 5,339 Amortization expense was $0.1 million for each of the three months ended March 31, 2019 and 2018. Future amortization expenses are expected as follows: (In thousands) 2019 (April 1 - December 31) $ 419 2020 558 2021 558 2022 558 2023 491 Thereafter 2,660 Total $ 5,244

Accrued Expenses

Accrued Expenses	3 Months Ended
	Mar. 31, 2019
Accrued Expenses
Accrued Expenses	Note 7. Accrued Expenses Accrued expenses consisted of the following: (In thousands) At March 31, 2019 At December 31, 2018 Warranty $ 873 $ 841 Legal and consulting 710 319 Travel and business 622 557 Accrued taxes 262 115 Clinical studies 33 60 Acquisition earn-out — 375 Deferred rent — 155 Other 185 358 Total $ 2,685 $ 2,780

Warranty Reserves

Warranty Reserves	3 Months Ended
	Mar. 31, 2019
Warranty Reserves
Warranty Reserves	Note 8. Warranty Reserves The reserve for warranties was as follows: Three Months Ended March 31, (In thousands) 2019 2018 Beginning balance $ 2,566 $ 1,672 Warranty provision 418 351 Processed warranty claims (257) (203) Ending balance $ 2,727 $ 1,820 Accrued warranty reserve, current $ 873 $ 648 Accrued warranty reserve, non-current 1,854 1,172 Total accrued warranty reserve $ 2,727 $ 1,820

Credit Agreement

Credit Agreement	3 Months Ended
	Mar. 31, 2019
Credit Agreement
Credit Agreement	Note 9. Credit Agreement On August 3, 2018, we entered into a credit agreement with Wells Fargo Bank, National Association. On February 12, 2019, we entered into a first amendment to our credit agreement, which provided for an increase in our annual capital expenditure limitations. On March 25, 2019, we entered into a waiver and second amendment to our credit agreement, which provided that the business plan and budget required to be delivered annually be reduced to cover one year as opposed to the initial three-year coverage requirement. We refer to the credit agreement, as amended, as the “Credit Agreement.” The Credit Agreement provides for a $10.0 million revolving credit facility. The revolving credit facility expires on August 3, 2021. Subject to satisfaction of certain conditions, we may increase the amount of the revolving loans available under the Credit Agreement and/or add one or more term loan facilities in an amount not to exceed an incremental $25.0 million in the aggregate, such that the total aggregate principal amount of loans available under the Credit Agreement (including under the revolving credit facility) does not exceed $35.0 million. Amounts drawn under the revolving credit facility bear interest, at our option, at a rate equal to (a) the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) LIBOR for an interest period of one month plus 1% (the “Base Rate”) plus an applicable margin or (b) LIBOR plus the applicable margin. The applicable margin is 0.40% to 1.15% on loans bearing interest at the Base Rate and 1.40% to 2.15% on loans bearing interest at LIBOR, in each case depending on our consolidated total leverage ratio. Undrawn portions of the revolving credit facility are subject to an unused line fee at a rate per annum from 0.200% to 0.275%, depending on our consolidated total leverage ratio. As of March 31, 2019, we did not have any outstanding borrowings under the Credit Agreement.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2019
Commitments and Contingencies
Commitments and Contingencies	Note 10. Commitments and Contingencies Lease Obligations We lease property and equipment under operating leases, typically with terms greater than 12 months, and determine if an arrangement contains a lease at inception. In general, an arrangement contains a lease if there is an identified asset and we have the right to direct the use of and obtain substantially all of the economic benefit from the use of the identified asset. We record a ROU operating lease liability at the present value of lease payments over the lease term on the commencement date. The related ROU operating lease asset reflects rental escalation clauses as well as renewal options and/or termination options. The exercise of lease renewal and/or termination options are at our discretion and are included in the determination of the lease term and lease payment obligations when it is deemed reasonably certain that the option will be exercised. When available, we use the rate implicit in the lease to discount lease payments to present value; however, certain leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. We classify our leases as Buildings, Vehicles or Computer/Office Equipment and do not separate lease and nonlease components of contracts for any of the aforementioned classifications. In accordance with applicable guidance, we do not record leases with terms that are less than one year on the Condensed Consolidated Balance Sheet. None of our lease agreements contain material restrictive covenants or residual value guarantees. Buildings We lease certain office and warehouse space at various locations in the United States where we provide services. These leases are typically greater than one year with fixed, escalating rents over the noncancelable terms and therefore, ROU operating lease assets and liabilities are recorded on the Condensed Consolidated Balance Sheet, with rent expense to be recognized on a straight-line basis over the term of the lease. The remaining lease terms vary from approximately 1 to 5 years as of the adoption date of January 1, 2019. In March 2008, we entered into a noncancelable operating lease agreement for building space for our corporate headquarters that provides for monthly rent, real estate taxes and operating expenses that was subsequently extended to July 31, 2021. This space is included in our ROU operating lease assets and liabilities. We are looking to sub-lease this space for the remainder of our lease obligation due to our new headquarters lease described below. We entered into a lease in October 2018 for office space for our future corporate headquarters in Minneapolis, Minnesota which will commence upon our move, which is expected to occur in the fourth quarter of 2019. As such, this lease is not included in either the ROU operating lease assets or liabilities. The initial lease term is through February 2030, with an option to renew for two periods of five years each. Vehicles We lease vehicles for certain members of our field sales organization under a vehicle fleet program whereby the initial, noncancelable lease is for a term of 367 days, thus more than one year. Subsequent to the initial term, the lease becomes a month-to-month, cancelable lease. As of March 31, 2019, we had approximately 40 vehicles with agreements within the initial, noncancelable lease term that are recorded as ROU operating lease assets and liabilities. In addition to monthly rental fees specific to the vehicle, there are fixed monthly nonlease components that have been included in the ROU operating lease assets and liabilities. The nonlease components are not significant. Computer and Office Equipment We also have operating lease agreements for certain computer and office equipment. The remaining lease terms at the adoption date of January 1, 2019 range from seven months to approximately four and a half years with fixed monthly payments that are included in the ROU operating lease assets and liabilities. The leases provide an option to purchase the related equipment at fair market value at the end of the lease. The lease will automatically renew as a month-to-month rental at the end of the lease if the equipment is not purchased or returned. Lease Position, Undiscounted Cash Flow and Supplemental Information The table below presents the lease-related assets and liabilities recorded on our Condensed Consolidated Balance Sheet: (In thousands) At March 31, 2019 Right of use operating lease assets $ 3,396 Right of use operating lease liabilities: Current $ 1,147 Non-current 2,318 Total $ 3,465 Operating leases: Weighted average remaining lease term 3.5 years Weighted average discount rate (1) (1) Discount rates were established as of January 1, 2019, the adoption date The table below reconciles the undiscounted cash flows under the operating leases recorded on the Condensed Consolidated Balance Sheet for each of the next five years and total of the remaining years: (In thousands) 2019 (April 1 - December 31) $ 1,000 2020 1,082 2021 741 2022 456 2023 383 Thereafter 32 Total minimum lease payments 3,694 Less: amount of lease payments representing interest (229) Present value of future minimum lease payments 3,465 Less: current obligations under leases (1,147) Long-term lease obligations $ 2,318 As of March 31, 2019, we have additional lease commitments of $19.9 million related to our future headquarters that we anticipate will commence in the fourth quarter of 2019. As the lessee we are involved in providing guidance to the lessor for related improvements, however these improvements are managed and owned by the lessor. Operating lease costs accounted for under ASC 842, for the three months ended March 31, 2019, were $0.3 million. Cash paid for the three months ended March 31, 2019 for operating lease liabilities included in the measurement of the lease liability was $0.3 million. Rent expense accounted for under ASC 840, for the three months ended March 31, 2018 was $0.3 million. Major Vendors We had purchases from three major vendors that accounted for 40% of our total purchases for the three months ended March 31, 2019 and from two major vendors that accounted for 33% of our total purchases for the three months ended March 31, 2018. Purchase Commitments We issued purchase orders prior to March 31, 2019, totaling $19.5 million for goods that we expect to receive between April and December of 2019. 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. Discretionary contributions to the 401(k) plan totaled $0.1 million for each of the three months ended March 31, 2019 and 2018.

