Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 02, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-37799 | |
Entity Registrant Name | Tactile Systems Technology, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 41-1801204 | |
Entity Address, Address Line One | 3701 Wayzata Blvd, Suite 300 | |
Entity Address, City or Town | Minneapolis | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55416 | |
City Area Code | 612 | |
Local Phone Number | 355-5100 | |
Title of 12(b) Security | Common Stock, Par Value $0.001 Per Share | |
Trading Symbol | TCMD | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 23,497,557 | |
Entity Central Index Key | 0001027838 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 66,036 | $ 21,929 |
Accounts receivable | 43,879 | 54,826 |
Net investment in leases | 13,603 | 16,130 |
Inventories | 23,498 | 23,124 |
Prepaid expenses and other current assets | 4,674 | 3,754 |
Total current assets | 151,690 | 119,763 |
Non-current assets | ||
Property and equipment, net | 5,486 | 6,077 |
Right of use operating lease assets | 19,303 | 21,322 |
Intangible assets, net | 47,628 | 50,375 |
Goodwill | 31,063 | 31,063 |
Accounts receivable, non-current | 14,636 | 23,061 |
Deferred income taxes | 20,717 | |
Other non-current assets | 2,784 | 3,335 |
Total non-current assets | 141,617 | 135,233 |
Total assets | 293,307 | 254,996 |
Current liabilities | ||
Accounts payable | 6,402 | 9,984 |
Note payable | 2,956 | 2,968 |
Earn-out, current | 5,575 | 13,050 |
Accrued payroll and related taxes | 14,784 | 17,100 |
Accrued expenses | 5,327 | 9,240 |
Income taxes payable | 2,092 | 2,336 |
Operating lease liabilities | 2,596 | 2,500 |
Other current liabilities | 5,886 | 7,152 |
Total current liabilities | 45,618 | 64,330 |
Non-current liabilities | ||
Revolving line of credit, non-current | 16,677 | 24,916 |
Note payable, non-current | 26,915 | 20,979 |
Accrued warranty reserve, non-current | 1,781 | 2,207 |
Income taxes payable, non-current | 443 | 298 |
Operating lease liabilities, non-current | 19,043 | 20,866 |
Total non-current liabilities | 64,859 | 69,266 |
Total liabilities | 110,477 | 133,596 |
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 September 30, 2023 and December 31, 2022 | ||
Common stock, $0.001 par value, 300,000,000 shares authorized; 23,497,557 shares issued and outstanding as of September 30, 2023; 20,252,677 shares issued and outstanding as of December 31, 2022 | 23 | 20 |
Additional paid-in capital | 172,115 | 131,001 |
Retained earnings (accumulated deficit) | 10,692 | (9,621) |
Total stockholders' equity | 182,830 | 121,400 |
Total liabilities and stockholders' equity | $ 293,307 | $ 254,996 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
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 | 23,497,557 | 20,252,677 |
Common stock, shares, outstanding | 23,497,557 | 20,252,677 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Total revenue | $ 69,586 | $ 65,262 | $ 196,771 | $ 172,885 |
Total cost of revenue | 20,227 | 18,468 | 57,645 | 49,006 |
Gross profit | 49,359 | 46,794 | 139,126 | 123,879 |
Operating expenses | ||||
Sales and marketing | 26,030 | 26,583 | 80,538 | 79,335 |
Research and development | 1,964 | 1,581 | 6,030 | 4,949 |
Reimbursement, general and administrative | 16,449 | 16,257 | 46,874 | 47,369 |
Intangible asset amortization and earn-out | (3,073) | 3,993 | (557) | 12,834 |
Total operating expenses | 41,370 | 48,414 | 132,885 | 144,487 |
Income (loss) from operations | 7,989 | (1,620) | 6,241 | (20,608) |
Other expense | (404) | (736) | (2,235) | (1,765) |
Income (loss) before income taxes | 7,585 | (2,356) | 4,006 | (22,373) |
Income tax (benefit) expense | (14,714) | (77) | (16,307) | 114 |
Net income (loss) | $ 22,299 | $ (2,279) | $ 20,313 | $ (22,487) |
Net income (loss) per common share | ||||
Basic (in dollars per share) | $ 0.95 | $ (0.11) | $ 0.89 | $ (1.12) |
Diluted (in dollars per share) | $ 0.94 | $ (0.11) | $ 0.88 | $ (1.12) |
Weighted-average common shares used to compute net income (loss) per common share | ||||
Basic (in shares) | 23,483,269 | 20,139,944 | 22,714,574 | 20,021,966 |
Diluted (in shares) | 23,848,729 | 20,139,944 | 22,987,667 | 20,021,966 |
Sales revenue | ||||
Total revenue | $ 58,866 | $ 55,545 | $ 171,459 | $ 147,980 |
Total cost of revenue | 17,016 | 15,476 | 48,523 | 41,366 |
Gross profit | 41,850 | 40,069 | 122,936 | 106,614 |
Rental revenue | ||||
Total revenue | 10,720 | 9,717 | 25,312 | 24,905 |
Total cost of revenue | 3,211 | 2,992 | 9,122 | 7,640 |
Gross profit | $ 7,509 | $ 6,725 | $ 16,190 | $ 17,265 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit). | Total |
Balances at the beginning at Dec. 31, 2021 | $ 20 | $ 119,962 | $ 8,245 | $ 128,227 |
Balances at the beginning (in shares) at Dec. 31, 2021 | 19,877,786 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Stock-based compensation | 7,681 | 7,681 | ||
Exercise of common stock options and vesting of performance and restricted stock units | 152 | 152 | ||
Exercise of common stock options and vesting of performance and restricted stock units (in shares) | 192,644 | |||
Common shares issued for employee stock purchase plan | 824 | 824 | ||
Common shares issued for employee stock purchase plan (in shares) | 85,274 | |||
Net Income (loss) for the period | (22,487) | (22,487) | ||
Balances at the end at Sep. 30, 2022 | $ 20 | 128,619 | (14,242) | 114,397 |
Balances at the end (in shares) at Sep. 30, 2022 | 20,155,704 | |||
Balances at the beginning at Jun. 30, 2022 | $ 20 | 126,059 | (11,963) | 114,116 |
Balances at the beginning (in shares) at Jun. 30, 2022 | 20,132,145 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Stock-based compensation | 2,560 | 2,560 | ||
Exercise of common stock options and vesting of performance and restricted stock units (in shares) | 23,559 | |||
Net Income (loss) for the period | (2,279) | (2,279) | ||
Balances at the end at Sep. 30, 2022 | $ 20 | 128,619 | (14,242) | 114,397 |
Balances at the end (in shares) at Sep. 30, 2022 | 20,155,704 | |||
Balances at the beginning at Dec. 31, 2022 | $ 20 | 131,001 | (9,621) | 121,400 |
Balances at the beginning (in shares) at Dec. 31, 2022 | 20,252,677 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Stock-based compensation | 5,597 | 5,597 | ||
Exercise of common stock options and vesting of performance and restricted stock units | 13 | 13 | ||
Exercise of common stock options and vesting of performance and restricted stock units (in shares) | 249,064 | |||
Sale of common stock from follow-on public offering, net of offering expenses | $ 3 | 34,622 | 34,625 | |
Sale of common stock from follow-on public offering, net of offering expenses (in shares) | 2,875,000 | |||
Common shares issued for employee stock purchase plan | 882 | 882 | ||
Common shares issued for employee stock purchase plan (in shares) | 120,816 | |||
Net Income (loss) for the period | 20,313 | 20,313 | ||
Balances at the end at Sep. 30, 2023 | $ 23 | 172,115 | 10,692 | 182,830 |
Balances at the end (in shares) at Sep. 30, 2023 | 23,497,557 | |||