Stockholders' Equity

Stockholders' Equity	3 Months Ended
	Mar. 31, 2019
Stockholders' Equity
Stockholders' Equity	Note 11. Stockholders' Equity Stock-Based Compensation Our 2016 Equity Incentive Plan (the “2016 Plan”) authorizes us to grant stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards to employees, non-employee directors and certain consultants and advisors. There were up to 4,800,000 shares of our common stock initially reserved for issuance pursuant to the 2016 Plan. The 2016 Plan provides that the number of shares reserved and available for issuance under the 2016 Plan will automatically increase annually on January 1 of each calendar year, commencing in 2017 and ending on and including January 1, 2026, by an amount equal to the lesser of: (a) 5% of the number of common shares of stock outstanding as of December 31 of the immediately preceding calendar year, or (b) 2,500,000 shares; provided, however, that our Board of Directors may determine that any annual increase be a lesser number. In addition, all awards granted under our 2007 Omnibus Stock Plan and our 2003 Stock Option Plan that were outstanding when the 2016 Plan became effective and that are forfeited, expire, are cancelled, are settled for cash or otherwise not issued, will become available for issuance under the 2016 Plan. Pursuant to the automatic increase feature of the 2016 Plan, 892,318 and 841,686 shares were added as available for issuance thereunder on January 1, 2018 and 2017, respectively. Our Board of Directors exercised its prerogative to forego the automatic increase on January 1, 2019. As of March 31, 2019, 5,092,296 shares were available for future grant pursuant to the 2016 Plan. Upon adoption and approval of the 2016 Plan, all of our previous equity incentive compensation plans were terminated. However, existing awards under those plans continue to vest in accordance with the original vesting schedules and will expire at the end of their original terms. We recorded stock-based compensation expense of $2.8 million and $1.5 million for the three months ended March 31, 2019 and 2018, respectively. This expense was allocated as follows: Three Months Ended March 31, (In thousands) 2019 2018 Cost of revenue $ 98 $ 40 Sales and marketing expenses 1,166 652 Research and development expenses 80 69 Reimbursement, general and administrative expenses 1,439 720 Total stock-based compensation expense $ 2,783 $ 1,481 The stock-based compensation expense included modifications of share-based awards totaling $0.3 million for the three months ended March 31, 2019. This amount included the acceleration of vesting pursuant to the terms of an employee’s award agreement of $0.2 million and a final charge of $0.1 million pertaining to the January 1, 2019 revaluation of the unvested portion of outstanding awards held by a former executive upon our adoption of ASU No. 2018-07 “Improvements to Non-employee Share Based Payment Accounting”. Stock Options Stock options issued to participants other than non-employees vest over three or four years and typically have a contractual term of seven or ten years. Annually, stock options are granted to our non-employee directors on the date of the annual meeting of stockholders and vest in full on the earlier of one year after the date of grant or on the date of the next year’s annual meeting of stockholders. These options have a contractual term of seven years. Stock-based compensation expense included in our Condensed Consolidated Statements of Operations for stock options was $0.7 million and $0.5 million for the three months ended March 31, 2019 and 2018, respectively. At March 31, 2019, there was approximately $7.2 million of total unrecognized pre-tax 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 2.9 years. Stock option activity for the three months ended March 31, 2019 is summarized as follows: Weighted- Weighted- Average Average Aggregate Options Exercise Price Remaining Intrinsic (In thousands except options and per share data) Outstanding Per Share (1) Contractual Life Value (2) Balance at December 31, 2018 1,076,535 $ 17.94 6.5 years $ 31,172 Granted 73,948 $ 72.64 Exercised (101,016) $ 8.53 $ 5,731 Forfeited (10,416) $ 28.44 Balance at March 31, 2019 1,039,051 $ 22.64 6.4 years $ 33,527 Options exercisable at March 31, 2019 586,039 $ 8.57 5.1 years $ 25,887 (1) The exercise price of each option granted during the period shown was equal to the market price of the underlying stock on the date of grant. (2) The aggregate intrinsic value of options exercised represents the difference between the exercise price of the option and the closing stock price of our common stock on the date of exercise. The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period. Options exercisable of 906,063 as of March 31, 2018 had a weighted-average exercise price of $2.75 per share. Time-Based Restricted Stock Units We have granted time-based restricted stock units to certain participants under the 2016 Plan that are stock-settled with common shares. Time-based restricted stock units granted under the 2016 Plan vest over one to three years. Stock-based compensation expense included in our Condensed Consolidated Statements of Operations for time-based restricted stock units was $0.8 million for each of the three-month periods ended March 31, 2019 and 2018. As of March 31, 2019, there was approximately $7.0 million of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 2.2 years. Our time-based restricted stock unit activity for the three months ended March 31, 2019 was as follows: Weighted- Average Grant Aggregate Units Date Fair Value Intrinsic (In thousands except unit and per unit data) Outstanding Per Unit Value (1) Balance at December 31, 2018 309,632 $ 23.69 $ 14,104 Granted 43,258 $ 72.38 Vested (131,363) $ 15.76 Cancelled (244) $ 17.35 Balance at March 31, 2019 221,283 $ 37.92 $ 11,666 Deferred and unissued at March 31, 2019 (2) 4,432 $ 35.43 $ 234 (1) The aggregate intrinsic value of restricted stock units outstanding was based on our closing stock price on the last trading day of the period. (2) For the three months ended March 31, 2019, there were 567 restricted stock units granted to non-employee directors in lieu of their quarterly cash retainer payments. These restricted stock units were fully vested upon grant and represent the right to receive one share of common stock, per unit, upon the earlier of the directors’ termination of service as a director of ours or the occurrence of a change of control of us. These restricted stock units are included in the “Granted” line in the table above and are also included in the “Vested” line in the table above due to their being fully vested upon grant. As of March 31, 2019, there were 4,432 outstanding restricted stock units that have been previously granted to non-employee directors in lieu of their quarterly director retainer payments. These restricted stock units are not included in the “Balance at March 31, 2019” line in the table above because they are fully vested. Performance-Based Restricted Stock Units We have granted performance-based restricted stock units (“PSUs”) to certain participants under the 2016 Plan. These PSUs have both performance-based and time-based vesting features. The PSUs granted in 2018 will be earned if and to the extent performance goals based on revenue and adjusted EBITDA are achieved in 2019. The PSUs granted in 2019 will be earned if and to the extent performance goals based on revenue and adjusted EBITDA are achieved in 2020. The number of PSUs earned will depend on the level at which the performance targets are achieved, and can range from 50% of target if threshold performance is achieved and up to 150% of target if maximum performance is achieved. One-third of the earned PSUs will vest on the date the Compensation and Organization Committee certifies the number of PSUs earned, and the remaining two thirds of the earned PSUs will vest on the first anniversary of that certification date. All earned and vested PSUs will be settled in shares of common stock. Stock-based compensation expense included in our Condensed Consolidated Statements of Operations for PSUs was $0.7 million and $0.1 million for the three months ended March 31, 2019 and 2018, respectively. The stock-based compensation expense for the three months ended March 31, 2019 reflects a $0.4 million charge due to a change in the estimated payout to 150% of target for those PSUs granted in 2018. As of March 31, 2019, there was approximately $3.8 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.4 years. Our performance-based restricted stock unit activity reflected at target for the three-months ended March 31, 2019 was as follows: Performance- Weighted- Based Average Grant Aggregate Units Date Fair Value Intrinsic (In thousands except unit and per unit data) Outstanding Per Unit Value (1) Balance at December 31, 2018 65,427 $ 33.62 $ 2,980 Granted 25,724 $ 72.64 Vested — $ — Cancelled — $ — Balance at March 31, 2019 91,151 $ 44.63 $ 4,805 (1) The aggregate intrinsic value of performance-based restricted stock units outstanding was based on our closing stock price on the last trading day of the period. 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 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 provides for six-month purchase periods, beginning on May 16 and November 16 of each calendar year. A total of 1.6 million shares of common stock was initially reserved for issuance under the ESPP, and this share reserve will automatically be supplemented each January 1, commencing in 2017 and ending on and including January 1, 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. Pursuant to the automatic increase feature of the plan, 178,463 and 168,337 shares were added to the ESPP on January 1, 2018 and 2017, respectively. Our Board of Directors exercised its prerogative to forego the automatic increase on January 1, 2019. As of March 31, 2019, 1,542,576 shares were available for future issuance under the ESPP. We recognized stock-based compensation expense associated with the ESPP of $0.3 million for each of the three-month periods ended March 31, 2019 and 2018.

Revenue

Revenue	3 Months Ended
	Mar. 31, 2019
Revenue
Revenue	Note 12. Revenue We derive our revenues from the sale and rental of our Flexitouch, Entre and Actitouch systems to our customers in the United States. While our primary source of revenue is from the sale of our products, a portion of our revenues are derived from patients who obtain our products under rental arrangements. (See description below for additional information on rental revenue as it relates to ASC 842 “Leases”.) These arrangements are primarily for rentals of the Flexitouch system and are mostly related to private insurers, and the Veterans Administration. The following table presents our revenue, inclusive of sales and rental revenue, disaggregated by product: Three Months Ended March 31, (In thousands) 2019 2018 Revenues Flexitouch system $ 34,109 $ 24,530 Entre/Actitouch systems 3,508 2,318 Total $ 37,617 $ 26,848 Percentage of total revenues Flexitouch system 91 % 91 % Entre/Actitouch systems 9 % 9 % Total 100 % 100 % Our revenues from third-party payers, inclusive of sales and rental revenue, for the three months ended March 31, 2019 and 2018 are summarized in the following table: Three Months Ended March 31, (In thousands) 2019 2018 Private insurers and other payers $ 25,929 $ 18,115 Veterans Administration 7,670 6,179 Medicare 4,018 2,554 Total $ 37,617 $ 26,848 Our rental revenue is derived from rent to purchase arrangements that typically range from three to ten months. Under ASC 840, our rental revenue was recognized as month-to-month, cancelable leases, however, because title transfers to the patient, with whom we have the contract, upon the termination of the lease term and because collectability is probable, under ASC 842, these are recognized as sales-type leases. Each rental agreement contains two components, the controller and related garments, both of which are interdependent and recognized as one lease component. In accordance with applicable guidance, we will continue to recognize rental agreements commencing prior to December 31, 2018 on a month-to-month basis as an operating lease until they are completed, which we anticipate to be in the fourth quarter of this fiscal year. Those initiated subsequent to January 1, 2019 are recorded as sales-type leases in accordance with ASC 842, whereby rental revenue and cost of rental revenue are recognized upon the lease commencement date. Total rental revenue in the three months ended March 31, 2019 includes both operating and sales-type lease revenue. Operating lease revenue for the three months ended March 31, 2019 was $2.8 million. Rental revenue for the three months ended March 31, 2018 related to operating leases under ASC 840 and includes garment revenue of approximately $0.2 million previously included as a purchase. The revenue and associated cost of revenue of sales-type leases are recognized on the lease commencement date and a net investment in leases is recorded on the Condensed Consolidated Balance Sheet. We bill the patients’ insurance payers monthly over the duration of the rental term. We record the net investment in leases and recognize revenue upon commencement of the lease in the amount of the expected consideration to be received through the monthly payments. Similar to our sales revenue, the transaction price is impacted by multiple factors, including the terms and conditions contracted by various third party payers. As the rental contract resides with the patients, we have elected the portfolio approach, at the payer level, to determine the expected consideration, which considers the impact of early terminations. While the contract is with the patient, in certain circumstances, the third party payer elects an initial rental period with an option to extend. We assess the likelihood of extending the lease at the onset of the lease to determine if the option is reasonably certain to be exercised. As the lease is short-term in nature, we anticipate collection of substantially all of the net investment within the first year of the lease agreement. Completion of these payments represents the fair market value of the equipment, and as such, interest income is not applicable. Sales-type lease revenue and the associated cost of revenue for the three months ended March 31, 2019 was: Three Months Ended March 31, (In thousands) 2019 Sales-type lease revenue $ 3,965 Cost of sales-type lease revenue 1,543 Gross profit $ 2,422

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2019
Income Taxes
Income Taxes	Note 13. 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 adjusting 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 reporting purposes, including for depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable and inventory reserves. Our provision for income taxes included current federal and state income tax expense, as well as deferred federal and state income tax expense. The effective tax rate for the three months ended March 31, 2019 was a benefit of 189.7%, compared to a benefit of 97.1% for the three months ended March 31, 2018. The primary driver of the change in our effective tax rate was attributable to an increase in the tax benefits related to share-based compensation proportionate to pre-tax book income as compared to the prior year's reporting period. We recorded an income tax benefit of $3.1 million and $1.7 million for the three months ended March 31, 2019 and 2018, respectively. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority is more-likely-than-not to 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. As of March 31, 2019 we had an unrecognized tax benefit classified as a non-current liability. We are not currently under examination in any 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 Per Share

Net Income Per Share	3 Months Ended
	Mar. 31, 2019
Net Income Per Share
Net Income (Loss) Per Share Attributable to Common Stockholders	Note 14. Net Income Per Share The following table sets forth the computation of our basic and diluted net income (loss) per share attributable to common stockholders: Three Months Ended March 31, (In thousands, except share and per share data) 2019 2018 Net income (loss) $ 1,472 $ (50) Weighted-average shares outstanding 18,746,751 17,996,672 Effect of restricted stock units, common stock options, and employee stock purchase plan shares 833,096 — Weighted-average shares used to compute diluted net income per share 19,579,847 17,996,672 Net income per share - Basic $ $ Net income per share - Diluted $ $ The following common stock equivalents were excluded from the computation of diluted net income per share for the periods presented because including them would have been anti-dilutive: Three Months Ended March 31, 2019 2018 Restricted stock units 42,691 395,046 Common stock options 165,638 1,445,089 Employee stock purchase plan — 68,114 Total 208,329 1,908,249