Balances at the beginning at Jun. 30, 2023 | $ 23 | 170,347 | (11,607) | 158,763 |
Balances at the beginning (in shares) at Jun. 30, 2023 | 23,458,302 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Stock-based compensation | 1,766 | 1,766 | ||
Exercise of common stock options and vesting of performance and restricted stock units | 2 | 2 | ||
Exercise of common stock options and vesting of performance and restricted stock units (in shares) | 39,255 | |||
Net Income (loss) for the period | 22,299 | 22,299 | ||
Balances at the end at Sep. 30, 2023 | $ 23 | $ 172,115 | $ 10,692 | $ 182,830 |
Balances at the end (in shares) at Sep. 30, 2023 | 23,497,557 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities | ||
Net income (loss) | $ 20,313 | $ (22,487) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 4,916 | 4,670 |
Deferred income taxes | (20,717) | 17 |
Stock-based compensation expense | 5,597 | 7,681 |
Loss on disposal of property and equipment and intangibles | 3 | 20 |
Change in fair value of earn-out liability | (2,475) | 10,898 |
Changes in assets and liabilities, net of acquisition: | ||
Accounts receivable | 10,947 | (2,336) |
Net investment in leases | 2,527 | (2,570) |
Inventories | (374) | (3,803) |
Income taxes | (99) | (55) |
Prepaid expenses and other assets | (369) | (349) |
Right of use operating lease assets | 292 | 141 |
Accounts receivable, non-current | 8,425 | (4,856) |
Accounts payable | (3,622) | 6,148 |
Accrued payroll and related taxes | (2,316) | 1,436 |
Accrued expenses and other liabilities | (5,545) | 6,799 |
Net cash provided by operating activities | 17,503 | 1,354 |
Cash flows from investing activities | ||
Purchases of property and equipment | (1,424) | (1,731) |
Intangible assets expenditures | (117) | (113) |
Net cash used in investing activities | (1,541) | (1,844) |
Cash flows from financing activities | ||
Proceeds from issuance of note payable | 8,250 | |
Payment on earn-out | (5,000) | |
Payments on note payable | (2,250) | (5,250) |
Payment on revolving line of credit | (8,250) | |
Payments of deferred debt issuance costs | (125) | (39) |
Proceeds from exercise of common stock options | 13 | 152 |
Proceeds from the issuance of common stock from the employee stock purchase plan | 882 | 824 |
Proceeds from issuance of common stock at market | 34,625 | |
Net cash provided by (used in) financing activities | 28,145 | (4,313) |
Net increase (decrease) in cash and cash equivalents | 44,107 | (4,803) |
Cash and cash equivalents - beginning of period | 21,929 | 28,229 |
Cash and cash equivalents - end of period | 66,036 | 23,426 |
Supplemental cash flow disclosure | ||
Cash paid for interest | 2,810 | 1,433 |
Cash paid for taxes | 3,006 | 29 |
Capital expenditures incurred but not yet paid | $ 40 | $ 16 |
Nature of Business and Operatio
Nature of Business and Operations | 9 Months Ended |
Sep. 30, 2023 | |
Nature of Business and Operations | |
Nature of Business and Operations | Note 1. Nature of Business and Operations Tactile Systems Technology, Inc. (“we,” “us,” “our,” and the “Company”) manufactures and distributes medical devices for the treatment of patients with underserved chronic diseases at home. We provide our Flexitouch® Plus and Entre™ Plus systems, which help control symptoms of lymphedema, a chronic progressive medical condition, through our direct sales force for use in the home following receipt of prescriptions from vascular, wound and lymphedema clinics throughout the United States. On September 8, 2021, we acquired the assets of the AffloVest airway clearance business (“AffloVest Acquisition”) from International Biophysics Corporation (“IBC”), a privately-held company which developed and manufactured AffloVest. AffloVest is a portable, wearable vest that treats patients with chronic respiratory conditions. We sell this device through home medical equipment and durable medical equipment (“DME”) providers throughout the United States. 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 our reincorporation 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. On February 27, 2023, we closed on a public offering of 2,875,000 shares of our common stock at a public offering price of $13.00 per share. We received net proceeds from this offering of $34.6 million after deducting underwriting discounts, commissions, and offering expenses. 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 revenue in the third and fourth quarters of the year when patients have met their annual insurance deductibles, thereby reducing their out-of-pocket costs for our products, and have an increasing desire to exhaust their flexible spending accounts at year end. This seasonality applies only to purchases and rentals of our products by patients covered by commercial insurance and is not relevant to Medicare, Medicaid or the Veterans Administration, as those payers either do not have plans that have declining deductibles over the course of the plan year and/or do not have plans that include patient deductibles for purchases or rentals of our products. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2023 | |
Basis of Presentation | |
Basis of Presentation | Note 2. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. The results for the nine months ended September 30, 2023, are not necessarily indicative of results to be expected for the year ending December 31, 2023, 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, 2022. Principles of Consolidation The 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. Risks and Uncertainties Coronavirus (COVID-19) The United States economy in general and our business specifically have been negatively affected by the COVID-19 pandemic. We have seen adverse impacts as it relates to the decline in the number of patients that healthcare facilities and clinics are able to treat due to enhanced safety protocols, particularly during most of 2021 and during the first quarter of 2022. We have also seen staffing challenges, both in our organization and at the clinics we serve, as another lingering consequence of the COVID-19 pandemic. While we saw some level of recovery in 2022 and the first nine months of 2023, consequences of the pandemic remain uncertain. Although the effects of the COVID-19 pandemic on our operating results continue to subside, the pandemic could still have an unfavorable effect on our financial position, results of operations and cash flows. 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Significant Accounting Policies There were no material changes in our significant accounting policies during the nine months ended September 30, 2023. 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, 2022, for information regarding our significant accounting policies. Accounting Pronouncement Recently Adopted I n December 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-06, “Reference Rate Reform (Topic 848) — Facilitation of the Effect of Reference Rate Reform on Financial Reporting” (“ASU 2022-06”), which provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate (e.g., LIBOR) reform if certain criteria are met, for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The ASU deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. We adopted this ASU in the quarter ended June 30, 2023. The adoption of this standard did not have a significant impact on the Company’s financial statements. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2023 | |