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2019
Fair Value Measurements
Fair Value Measurements	Note 15. Fair Value Measurements We determine the fair value of our assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We use a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1). The next highest priority is based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in non-active markets or other observable inputs (Level 2). The lowest priority is given to unobservable inputs (Level 3). The following provides information regarding fair value measurements for our cash equivalents and marketable securities as of March 31, 2019 and December 31, 2018 according to the three-level fair value hierarchy: At March 31, 2019 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (In thousands) (Level 1) (Level 2) (Level 3) Total Recurring Fair Value Measurements: Money market mutual funds $ 7,055 $ — $ — $ 7,055 U.S. government and agency obligations 16,402 999 — 17,401 Corporate debt securities — 3,983 — 3,983 Total $ 23,457 $ 4,982 $ — $ 28,439 At December 31, 2018 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (In thousands) (Level 1) (Level 2) (Level 3) Total Recurring Fair Value Measurements: Money market mutual funds $ 2,447 $ — $ — $ 2,447 U.S. government and agency obligations 16,326 2,994 — 19,320 Corporate debt securities — 6,466 — 6,466 Total $ 18,773 $ 9,460 $ — $ 28,233 During the three months ended March 31, 2019, there were no transfers within the three-level hierarchy. A significant transfer is recognized when the inputs used to value a security have been changed, which merits a transfer between the disclosed levels of the valuation hierarchy. The fair values for our money market mutual funds, U.S. government and agency obligations and corporate debt securities are determined based on valuations provided by external investment managers who obtain them from a variety of industry standard data providers. The carrying amounts of financial instruments such as cash equivalents, accounts receivable, other assets, accounts payable, accrued expenses and other liabilities approximate their related fair values due to the short-term maturities of these items. Non-financial assets, such as equipment and leasehold improvements, and intangible assets are subject to non-recurring fair value measurements if they are deemed impaired. As of December 31, 2018, we re-measured the value of our intangible assets related to the Actitouch product line to their fair value, which was deemed to be $0 using level 3 measurements. We had no re-measurements of non-financial assets to fair value in the three months ended March 31, 2019.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2019
Summary of Significant Accounting Policies
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. We have reclassified certain prior year amounts to conform to the current year’s presentation. The results for the three months ended March 31, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019, or for any other interim period or for any future year. The condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.
Principles of Consolidation	Principles of Consolidation Our accompanying unaudited condensed consolidated financial statements include the accounts of Tactile Systems Technology, Inc. and its wholly owned subsidiary, Swelling Solutions, Inc. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and to disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Comprehensive Income	Comprehensive Income Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Our comprehensive income represents net income adjusted for unrealized gains and losses on available-for-sale marketable securities.
JOBS Act Accounting Election	JOBS Act Accounting Election Prior to December 31, 2018, we were an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and as a result we were 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 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. However, as of the last business day of our second fiscal quarter of 2018, the market value of our common stock that was held by non-affiliates exceeded $700 million, and as a result, we no longer qualified as an emerging growth company as of December 31, 2018 and are no longer able to take advantage of the extended transition period for adopting new or revised accounting standards. Therefore, beginning December 31, 2018, we were required to adopt new or revised accounting standards when they are applicable to public companies that are not emerging growth companies.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (Topic 842) (“ASC 842”), which supersedes the existing guidance for lease accounting, “Leases” (Topic 840) (“ASC 840”). ASC 842 requires lessees to recognize a lease liability and a right of use asset for all leases that extend beyond one year. As a result of our change in filing status, we adopted this standard using the modified retrospective transition approach at the adoption date of January 1, 2019. This approach does not require restatement of previous periods. We completed a qualitative and quantitative assessment of our leases from both a lessee and lessor perspective. As part of our process, we elected to utilize certain practical expedients that were provided for transition relief. Accordingly, we did not reassess expired or existing contracts, lease classifications or related initial direct costs as part of our assessment process for either lessee or lessor leases. Additionally, we elected the practical expedient to treat lease and nonlease components of fixed payments due to the lessor as one, and therefore no separate allocation was required on the initial implementation date of January 1, 2019, and thereafter. The adoption of this standard, from a lessee perspective, resulted in us recording Right of Use (“ROU”) operating lease assets and liabilities of approximately $3.1 million on the Condensed Consolidated Balance Sheet as of January 1, 2019, with no impact to retained earnings. In addition, we elected as an accounting policy, not to record leases with an initial term of less than 12 months. From a lessor perspective, the application of ASC 842 to our rental revenue, which was recognized as month-to-month, cancelable leases in accordance with ASC 840 through December 31, 2018, resulted in recognizing rental revenue as a sales-type lease under ASC 842 thereafter. Rental sales agreements that commenced prior to December 31, 2018, will continue to be recognized as month-to-month, cancelable leases until they are completed, as we elected the practical expedient to not reassess the lease classification for leases in existence upon adoption. As such, rental agreements commencing after January 1, 2019 were recorded as sales-type leases with the associated revenue and cost of revenue recognized on the lease commencement date and a corresponding net investment in leases on the Condensed Consolidated Balance Sheet. (See Note 10 – “Commitments and Contingencies” and Note 12 – “Revenue” for additional information and required disclosures.) 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 will be effective for us for interim and annual periods beginning January 1, 2020. Therefore, we plan to further evaluate the anticipated impact of the adoption of this ASU on our condensed consolidated financial statements in future periods. In July 2018, the FASB issued ASU No. 2018-07 “Improvements to Non-employee Share-Based Payment Accounting,” which expands the scope of ASC 718 – “Stock Based Compensation” to include share-based payment transactions for acquiring goods and services from non-employees. The ASU was effective for us beginning January 1, 2019, including interim periods within the fiscal year. We have early adopted ASU 2018-07 for the quarter ended March 31, 2019 and it did not have a material impact on our condensed consolidated financial statements.

Marketable Securities (Tables)

Marketable Securities (Tables)	3 Months Ended
	Mar. 31, 2019
Marketable Securities
Schedule of marketable securities	At March 31, 2019 Amortized Unrealized Fair (In thousands) Cost Gains Losses Value U.S. government and agency obligations $ 17,391 $ 13 $ 3 $ 17,401 Corporate debt securities and certificates of deposit 3,973 11 1 3,983 Marketable securities $ 21,364 $ 24 $ 4 $ 21,384 At December 31, 2018 Amortized Unrealized Fair (In thousands) Cost Gains Losses Value U.S. government and agency obligations $ 19,332 $ 5 $ 17 $ 19,320 Corporate debt securities and certificates of deposit 6,464 7 5 6,466 Marketable securities $ 25,796 $ 12 $ 22 $ 25,786
Schedule of unrealized losses on investment	At March 31, 2019 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Losses Value Losses Value Losses U.S. government and agency obligations $ 7,474 $ 2 $ 999 $ 1 $ 8,473 $ 3 Corporate debt securities and certificates of deposit 1,498 1 — — 1,498 1 Marketable securities $ 8,972 $ 3 $ 999 $ 1 $ 9,971 $ 4 At December 31, 2018 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Losses Value Losses Value Losses U.S. government and agency obligations $ 11,884 $ 11 $ 2,993 $ 6 $ 14,877 $ 17 Corporate debt securities and certificates of deposit 2,993 3 999 2 3,992 5 Marketable securities $ 14,877 $ 14 $ 3,992 $ 8 $ 18,869 $ 22