Acquisitions | |
Acquisitions | Note 4. Acquisitions On September 8, 2021, we entered into an Asset Purchase Agreement (“AffloVest APA”) to acquire the AffloVest airway clearance business from IBC. Under the terms of the AffloVest APA, we agreed to pay IBC a total of up to $100.0 million for the purchase of substantially all of the assets related to its branded high frequency chest wall oscillation vest therapy business, other than specifically identified excluded assets. We acquired AffloVest to further expand our position as a leader in treating patients with underserved chronic conditions in the home. The acquired assets included inventory, tooling, intellectual property, permits and approvals, data and records, and customer and supplier information. At closing, $80.0 million of the purchase price was paid, of which a total of $0.5 million was deposited into an escrow account at closing for purposes of satisfying certain post-closing purchase price adjustments and indemnification claims. Subsequent to closing, $0.2 million was returned to us as a result of working capital adjustments and the remaining $0.3 million was released to IBC. The AffloVest Acquisition was funded through a combination of cash on hand and proceeds from borrowings. On November 4, 2022, we entered into an Amendment to the AffloVest APA (the “APA Amendment”) with IBC, which modifies the terms of the earn-out arrangement under the AffloVest APA, as follows: ● Initial Earn-Out: The AffloVest APA provided for an initial earn-out equal to 1.5 times the amount by which the AffloVest U.S. revenues in the period from October 1, 2021 to September 30, 2022 (the “Initial Earn-Out Period”) exceed a specified amount; provided that in no event will the payment exceed $10.0 million. o The APA Amendment provides that the calculated amount of the initial earn-out payment is $10.0 million, of which the Company paid $5.0 million on November 28, 2022, and $5.0 million, plus an imputed interest payment of $250,000 , on May 25, 2023. ● Second Earn-Out: The AffloVest APA provided for a second earn-out equal to 1.5 times the amount by which the AffloVest U.S. revenues in the period from October 1, 2022 to September 30, 2023 exceed the revenues recognized during the Initial Earn-Out Period; provided that in no event will the payment exceed $10.0 million. o The APA Amendment changes the 1.5 times multiplier to 3.0 times, but still provides that in no event will the second earn-out payment exceed $10.0 million. o Subsequent to September 30, 2023, it was determined that the calculated amount of the second earn-out payment is $5.6 million, which is payable by the Company on or before November 28, 2023 (see Note 15 – “Fair Value Measurements”). The fair value of the earn-out as of the acquisition date was $6.4 million. The fair value of the earn-out, reflecting management’s estimate of the likelihood of achieving these targets, was determined by employing a Monte Carlo Simulation model. This amount and the current versus non-current allocation is remeasured at the end of each reporting period until the payment requirement ends, with any adjustments reported in income from operations (see Note 15 – “Fair Value Measurements”). |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2023 | |
Inventories | |
Inventories | Note 5. Inventories Inventories consisted of the following: (In thousands) At September 30, 2023 At December 31, 2022 Finished goods $ 7,880 $ 5,100 Component parts and work-in-process 15,618 18,024 Total inventories $ 23,498 $ 23,124 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note 6. Goodwill and Intangible Assets Goodwill In the third quarter of fiscal 2021, we completed the AffloVest Acquisition. The purchase price of the AffloVest product line exceeded the net acquisition-date estimated fair value amounts of the identifiable assets acquired and the liabilities assumed by $31.1 million, which was assigned to goodwill. Intangible Assets Our patents and other intangible assets are summarized as follows: Weighted- At September 30, 2023 Average Gross Amortization Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Definite-lived intangible assets: Patents 12 years $ 990 $ 232 $ 758 Defensive intangible assets 1 year 1,125 883 242 Customer accounts — 125 125 — Customer relationships 11 years 31,000 4,915 26,085 Developed technology 9 years 13,000 2,436 10,564 Subtotal 46,240 8,591 37,649 Unamortized intangible assets: Tradenames 9,500 — 9,500 Patents pending 479 — 479 Total intangible assets $ 56,219 $ 8,591 $ 47,628 Weighted- At December 31, 2022 Average Gross Amortization Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Definite-lived intangible assets: Patents 12 years $ 897 $ 173 $ 724 Defensive intangible assets 2 years 1,126 764 362 Customer accounts < 1 year 125 114 11 Customer relationships 12 years 31,000 3,127 27,873 Developed technology 10 years 13,000 1,550 11,450 Subtotal 46,148 5,728 40,420 Unamortized intangible assets: Tradenames 9,500 — 9,500 Patents pending 455 — 455 Total intangible assets $ 56,103 $ 5,728 $ 50,375 Amortization expense was $0.9 million and $1.0 million for the three months ended September 30, 2023 and 2022, respectively, and $2.9 million for each of the nine months ended September 30, 2023 and 2022. Future amortization expenses are expected as follows: (In thousands) 2023 (October 1 - December 31) $ 948 2024 3,792 2025 3,703 2026 3,637 2027 3,629 Thereafter 21,940 Total $ 37,649 In the third quarter of 2023, we performed our annual goodwill impairment test utilizing both the qualitative and quantitative approach described in FASB ASU No. 2021-03, “Intangibles—Goodwill and Other (Topic 350) – Accounting Alternative for Evaluating Triggering Events.” Based on the testing using the qualitative approach, it was determined that it was not more likely than not that the fair value of the reporting unit was less than the carrying value. As a result, it was not deemed necessary to proceed to the quantitative test and no impairment was recognized. |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2023 | |
Accrued Expenses | |
Accrued Expenses | Note 7. Accrued Expenses Accrued expenses consisted of the following: (In thousands) At September 30, 2023 At December 31, 2022 Warranty $ 1,872 $ 2,005 Travel 1,019 1,121 Legal and consulting 821 730 Clinical studies 385 276 In-transit inventory 379 3,228 Sales and use tax 142 147 Other 709 1,733 Total $ 5,327 $ 9,240 |
Warranty Reserves
Warranty Reserves | 9 Months Ended |
Sep. 30, 2023 | |
Warranty Reserves | |
Warranty Reserves | Note 8. Warranty Reserves The activity in the warranty reserve during and as of the end of the reporting periods presented was as follows: Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2023 2022 2023 2022 Beginning balance $ 3,828 $ 4,818 $ 4,212 $ 4,959 Warranty provision 1,228 589 3,128 1,586 Processed warranty claims (1,403) (783) (3,687) (1,921) Ending balance $ 3,653 $ 4,624 $ 3,653 $ 4,624 Accrued warranty reserve, current $ 1,872 $ 1,732 $ 1,872 $ 1,732 Accrued warranty reserve, non-current 1,781 2,892 1,781 2,892 Total accrued warranty reserve $ 3,653 $ 4,624 $ 3,653 $ 4,624 |
Credit Agreement
Credit Agreement | 9 Months Ended |
Sep. 30, 2023 | |
Credit Agreement | |
Credit Agreement | Note 9. Credit Agreement On April 30, 2021, we entered into an Amended and Restated Credit Agreement (the “Restated Credit Agreement”) with the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative Agent. The Restated Credit Agreement amended and restated in its entirety our prior credit agreement. On September 8, 2021, we entered into a First Amendment Agreement (the “Amendment”), which amended the Restated Credit Agreement (as amended by the Amendment, the “Credit Agreement”) with the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent. The Amendment, among other things, added a $30.0 million incremental term loan to the $25.0 million revolving credit facility provided by the Restated Credit Agreement. The term loan is reflected on our condensed consolidated financial statements as a note payable. The Credit Agreement provides that, 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 $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 $80.0 million. On September 8, 2021, in connection with the closing of the AffloVest Acquisition, we borrowed the $30.0 million term loan and utilized that borrowing, together with a draw of $25.0 million under the revolving credit facility and cash on hand, to fund the purchase price. On February 22, 2022, we entered into a Second Amendment Agreement (the “Second Amendment”), which further amended the Credit Agreement. The Second Amendment modified the maximum leverage ratio, the minimum fixed charge coverage ratio and the minimum consolidated EBITDA covenants under the Credit Agreement, and added a minimum liquidity covenant, through the quarter ended June 30, 2023. The Second Amendment also increased the applicable margin for LIBOR rate loans under the Credit Agreement during the period commencing on the date of the Second Amendment and ending on the last day of the fiscal quarter ending June 30, 2023. Pursuant to the Second Amendment, we made a mandatory principal prepayment of the term loan of $3.0 million on February 22, 2022. On June 21, 2023, we entered into a Third Amendment Agreement (the “Third Amendment”) that replaced the interest rate benchmark under the Credit Agreement from LIBOR to the term Secured Overnight Financing Rate (“SOFR”). All tenors of term SOFR are subject to a credit spread adjustment of 0.10% (“Adjusted Term SOFR”). Following the Third Amendment, the term loan and 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) Adjusted Term SOFR for a one-month tenor plus 1% (the “Base Rate”) plus an applicable margin or (b) Adjusted Term SOFR for an interest period of one, three or six months, at our option, plus the applicable margin. The applicable margin is 0.75% to 2.25% on loans bearing interest at the Base Rate and 1.75% to 3.25% on loans bearing interest at Adjusted Term SOFR, in each case depending on our consolidated total leverage ratio; except that, pursuant to the Second Amendment and the Third Amendment, during the period commencing on February 22, 2022 and ending on the last day of the fiscal quarter ending June 30, 2023, the applicable margin for LIBOR rate loans and Adjusted Term SOFR loans, as applicable, was 3.50% . At September 30, 2023, all outstanding borrowings were subject to interest at a rate calculated at Adjusted Term SOFR plus an applicable margin, for an interest rate of 7.72% . On August 1, 2023, we entered into a Fourth Amendment Agreement (the “Fourth Amendment”), which further amends the Credit Agreement. The Fourth Amendment, among other things, decreased the commitment fees payable under the revolving credit facility under the Credit Agreement such that the undrawn portions of the revolving credit facility are subject to an unused line fee at a rate per annum from 0.125% to 0.200% , depending on our consolidated leverage ratio, and eliminated the language providing that the applicable margin for Adjusted Term SOFR loans was 3.50% , such that the interest rates are in effect as set forth in the above paragraph. The Fourth Amendment also eliminated the liquidity financial covenant and modified the remaining financial covenants to reflect the termination of the temporary covenant relief period that was in place until June 30, 2023 pursuant to the Second Amendment, such that the financial covenants now include a maximum consolidated total leverage ratio covenant, a minimum consolidated EBITDA covenant and a minimum fixed charge coverage ratio covenant. In addition, the Fourth Amendment provided for an additional term loan in the amount of $8.25 million, which we used for a paydown of the revolving credit facility. The Fourth Amendment also extended the maturity date of the term loans and revolving credit facility under the Credit Agreement from September 8, 2024, to August 1, 2026. As of September 30, 2023, we had outstanding borrowings of $46.8 million under the Credit Agreement, comprised of $30.0 million under the term loan and $16.8 million under the revolving credit facility. The principal of the term loan is required to be repaid in quarterly installments of $750,000 . Maturities of the term loan for the next four years as of September 30, 2023, were as follows: (In thousands) Amount 2023 (October 1 - December 31) 750 2024 3,000 2025 3,000 2026 23,250 Total $ 30,000 Our obligations under the Credit Agreement are secured by a security interest in substantially all of our and our subsidiary’s assets and are also guaranteed by our subsidiary. As of September 30, 2023, the Credit Agreement contained a number of restrictions and covenants, including that we maintain compliance with a maximum total leverage ratio, a minimum fixed charge coverage ratio and a minimum consolidated EBITDA covenant. As of September 30, 2023, we were in compliance with all financial covenants under the Credit Agreement. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