Inventories (Tables)

Inventories (Tables)	3 Months Ended
	Mar. 31, 2019
Inventories
Schedule of inventories	(In thousands) At March 31, 2019 At December 31, 2018 Finished goods $ 4,656 $ 5,318 Component parts and work-in-process 6,665 5,871 Total inventories $ 11,321 $ 11,189

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2019
Intangible Assets
Schedule of finite lived intangible assets	Weighted- At March 31, 2019 At December 31, 2018 Average Gross Gross Amortization Carrying Accumulated Net Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Amount Amortization Amount Patents 11 years $ 4,298 $ 157 $ 4,141 $ 4,253 $ 71 $ 4,182 Defensive intangible assets 5 years 1,126 130 996 1,126 82 1,044 Customer accounts 4 years 125 18 107 125 12 113 Total $ 5,549 $ 305 $ 5,244 $ 5,504 $ 165 $ 5,339
Schedule of future amortization expense	(In thousands) 2019 (April 1 - December 31) $ 419 2020 558 2021 558 2022 558 2023 491 Thereafter 2,660 Total $ 5,244

Accrued Expenses (Tables)

Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2019
Accrued Expenses
Schedule of Accrued Expenses	(In thousands) At March 31, 2019 At December 31, 2018 Warranty $ 873 $ 841 Legal and consulting 710 319 Travel and business 622 557 Accrued taxes 262 115 Clinical studies 33 60 Acquisition earn-out — 375 Deferred rent — 155 Other 185 358 Total $ 2,685 $ 2,780

Warranty Reserves (Tables)

Warranty Reserves (Tables)	3 Months Ended
	Mar. 31, 2019
Warranty Reserves
Schedule of warranty reserves	Three Months Ended March 31, (In thousands) 2019 2018 Beginning balance $ 2,566 $ 1,672 Warranty provision 418 351 Processed warranty claims (257) (203) Ending balance $ 2,727 $ 1,820 Accrued warranty reserve, current $ 873 $ 648 Accrued warranty reserve, non-current 1,854 1,172 Total accrued warranty reserve $ 2,727 $ 1,820

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2019
Commitments and Contingencies
Summary of lease-related assets and liabilities	(In thousands) At March 31, 2019 Right of use operating lease assets $ 3,396 Right of use operating lease liabilities: Current $ 1,147 Non-current 2,318 Total $ 3,465 Operating leases: Weighted average remaining lease term 3.5 years Weighted average discount rate (1) (1) Discount rates were established as of January 1, 2019, the adoption date
Summary of undiscounted cash flows	(In thousands) 2019 (April 1 - December 31) $ 1,000 2020 1,082 2021 741 2022 456 2023 383 Thereafter 32 Total minimum lease payments 3,694 Less: amount of lease payments representing interest (229) Present value of future minimum lease payments 3,465 Less: current obligations under leases (1,147) Long-term lease obligations $ 2,318

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	3 Months Ended
	Mar. 31, 2019
Schedule of allocation of stock-based compensation expense	Three Months Ended March 31, (In thousands) 2019 2018 Cost of revenue $ 98 $ 40 Sales and marketing expenses 1,166 652 Research and development expenses 80 69 Reimbursement, general and administrative expenses 1,439 720 Total stock-based compensation expense $ 2,783 $ 1,481
Schedule of stock option activity	Weighted- Weighted- Average Average Aggregate Options Exercise Price Remaining Intrinsic (In thousands except options and per share data) Outstanding Per Share (1) Contractual Life Value (2) Balance at December 31, 2018 1,076,535 $ 17.94 6.5 years $ 31,172 Granted 73,948 $ 72.64 Exercised (101,016) $ 8.53 $ 5,731 Forfeited (10,416) $ 28.44 Balance at March 31, 2019 1,039,051 $ 22.64 6.4 years $ 33,527 Options exercisable at March 31, 2019 586,039 $ 8.57 5.1 years $ 25,887 (1) The exercise price of each option granted during the period shown was equal to the market price of the underlying stock on the date of grant. (2) The aggregate intrinsic value of options exercised represents the difference between the exercise price of the option and the closing stock price of our common stock on the date of exercise. The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period.
Time-Based Restricted Stock Units
Schedule of stock-settled restricted stock unit activity	Weighted- Average Grant Aggregate Units Date Fair Value Intrinsic (In thousands except unit and per unit data) Outstanding Per Unit Value (1) Balance at December 31, 2018 309,632 $ 23.69 $ 14,104 Granted 43,258 $ 72.38 Vested (131,363) $ 15.76 Cancelled (244) $ 17.35 Balance at March 31, 2019 221,283 $ 37.92 $ 11,666 Deferred and unissued at March 31, 2019 (2) 4,432 $ 35.43 $ 234 (1) The aggregate intrinsic value of restricted stock units outstanding was based on our closing stock price on the last trading day of the period. (2) For the three months ended March 31, 2019, there were 567 restricted stock units granted to non-employee directors in lieu of their quarterly cash retainer payments. These restricted stock units were fully vested upon grant and represent the right to receive one share of common stock, per unit, upon the earlier of the directors’ termination of service as a director of ours or the occurrence of a change of control of us. These restricted stock units are included in the “Granted” line in the table above and are also included in the “Vested” line in the table above due to their being fully vested upon grant. As of March 31, 2019, there were 4,432 outstanding restricted stock units that have been previously granted to non-employee directors in lieu of their quarterly director retainer payments. These restricted stock units are not included in the “Balance at March 31, 2019” line in the table above because they are fully vested.
Performance-based stock-settled restricted stock units
Schedule of stock-settled restricted stock unit activity	Performance- Weighted- Based Average Grant Aggregate Units Date Fair Value Intrinsic (In thousands except unit and per unit data) Outstanding Per Unit Value (1) Balance at December 31, 2018 65,427 $ 33.62 $ 2,980 Granted 25,724 $ 72.64 Vested — $ — Cancelled — $ — Balance at March 31, 2019 91,151 $ 44.63 $ 4,805 (1) The aggregate intrinsic value of performance-based restricted stock units outstanding was based on our closing stock price on the last trading day of the period.

Revenue (Tables)

Revenue (Tables)	3 Months Ended
	Mar. 31, 2019
Revenue
Summary of revenue disaggregated by product	Three Months Ended March 31, (In thousands) 2019 2018 Revenues Flexitouch system $ 34,109 $ 24,530 Entre/Actitouch systems 3,508 2,318 Total $ 37,617 $ 26,848 Percentage of total revenues Flexitouch system 91 % 91 % Entre/Actitouch systems 9 % 9 % Total 100 % 100 %
Summary of revenues from third-party payers	Three Months Ended March 31, (In thousands) 2019 2018 Private insurers and other payers $ 25,929 $ 18,115 Veterans Administration 7,670 6,179 Medicare 4,018 2,554 Total $ 37,617 $ 26,848
Sales-type lease revenue and the associated cost of goods sold	Three Months Ended March 31, (In thousands) 2019 Sales-type lease revenue $ 3,965 Cost of sales-type lease revenue 1,543 Gross profit $ 2,422

Net Income Per Share (Tables)