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 an operating lease liability at the present value of lease payments over the lease term on the commencement date. The related right of use (“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 and office equipment and do not separate lease and non-lease 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 Sheets. 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 operating lease liabilities are recorded on the Condensed Consolidated Balance Sheets, with rent expense to be recognized on a straight-line basis over the term of the lease. The remaining lease terms vary from approximately one to eight years as of September 30, 2023. We entered into a lease (“initial lease”) in October 2018, for approximately 80,000 square feet of office space for our new corporate headquarters in Minneapolis, Minnesota. In December 2018, we amended the initial lease to add approximately 29,000 square feet of additional office space, which is accounted for as a separate lease (“second lease”) in accordance with ASU No. 2016-02, “Leases” (Topic 842) (“ASC 842”). In December 2019, we further amended the lease which extended the expiration date of the initial lease, extended the expiration date of and added approximately 4,000 square feet to the second lease, as well as added approximately 37,000 square feet of additional office space, accounted for as a separate lease (“third lease”) in accordance with ASC 842. The portion of the space covered under the initial lease was placed in service in September 2019. This portion was recognized as an operating lease and included in the ROU operating lease assets and operating lease liabilities on the Condensed Consolidated Balance Sheets. The portion of the space covered under the second lease commenced in September 2020. Finally, the portion of the space covered under the third lease commenced in September 2021. 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. In addition to monthly rental fees specific to the vehicle, there are fixed monthly non-lease components that have been included in the ROU operating lease assets and operating lease liabilities. The non-lease components are not significant. As of September 30, 2023, we did not have any vehicles with agreements within the initial, noncancelable lease term that are recorded as ROU operating lease assets and operating lease liabilities. Computer and Office Equipment We also have operating lease agreements for certain computer and office equipment. The remaining lease terms as of September 30, 2023, ranged from less than one year to approximately four years with fixed monthly payments that are included in the ROU operating lease assets and operating lease liabilities. The leases provide an option to purchase the related equipment at fair market value at the end of the lease. The leases 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 information related to our ROU operating lease assets and operating lease liabilities that we have recorded: (In thousands) At September 30, 2023 At December 31, 2022 Right of use operating lease assets $ 19,303 $ 21,322 Operating lease liabilities: Current $ 2,596 $ 2,500 Non-current 19,043 20,866 Total $ 21,639 $ 23,366 Operating leases: Weighted average remaining lease term 7.0 years 7.7 years Weighted average discount rate 4.3% 4.2% Nine Months Ended September 30, 2023 2022 Supplemental cash flow information for our operating leases: Cash paid for operating lease liabilities $ 2,579 $ 2,703 Non-cash right of use assets obtained in exchange for new operating lease obligations $ 132 $ 49 The table below reconciles the undiscounted cash flows for the periods presented to the operating lease liabilities recorded on the Condensed Consolidated Balance Sheet for the periods presented: (In thousands) 2023 (October 1 - December 31) $ 869 2024 3,468 2025 3,569 2026 3,642 2027 3,171 Thereafter 10,082 Total minimum lease payments 24,801 Less: Amount of lease payments representing interest (3,162) Present value of future minimum lease payments 21,639 Less: Current obligations under operating lease liabilities (2,596) Non-current obligations under operating lease liabilities $ 19,043 Operating lease costs were $0.9 million for each of the three months ended September 30, 2023 and 2022. Operating lease costs were $2.7 million and $2.8 million for the nine months ended September 30, 2023 and 2022, respectively. Major Vendors We had purchases from one vendor that accounted for 29% of our total purchases for the three months ended September 30, 2023 and purchases from one vendor that accounted for 26% of our total purchases for the nine months ended September 30, 2023. We had purchases from one vendor that accounted for 24% of our total purchases for the three months ended September 30, 2022 and purchases from two vendors that accounted for 44% of our total purchases for the nine months ended September 30, 2022. Purchase Commitments We issued purchase orders prior to September 30, 2023, totaling $27.7 million for goods that we expect to receive within the next year. Retirement Plan We maintain a 401(k) retirement plan for our employees in which eligible employees can contribute a percentage of their pre-tax compensation. We recorded an expense related to our discretionary contributions to the 401(k) plan of $0.4 million for each of the three months ended September 30, 2023 and 2022, and $1.1 million for each of the nine months ended September 30, 2023 and 2022. Legal Proceedings From time to time, we are subject to various claims and legal proceedings arising in the ordinary course of business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. We and certain of our present or former officers have been sued in a purported securities class action lawsuit that was filed in the United States District Court for the District of Minnesota on September 29, 2020, and that is pending under the caption Brian Mart v. Tactile Systems Technology, Inc., et al ., File No. 0:20-cv-02074-NEB-BRT (the “Mart Lawsuit”). On April 19, 2021, the plaintiff filed an Amended Complaint against us and eight of our present and former officers and directors. Plaintiff seeks to represent a class consisting of investors who purchased our common stock in the market during the time period from May 7, 2018 through June 8, 2020 (“alleged class period”). The Amended Complaint alleges the following claims under the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (1) that we and certain officer defendants made materially false or misleading public statements about our business, operational and compliance policies, and results during the alleged class period in violation of Section 10(b) of the Exchange Act; (2) that we and the individual defendants engaged in a scheme to defraud investors in order to allow the individual defendants to sell our stock in violation of Section 10(b) of the Exchange Act; (3) that the individual defendants engaged in improper insider trading of our stock in violation of Section 20A of the Exchange Act; and (4) that we and the individual defendants are liable under Section 20(a) of the Exchange Act because each defendant is a controlling person. On June 18, 2021, we and the individual defendants filed a motion to dismiss the Amended Complaint. On March 31, 2022, the court granted in part, and denied in part, the defendants’ motion to dismiss. All claims against three individual defendants were dismissed, and most claims against four other individual defendants were dismissed. On November 21, 2022, the Company announced that it entered into a Memorandum of Understanding to settle this matter. The Company does not expect to fund any portion of cash payments made in connection with the $5 million settlement amount. The settlement does not constitute an admission of liability or wrongdoing by the Company. The settlement is subject to court approval. On February 28, 2023, the parties executed a stipulation of settlement and the plaintiff filed an unopposed motion for preliminary approval of the class settlement with the court. On April 26, 2023, the court issued a minute order indicating the motion would be approved and on May 4, 2023, issued the written order granting the motion for preliminary approval of the settlement. On July 19, 2023, the plaintiff filed a motion for final approval of the settlement. On August 23, 2023, the Court held the hearing on the motion for final approval of the settlement and on August 25, 2023 entered an order granting the motion, bringing the matter to a close. On May 24, 2022, a stockholder derivative lawsuit was filed in the United States District Court for the District of Minnesota, purportedly on behalf of the Company against certain of our present and former officers and directors and the Company (as a nominal defendant), captioned Jack Weaver v. Moen , et al., File No. 0:22-cv-01403-NEB-BRT. This complaint generally arises out of the same subject matter as the Mart Lawsuit and alleges the following claims under the Exchange Act and common law: (1) that the director defendants made materially false or misleading public statements in proxy statements in violation of Section 14(a) of the Exchange Act; (2) that the director defendants’ stock and option awards should be rescinded under Section 29(b) of the Exchange Act; (3) that the officer defendants’ employment contract compensation should be rescinded under Section 29(b) of the Exchange Act; (4) that certain officer defendants are liable for contribution arising out of any liability incurred in the Mart Lawsuit, under Sections 10(b) and 21D of the Exchange Act; (5) that the individual defendants breached their fiduciary duties; and (6) that the individual defendants were unjustly enriched. The lawsuit seeks unspecified damages. In August 2022, the matter was transferred to the United States District Court for the District of Delaware by order granting the Parties Stipulation to Transfer. On February 10, 2023, we filed a motion to dismiss the action. The plaintiff filed an Amended Complaint on March 3, 2023. On March 31, 2023, we filed a motion to dismiss the Amended Complaint , which is pending. On July 31, 2023, the plaintiff filed a Joint Notice of Preliminary Settlement indicating that the parties have reached a non-binding settlement-in-principal on most of the material terms that would resolve all claims between the parties and requested that the Court temporarily stay all deadlines, hearings, and conferences while the parties continue to finalize settlement. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
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, expired, cancelled, settled for cash or otherwise not issued, will become available for issuance under the 2016 Plan. Our Board of Directors exercised its prerogative to forego the automatic increase on each of January 1, 2023 and 2022. As of September 30, 2023, 5,773,265 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 $1.8 million and $2.6 million for the three months ended September 30, 2023 and 2022, respectively, and $5.6 million and $7.7 million for the nine months ended September 30, 2023 and 2022, respectively. This expense was allocated as follows: Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2023 2022 2023 2022 Cost of revenue $ 116 $ 67 $ 340 $ 281 Sales and marketing expenses 634 1,101 2,196 3,352 Research and development expenses 5 54 98 175 Reimbursement, general and administrative expenses 1,011 1,338 2,963 3,873 Total stock-based compensation expense $ 1,766 $ 2,560 $ 5,597 $ 7,681 Stock Options Stock options issued to participants other than non-employees typically vest over three or four years and typically have a contractual term of seven or ten years . Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $0.2 million and $0.6 million for the three months ended September 30, 2023 and 2022, respectively, and $0.8 million and $2.0 million for the nine months ended September 30, 2023 and 2022, respectively. At September 30, 2023, there was approximately $0.4 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 0.9 years. Our stock option activity for the nine months ended September 30, 2023, was 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, 2022 615,307 $ 43.25 4.7 years $ 164 Exercised (4,432) $ 3.04 $ 96 Forfeited (24,498) $ 47.68 Cancelled/Expired (114,932) $ 50.57 Balance at September 30, 2023 471,445 $ 41.62 4.0 years $ 216 Options exercisable at September 30, 2023 400,484 $ 43.45 3.8 years $ 76 (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 402,979 as of September 30, 2022, had a weighted-average exercise price of $44.18 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 the Condensed Consolidated Statements of Operations for time-based restricted stock units was $1.2 million and $1.5 million for the three months ended September 30, 2023 and 2022, respectively, and $3.8 million and $4.5 million for the nine months ended September 30, 2023 and 2022, respectively. At September 30, 2023, there was approximately $7.6 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 1.6 years. Our time-based restricted stock unit activity for the nine months ended September 30, 2023, 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, 2022 590,542 $ 19.42 $ 6,779 Granted 378,498 $ 15.82 Vested (236,284) $ 19.96 Cancelled (114,060) $ 20.81 Balance at September 30, 2023 618,696 $ 16.75 $ 8,693 (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. 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 2021 were earned based on the extent to which performance goals based on revenue and adjusted EBITDA were achieved in 2022. The PSUs granted in 2022 will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA margin are achieved in 2023. 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 the minimum performance threshold is achieved and up to 150% of target if maximum performance is achieved. The PSUs granted in 2023 have three separate performance periods, and one-third of each grant will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA margin are achieved in each of 2023 and 2024 (ranging from 25% to 175% of target), and one-third will be earned if and to the extent performance goals to be established are achieved in 2025. All earned and vested PSUs will be settled in shares of common stock. Stock-based compensation expense recognized for PSUs was $0.3 million for each of the three months ended September 30, 2023 and 2022, and $0.6 million and $0.5 million for the nine months ended September 30, 2023 and 2022, respectively. At September 30, 2023, there was approximately $1.7 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.1 years. Our PSU activity for the nine months ended September 30, 2023, was as follows: Weighted- Average Grant Aggregate PSUs Date Fair Value Intrinsic (In thousands except unit and per unit data) Outstanding Per Unit Value (1) Balance at December 31, 2022 155,618 $ 25.05 $ 1,786 Granted 123,575 $ 15.28 Vested (13,842) $ 42.70 Cancelled (67,119) $ 21.50 Balance at September 30, 2023 198,232 $ 18.93 $ 2,785 (1) The aggregate intrinsic value of PSUs 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 ESPP is available to all of our employees and employees of participating subsidiaries. Participating employees may purchase common stock, on a voluntary after-tax basis, at a price equal to 85% of the lower of the closing market price per share of our common stock on the first or last trading day of each stock purchase period. The ESPP provides for six-month purchase periods, beginning on May 16 and November 16 of each calendar year. A total of 1,600,000 shares of common stock was initially reserved for issuance under the ESPP. 