Net Income Per Share (Tables)	3 Months Ended
	Mar. 31, 2019
Net Income Per Share
Schedule of computation of the basic and diluted net income (loss) per share attributable to common stockholders	Three Months Ended March 31, (In thousands, except share and per share data) 2019 2018 Net income (loss) $ 1,472 $ (50) Weighted-average shares outstanding 18,746,751 17,996,672 Effect of restricted stock units, common stock options, and employee stock purchase plan shares 833,096 — Weighted-average shares used to compute diluted net income per share 19,579,847 17,996,672 Net income per share - Basic $ $ Net income per share - Diluted $ $
Schedule of potentially dilutive securities outstanding	Three Months Ended March 31, 2019 2018 Restricted stock units 42,691 395,046 Common stock options 165,638 1,445,089 Employee stock purchase plan — 68,114 Total 208,329 1,908,249

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2019
Fair Value Measurements
Schedule of fair value measurements for our cash equivalents and marketable securities	At March 31, 2019 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (In thousands) (Level 1) (Level 2) (Level 3) Total Recurring Fair Value Measurements: Money market mutual funds $ 7,055 $ — $ — $ 7,055 U.S. government and agency obligations 16,402 999 — 17,401 Corporate debt securities — 3,983 — 3,983 Total $ 23,457 $ 4,982 $ — $ 28,439 At December 31, 2018 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (In thousands) (Level 1) (Level 2) (Level 3) Total Recurring Fair Value Measurements: Money market mutual funds $ 2,447 $ — $ — $ 2,447 U.S. government and agency obligations 16,326 2,994 — 19,320 Corporate debt securities — 6,466 — 6,466 Total $ 18,773 $ 9,460 $ — $ 28,233

Nature of Business and Operat_2

Nature of Business and Operations (Details) - IPO $ / shares in Units, $ in Millions	Aug. 02, 2016USD ($)$ / sharesshares
Subsidiary, Sale of Stock
Number of shares of common stock sold | shares	4,120,000
IPO price per share (in dollars per share) | $ / shares	$ 10
Proceeds from IPO	$ 35.4
Expense Relating To Initial Public Offering	$ 2.9

Basis of presentation (Details)

Basis of presentation (Details) $ in Millions	3 Months Ended
	Jun. 30, 2018USD ($)
Basis of Presentation
Minimum market value of common stock that was held by non-affiliates	$ 700

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jan. 01, 2019
Recent Accounting Pronouncements
Right of Use assets	$ 3,396
Lease liabilities	$ 3,465
Accounting Standards Update 2016-02 [Member] | Restatement
Recent Accounting Pronouncements
Right of Use assets		$ 3,100
Lease liabilities		$ 3,100

Marketable Securities (Details)

Marketable Securities (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Marketable Securities
Amortized Cost	$ 21,364,000	$ 25,796,000
Unrealized Gains	24,000	12,000
Unrealized Losses	4,000	22,000
Fair Value	21,384,000	25,786,000
Fair value less than 12 months	8,972,000	14,877,000
Unrealized losses, less than 12 months	3,000	14,000
Fair value, 12 months or more	999,000	3,992,000
Unrealized losses, 12 months or more	1,000	8,000
Fair value, Total	9,971,000	18,869,000
Unrealized loss, Total	4,000	22,000
Marketable securities sold	$ 0
Minimum
Marketable Securities
Contractual maturities of marketable securities	10 months
Maximum
Marketable Securities
Contractual maturities of marketable securities	24 months
U.S. government and agency obligations
Marketable Securities
Amortized Cost	$ 17,391,000	19,332,000
Unrealized Gains	13,000	5,000
Unrealized Losses	3,000	17,000
Fair Value	17,401,000	19,320,000
Fair value less than 12 months	7,474,000	11,884,000
Unrealized losses, less than 12 months	2,000	11,000
Fair value, 12 months or more	999,000	2,993,000
Unrealized losses, 12 months or more	1,000	6,000
Fair value, Total	8,473,000	14,877,000
Unrealized loss, Total	3,000	17,000
Corporate debt securities
Marketable Securities
Amortized Cost	3,973,000	6,464,000
Unrealized Gains	11,000	7,000
Unrealized Losses	1,000	5,000
Fair Value	3,983,000	6,466,000
Fair value less than 12 months	1,498,000	2,993,000
Unrealized losses, less than 12 months	1,000	3,000
Fair value, 12 months or more		999,000
Unrealized losses, 12 months or more		2,000
Fair value, Total	1,498,000	3,992,000
Unrealized loss, Total	$ 1,000	$ 5,000

Inventories (Details)

Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Inventories
Finished goods	$ 4,656	$ 5,318
Component parts and work-in-process	6,665	5,871
Total inventories	$ 11,321	$ 11,189

Intangible Assets (Details)

Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Patents and Intangibles
Gross Carrying Amount	$ 5,549		$ 5,504
Accumulated Amortization	305		165
Total	5,244		5,339
Amortization expense	100	$ 100
Future Amortization
2019 (April 1 - December 31)	419
2020	558
2021	558
2022	558
2023	491
Thereafter	2,660
Total	$ 5,244		$ 5,339
Patents
Patents and Intangibles
Weighted Average Amortization Period	11 years		11 years
Gross Carrying Amount	$ 4,298		$ 4,253
Accumulated Amortization	157		71
Total	4,141		4,182
Future Amortization
Total	$ 4,141		$ 4,182
Defensive intangible assets
Patents and Intangibles
Weighted Average Amortization Period	5 years		5 years
Gross Carrying Amount	$ 1,126		$ 1,126
Accumulated Amortization	130		82
Total	996		1,044
Future Amortization
Total	$ 996		$ 1,044
Customer accounts
Patents and Intangibles
Weighted Average Amortization Period	4 years		4 years
Gross Carrying Amount	$ 125		$ 125
Accumulated Amortization	18		12
Total	107		113
Future Amortization
Total	$ 107		$ 113

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Accrued Expenses
Warranty	$ 873	$ 841	$ 648
Legal and consulting	710	319
Travel and business	622	557
Accrued taxes	262	115
Clinical studies	33	60
Acquisition earn-out		375
Deferred rent		155
Other	185	358
Total	$ 2,685	$ 2,780

Warranty Reserves (Details)

Warranty Reserves (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning balance	$ 2,566	$ 1,672
Warranty provision	418	351
Processed warranty claims	(257)	(203)
Ending balance	2,727	1,820
Accrued warranty reserve, current	873	648	$ 841
Accrued warranty reserve, non-current	1,854	1,172	$ 1,725
Total accrued warranty reserve	$ 2,727	$ 1,820

Credit Agreement (Details)

Credit Agreement (Details) - USD ($)	Mar. 25, 2019	Mar. 24, 2019	Aug. 03, 2018	Mar. 31, 2019
Credit Agreement
Annual business plan and budget covenant (in years)	1 year	3 years
Line of credit			$ 10,000,000
Aggregate Borrowings			25,000,000
Total aggregate principal amount of loans			$ 35,000,000
Credit facility outstanding amount				$ 0
Maximum
Credit Agreement
Unused line fee (as a percent)			0.275%
Minimum
Credit Agreement
Unused line fee (as a percent)			0.20%
Federal Funds
Credit Agreement
Basis spread (as a percent)			0.50%
Base Rate
Credit Agreement
Basis spread (as a percent)			1.00%
Base Rate | Maximum
Credit Agreement
Basis spread (as a percent)			1.15%
Base Rate | Minimum
Credit Agreement
Basis spread (as a percent)			0.40%
LIBOR | Maximum
Credit Agreement
Basis spread (as a percent)			2.15%
LIBOR | Minimum
Credit Agreement
Basis spread (as a percent)			1.40%

Commitments and Contingencies -

Commitments and Contingencies - Lease Obligations (Details)	1 Months Ended	3 Months Ended
	Oct. 31, 2018period	Mar. 31, 2019item	Jan. 01, 2019
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms		12 months
Building
Lessee, Lease, Description [Line Items]
Option to renew	true
Number of renewal option | period	2
Renewal term	5 years
Building | Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms			1 year
Building | Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms			5 years
Vehicles
Lessee, Lease, Description [Line Items]
Remaining lease terms		367 days
Number of vehicles with agreements within the initial, noncancelable lease term | item		40
Computer and Office Equipment
Lessee, Lease, Description [Line Items]
Option to renew		true
Computer and Office Equipment | Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms			7 months
Computer and Office Equipment | Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms			4 years 6 months

Commitments and Contingencies_2

Commitments and Contingencies - Lease related assets and liabilities (Details) $ in Thousands	Mar. 31, 2019USD ($)
Lease-related assets and liabilities
Right of use operating lease assets	$ 3,396
Right of use operating lease liabilities:Current	1,147
Right of use operating lease liabilities:Non-Current	2,318
Operating Lease, Liability, Total	$ 3,465
Weighted average remaining lease term	3 years 6 months
Weighted average discount rate	5.05%

Commitments and Contingencies_3

Commitments and Contingencies - Undiscounted cash flows (Details) $ in Thousands	Mar. 31, 2019USD ($)
Undiscounted cash flows
2019 (April 1 - December 31)	$ 1,000
2020	1,082
2021	741
2022	456
2023	383
Thereafter	32
Total minimum lease payments	3,694
Less: amount of lease payments representing interest	(229)
Operating Lease, Liability, Total	3,465
Less: current obligations under leases	(1,147)
Long-term lease obligations	$ 2,318

Commitments and Contingencies_4

Commitments and Contingencies - Lease commitments and operating lease cost (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Commitments and Contingencies
Additional lease commitments	$ 19.9
Operating lease cost	0.3
Cash paid for operating lease liabilities	$ 0.3
Rent expense		$ 0.3

Commitments and Contingencies_5

Commitments and Contingencies - Major Vendors (Details) - item	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Commitments and Contingencies
Number of vendors	3	2
Purchases | Vendor
Commitments and Contingencies
Accounts Receivable (in percentage)	40.00%	33.00%

Commitments and Contingencies_6

Commitments and Contingencies - Purchase Commitments (Details) $ in Millions	Mar. 31, 2019USD ($)
Purchase commitments
Purchase orders issued	$ 19.5

Commitments and Contingencies_7

Commitments and Contingencies - Retirement Plan (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
401(k)
Retirement Plan
Discretionary contributions	$ 0.1	$ 0.1

Stockholders' Equity - Stock-Ba

Stockholders' Equity - Stock-Based Compensation General Information (Details)	Mar. 31, 2019shares
2016 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	4,800,000

Stockholders' Equity - Stock-_2

Stockholders' Equity - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	Jan. 01, 2019	Jan. 01, 2018	Jan. 01, 2017	Mar. 31, 2019	Mar. 31, 2018
Stock-based compensation
Compensation expense				$ 2,783	$ 1,481
Former executive
Stock-based compensation
Compensation expense				300
Former executive | ASU No. 2018-07
Stock-based compensation
Terms of employee's award agreement	$ 200
Revaluation of the unvested portion	$ 100
Cost of revenue
Stock-based compensation
Compensation expense				98	40
Sales and marketing
Stock-based compensation
Compensation expense				1,166	652
Research and development
Stock-based compensation
Compensation expense				80	69
Reimbursement, general and administrative
Stock-based compensation
Compensation expense				$ 1,439	$ 720
2016 Plan
Stock-based compensation
Shares available for future issuance				5,092,296
Automatic annual increase to the number of shares reserved and available for issuance as a percentage of outstanding common stock (as a percent)				5.00%
Automatic annual increase to the number of shares reserved and available for issuance				2,500,000
Increase in number of shares reserved and available for issuance		892,318	841,686

Stockholders' Equity - Stock Op

Stockholders' Equity - Stock Options and Restricted Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Mar. 31, 2019	Dec. 31, 2018
Stock-based compensation, general disclosures
Stock-based compensation expense	$ 2,783	$ 1,481
Common Stock
Options
Exercised	(231,814)	(230,532)
Weighted Average Grant Date Fair Value Per Share
Weighted average remaining contractual life (in years)	5 years 1 month 6 days
Common stock options
Stock-based compensation, general disclosures
Term (in years)	7 years
Stock-based compensation expense	$ 700	$ 500
Total unrecognized pre-tax compensation expense related to nonvested stock option awards				$ 7,200
Weighted-average period over which unrecognized compensation cost is expected to be recognized	2 years 10 months 24 days
Options
Outstanding at beginning of period	1,076,535
Granted	73,948
Exercised	(101,016)
Forfeited	(10,416)
Outstanding at end of period	1,039,051		1,076,535
Weighted Average Exercise Price ($/share)
Outstanding at beginning of period	$ 17.94
Granted	72.64
Exercised	8.53
Forfeited	28.44
Outstanding at end of period	$ 22.64		$ 17.94
Other information
Options exercisable Number of Exercisable		906,063		586,039
Options exercisable, weighted-average exercise price		$ 2.75		$ 8.57
Options outstanding				$ 33,527	$ 31,172
Options exercisable				$ 25,887
Exercised	$ 5,731
Weighted Average Grant Date Fair Value Per Share
Weighted average remaining contractual life (in years)	6 years 4 months 24 days		6 years 6 months
Restricted stock unit awards, Average Intrinsic Value
Number of option outstanding	1,076,535		1,076,535	1,039,051	1,076,535
Options Outstanding, weighted average exercise price	$ 17.94		$ 17.94	$ 22.64	$ 17.94
Options exercisable Number of Exercisable		906,063		586,039
Options exercisable, weighted-average exercise price		$ 2.75		$ 8.57
Common stock options | Minimum
Stock-based compensation, general disclosures
Vesting period (in years)	3 years
Term (in years)	7 years
Common stock options | Maximum
Stock-based compensation, general disclosures
Vesting period (in years)	4 years
Term (in years)	10 years
Time-Based Restricted Stock Units
Number of Stock-Settled Restricted Stock Unit Awards Outstanding
Number of share of common stock that restricted stock unit has the right to convert to				1
Time-Based Restricted Stock Units | Non-employee Directors
Number of Stock-Settled Restricted Stock Unit Awards Outstanding
Granted (in shares)	567
Number of granted and vested restricted stock units				4,432
Performance-based stock-settled restricted stock units
Stock-based compensation, general disclosures
Stock-based compensation expense		$ 400
2016 Plan | Time-Based Restricted Stock Units
Stock-based compensation, general disclosures
Stock-based compensation expense	$ 800
Weighted-average period over which unrecognized compensation cost is expected to be recognized	2 years 2 months 12 days
Total unrecognized pre-tax compensation expense related to awards				$ 7,000
Number of Stock-Settled Restricted Stock Unit Awards Outstanding
Restricted stock unit awards outstanding at the beginning of the period (in shares)	309,632
Granted (in shares)	43,258
Vested (in shares)	(131,363)
Cancelled (in shares)	(244)
Restricted stock unit awards outstanding at the end of the period (in shares)	221,283		309,632
Deferred and unissued (in shares)				4,432
Weighted Average Grant Date Fair Value Per Share
Restricted stock unit awards outstanding at the beginning of the period (in dollars per share)	$ 23.69
Granted (in dollars per share)	72.38
Vested (in dollars per share)	15.76
Cancelled (in dollars per share)	17.35
Restricted stock unit awards outstanding at the end of the period (in dollars per share)	$ 37.92		$ 23.69
Deferred and unissued (in dollars per share)				$ 35.43
Restricted stock unit awards, Average Intrinsic Value
Restricted stock unit awards, Average Intrinsic Value				$ 11,666	$ 14,104
Restricted stock unit awards deferred and unissued, Average Intrinsic Value				234
2016 Plan | Time-Based Restricted Stock Units | Minimum
Stock-based compensation, general disclosures
Vesting period (in years)	1 year
2016 Plan | Time-Based Restricted Stock Units | Maximum
Stock-based compensation, general disclosures
Vesting period (in years)	3 years
2016 Plan | Performance-based stock-settled restricted stock units
Stock-based compensation, general disclosures
Stock-based compensation expense	$ 700	$ 100
Estimated Payout of percentage		150.00%
Weighted-average period over which unrecognized compensation cost is expected to be recognized	2 years 4 months 24 days
Total unrecognized pre-tax compensation expense related to awards				3,800
Number of Stock-Settled Restricted Stock Unit Awards Outstanding
Restricted stock unit awards outstanding at the beginning of the period (in shares)	65,427
Granted (in shares)	25,724
Restricted stock unit awards outstanding at the end of the period (in shares)	91,151		65,427
Weighted Average Grant Date Fair Value Per Share
Restricted stock unit awards outstanding at the beginning of the period (in dollars per share)	$ 33.62
Granted (in dollars per share)	72.64
Restricted stock unit awards outstanding at the end of the period (in dollars per share)	$ 44.63		$ 33.62
Restricted stock unit awards, Average Intrinsic Value
Restricted stock unit awards, Average Intrinsic Value				$ 4,805	$ 2,980
2016 Plan | Performance-based stock-settled restricted stock units | Minimum
Number of Stock-Settled Restricted Stock Unit Awards Outstanding
Percentage to earn or vest the performance-based stock-settled restricted stock units	50.00%
2016 Plan | Performance-based stock-settled restricted stock units | Maximum
Number of Stock-Settled Restricted Stock Unit Awards Outstanding
Percentage to earn or vest the performance-based stock-settled restricted stock units	150.00%
2016 Plan | Tranche one | Performance-based stock-settled restricted stock units
Stock-based compensation, general disclosures
Compensation arrangement	33.33%
2016 Plan | Tranche two | Performance-based stock-settled restricted stock units
Stock-based compensation, general disclosures
Compensation arrangement	66.67%