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 (a) 1% of the shares of our common stock outstanding on the immediately preceding December 31, (b) 500,000 shares or (c) such lesser amount as our Board of Directors may determine. Our Board of Directors exercised its prerogative to forego the automatic increase on each of January 1, 2023 and 2022. As of September 30, 2023, 1,438,335 shares were available for future issuance under the ESPP. We recognized stock-based compensation expense associated with the ESPP of $0.1 million and $0.2 million for the three months ended September 30, 2023 and 2022, respectively, and $0.4 million and $0.7 million for the nine months ended September 30, 2023 and 2022, respectively. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2023 | |
Revenue. | |
Revenue | Note 12. Revenue We derive our revenue from the sale and rental of our products to our customers in the United States. The following table presents our revenue, inclusive of sales and rental revenue, disaggregated by product line : Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2023 2022 2023 2022 Revenue Lymphedema products $ 62,506 $ 54,214 $ 172,257 $ 146,502 Airway clearance products 7,080 11,048 24,514 26,383 Total $ 69,586 $ 65,262 $ 196,771 $ 172,885 Percentage of total revenue Lymphedema products 90% 83% 88% 85% Airway clearance products 10% 17% 12% 15% Total 100% 100% 100% 100% Our revenue by channel, inclusive of sales and rental revenue, for the three and nine months ended September 30, 2023 and 2022, are summarized in the following table: Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2023 2022 2023 2022 Private insurers and other payers $ 39,376 $ 36,188 $ 101,300 $ 97,726 Veterans Administration 7,259 6,755 20,203 19,118 Medicare 15,871 11,271 50,754 29,658 Durable medical equipment distributors 7,080 11,048 24,514 26,383 Total $ 69,586 $ 65,262 $ 196,771 $ 172,885 Our rental revenue is derived from rent-to-purchase arrangements that typically range from three to ten months . As 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. 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 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. Rental revenue for the three and nine months ended September 30, 2023 and 2022, was primarily from private insurers. Sales-type lease revenue and the associated cost of revenue for the three and nine months ended September 30, 2023 and 2022, was: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2023 2022 2023 2022 Sales-type lease revenue $ 10,720 $ 9,717 $ 25,312 $ 24,905 Cost of sales-type lease revenue 3,211 2,992 9,122 7,640 Gross profit $ 7,509 $ 6,725 $ 16,190 $ 17,265 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
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 (loss) 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 September 30, 2023, was a benefit of 194.0% , compared to a benefit of 3.4% for the three months ended September 30, 2022. The primary driver of the change in our effective tax rate was attributable to the release of our valuation allowance related to the future realization of deferred tax assets. We recorded an income tax benefit of $14.7 million and an income tax benefit of $0.1 million for the three months ended September 30, 2023 and 2022, respectively. The effective tax rate for the nine months ended September 30, 2023, was a benefit of 407.1% , compared to an expense of 0.5% for the nine months ended September 30, 2022. The primary driver of the change in the Company’s effective tax rate was attributable to the release of our valuation allowance related to the future realization of deferred tax assets. We recorded an income tax benefit of $16.3 million and an income tax expense of $0.1 million for the nine months ended September 30, 2023 and 2022, respectively. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of September 30, 2023, in part because in the current year we achieved three years of cumulative pretax income in the U.S. federal tax jurisdiction, management determined that there is sufficient positive evidence to conclude that it is more likely than not that additional deferred taxes of $17.9 million are realizable. We therefore reduced the valuation allowance accordingly, which resulted in the increased effective tax rate benefit in the three and nine months ended September 30, 2023 as discussed above. 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. The Company currently is not under examination in any jurisdictions. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Net Income (Loss) Per Share | |
Net Income (Loss) Per Share | Note 14. Net Income (Loss) Per Share The following table sets forth the computation of our basic and diluted net income (loss) per share: Three Months Ended Nine Months Ended September 30, September 30, (In thousands, except share and per share data) 2023 2022 2023 2022 Net income (loss) $ 22,299 $ (2,279) $ 20,313 $ (22,487) Weighted-average shares outstanding 23,483,269 20,139,944 22,714,574 20,021,966 Weighted-average shares used to compute diluted net loss per share 23,848,729 20,139,944 22,987,667 20,021,966 Net income (loss) per share - Basic $ 0.95 $ (0.11) $ 0.89 $ (1.12) Net income (loss) per share - Diluted $ 0.94 $ (0.11) $ 0.88 $ (1.12) The following common stock equivalents were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been anti-dilutive: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Restricted stock units 74,972 607,706 190,071 607,706 Common stock options 430,521 613,783 430,521 613,783 Performance stock units — 164,027 17,392 164,027 Employee stock purchase plan — 143,526 — 93,592 Total 505,493 1,529,042 637,984 1,479,108 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