Stockholders' Equity - Employee

Stockholders' Equity - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands	Jan. 01, 2018	Jan. 01, 2017	Mar. 31, 2019	Mar. 31, 2018	Apr. 27, 2017
Stockholders' Equity
Stock-based compensation expense			$ 2,783	$ 1,481
Employee Stock Purchase Plan
Stockholders' Equity
Purchase price of common stock under plan (as a percent)			85.00%
Offering period (in months)			6 months
Incremental share increase (as a percent)			1.00%
Incremental share increase (in shares)			500,000
Increase in number of shares reserved and available for issuance	178,463	168,337
Shares reserved			1,542,576		1,600,000
Stock-based compensation expense			$ 300	$ 300

Revenue (Details)

Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue
Revenues	$ 37,617	$ 26,848
Percentage of total revenues (in percent)	100.00%	100.00%
Operating lease revenue	$ 2,800
Rental revenue		$ 200
Revenues from sale type lease
Sales-type lease revenue	3,965
Cost of sales-type lease revenue	1,543
Gross profit	2,422
Veterans Administration
Revenue
Revenues	7,670	6,179
Medicare
Revenue
Revenues	4,018	2,554
Private insurers and other payers
Revenue
Revenues	25,929	18,115
Flexitouch system
Revenue
Revenues	$ 34,109	$ 24,530
Percentage of total revenues (in percent)	91.00%	91.00%
Rental revenue
Revenue
Revenues	$ 6,786	$ 3,201
Entre/Actitouch systems
Revenue
Revenues	$ 3,508	$ 2,318
Percentage of total revenues (in percent)	9.00%	9.00%

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Taxes
Effective rate (as percent)	189.70%	97.10%
Income tax benefit	$ (3,113)	$ (1,686)

Net Income Per Share (Details)

Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net Income Per Share
Net (loss) income	$ 1,472	$ (50)
Weighted-average shares outstanding	18,746,751	17,996,672
Effect of restricted stock units, common stock options, and employee stock purchase plan shares	833,096
Weighted-average shares used to compute diluted net income per share	19,579,847	17,996,672
Net income per share - Basic	$ 0.08	$ 0
Net income per share - Diluted	$ 0.08	$ 0

Net Income Per Share (Details_2

Net Income Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net Income (Loss) Per Share Attributable to Common Stockholders
Antidilutive securities excluded from computation of earnings per share	208,329	1,908,249
Restricted Stock Units
Net Income (Loss) Per Share Attributable to Common Stockholders
Antidilutive securities excluded from computation of earnings per share	42,691	395,046
Employee stock purchase plan
Net Income (Loss) Per Share Attributable to Common Stockholders
Antidilutive securities excluded from computation of earnings per share		68,114
Common stock options
Net Income (Loss) Per Share Attributable to Common Stockholders
Antidilutive securities excluded from computation of earnings per share	165,638	1,445,089

Fair Value Measurements (Detail

Fair Value Measurements (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fair Value Measurements
Available for sale debt securities	$ 21,384	$ 25,786
Amount of transfers of marketable securities within the three level hierarchy	0
Intangible assets	5,244	5,339
U.S. government and agency obligations
Fair Value Measurements
Available for sale debt securities	17,401	19,320
Corporate debt securities
Fair Value Measurements
Available for sale debt securities	3,983	6,466
Recurring
Fair Value Measurements
Available for sale debt securities	28,439	28,233
Recurring | Money market mutual funds
Fair Value Measurements
Money market mutual funds	7,055	2,447
Recurring | U.S. government and agency obligations
Fair Value Measurements
Available for sale debt securities	17,401	19,320
Recurring | Corporate debt securities
Fair Value Measurements
Available for sale debt securities	3,983	6,466
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value Measurements
Available for sale debt securities	23,457	18,773
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market mutual funds
Fair Value Measurements
Money market mutual funds	7,055	2,447
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government and agency obligations
Fair Value Measurements
Available for sale debt securities	16,402	16,326
Recurring | Significant Other Observable Inputs (Level 2)
Fair Value Measurements
Available for sale debt securities	4,982	9,460
Recurring | Significant Other Observable Inputs (Level 2) | U.S. government and agency obligations
Fair Value Measurements
Available for sale debt securities	999	2,994
Recurring | Significant Other Observable Inputs (Level 2) | Corporate debt securities
Fair Value Measurements
Available for sale debt securities	3,983	6,466
Non-recurring | Significant Unobservable Inputs (Level 3) | Entre/Actitouch systems
Fair Value Measurements
Intangible assets	$ 0	$ 0