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). As of September 30, 2023, we had an obligation to pay $5.6 million in cash under the second, final earn-out payment based on the level of AffloVest U.S. revenues in the period from October 1, 2022 to September 30, 2023. Prior to the determination of the actual amount of the earn-out, the earn-out liability was valued by employing a Monte Carlo Simulation model in a risk-neutral framework, which is a Level 3 input. The underlying simulated variable included recognized revenue. The recognized revenue volatility estimate was based on a study of historical asset volatility for a set of comparable public companies. The model included other assumptions including the market price of risk, which was calculated as the weighted average cost of capital less the long-term risk-free rate. The earn-out liability was adjusted to fair value at each reporting date until the end of the earn-out period. Changes in fair value are included in intangible asset amortization and earn-out expenses in our Condensed Consolidated Statements of Operations. As of September 30, 2023 the AffloVest U.S. revenues were known and the earn-out was no longer subject to a fair value measurement. Changes in the earn-out liability measured at fair value using Level 3 inputs were as follows: (In thousands) Earn-out liability at December 31, 2022 $ 13,050 Payment on earn-out (5,000) Fair value adjustments (2,475) Earn-out liability at September 30, 2023 $ 5,575 (In thousands) Earn-out liability at December 31, 2021 $ 6,200 Fair value adjustments 10,898 Earn-out liability at September 30, 2022 $ 17,098 As of September 30, 2023, the remaining $5.6 million of the earn-out liability had been earned and is to be paid by the Company on or before November 28, 2023. There was no remaining contingent earn-out liability as of September 30, 2023. The following provides information regarding fair value measurements for our remaining contingent earn-out liability as of December 31, 2022, according to the three-level fair value hierarchy: At December 31, 2022 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: Earn-out liability $ — $ — $ 8,050 $ 8,050 Total $ — $ — $ 8,050 $ 8,050 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. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. The results for the nine months ended September 30, 2023, are not necessarily indicative of results to be expected for the year ending December 31, 2023, 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, 2022. |
Principles of Consolidation | Principles of Consolidation The 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. |
Risks and Uncertainties | Risks and Uncertainties Coronavirus (COVID-19) The United States economy in general and our business specifically have been negatively affected by the COVID-19 pandemic. We have seen adverse impacts as it relates to the decline in the number of patients that healthcare facilities and clinics are able to treat due to enhanced safety protocols, particularly during most of 2021 and during the first quarter of 2022. We have also seen staffing challenges, both in our organization and at the clinics we serve, as another lingering consequence of the COVID-19 pandemic. While we saw some level of recovery in 2022 and the first nine months of 2023, consequences of the pandemic remain uncertain. Although the effects of the COVID-19 pandemic on our operating results continue to subside, the pandemic could still have an unfavorable effect on our financial position, results of operations and cash flows. |
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 revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Accounting Pronouncement Recently Adopted | Accounting Pronouncement Recently Adopted I n December 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-06, “Reference Rate Reform (Topic 848) — Facilitation of the Effect of Reference Rate Reform on Financial Reporting” (“ASU 2022-06”), which provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate (e.g., LIBOR) reform if certain criteria are met, for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The ASU deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. We adopted this ASU in the quarter ended June 30, 2023. The adoption of this standard did not have a significant impact on the Company’s financial statements. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventories | |
Schedule of inventories | (In thousands) At September 30, 2023 At December 31, 2022 Finished goods $ 7,880 $ 5,100 Component parts and work-in-process 15,618 18,024 Total inventories $ 23,498 $ 23,124 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets | |
Schedule of finite lived intangible assets | Weighted- At September 30, 2023 Average Gross Amortization Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Definite-lived intangible assets: Patents 12 years $ 990 $ 232 $ 758 Defensive intangible assets 1 year 1,125 883 242 Customer accounts — 125 125 — Customer relationships 11 years 31,000 4,915 26,085 Developed technology 9 years 13,000 2,436 10,564 Subtotal 46,240 8,591 37,649 Unamortized intangible assets: Tradenames 9,500 — 9,500 Patents pending 479 — 479 Total intangible assets $ 56,219 $ 8,591 $ 47,628 Weighted- At December 31, 2022 Average Gross Amortization Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Definite-lived intangible assets: Patents 12 years $ 897 $ 173 $ 724 Defensive intangible assets 2 years 1,126 764 362 Customer accounts < 1 year 125 114 11 Customer relationships 12 years 31,000 3,127 27,873 Developed technology 10 years 13,000 1,550 11,450 Subtotal 46,148 5,728 40,420 Unamortized intangible assets: Tradenames 9,500 — 9,500 Patents pending 455 — 455 Total intangible assets $ 56,103 $ 5,728 $ 50,375 |
Schedule of future amortization expense | (In thousands) 2023 (October 1 - December 31) $ 948 2024 3,792 2025 3,703 2026 3,637 2027 3,629 Thereafter 21,940 Total $ 37,649 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accrued Expenses | |
Schedule of Accrued Expenses | (In thousands) At September 30, 2023 At December 31, 2022 Warranty $ 1,872 $ 2,005 Travel 1,019 1,121 Legal and consulting 821 730 Clinical studies 385 276 In-transit inventory 379 3,228 Sales and use tax 142 147 Other 709 1,733 Total $ 5,327 $ 9,240 |
Warranty Reserves (Tables)
Warranty Reserves (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Warranty Reserves | |
Schedule of warranty reserves | Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2023 2022 2023 2022 Beginning balance $ 3,828 $ 4,818 $ 4,212 $ 4,959 Warranty provision 1,228 589 3,128 1,586 Processed warranty claims (1,403) (783) (3,687) (1,921) Ending balance $ 3,653 $ 4,624 $ 3,653 $ 4,624 Accrued warranty reserve, current $ 1,872 $ 1,732 $ 1,872 $ 1,732 Accrued warranty reserve, non-current 1,781 2,892 1,781 2,892 Total accrued warranty reserve $ 3,653 $ 4,624 $ 3,653 $ 4,624 |
Credit Agreement (Tables)
Credit Agreement (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Credit Agreement | |
Schedule of maturities of the term note payable | (In thousands) Amount 2023 (October 1 - December 31) 750 2024 3,000 2025 3,000 2026 23,250 Total $ 30,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Summary of lease-related assets and liabilities | (In thousands) At September 30, 2023 At December 31, 2022 Right of use operating lease assets $ 19,303 $ 21,322 Operating lease liabilities: Current $ 2,596 $ 2,500 Non-current 19,043 20,866 Total $ 21,639 $ 23,366 Operating leases: Weighted average remaining lease term 7.0 years 7.7 years Weighted average discount rate 4.3% 4.2% Nine Months Ended September 30, 2023 2022 Supplemental cash flow information for our operating leases: Cash paid for operating lease liabilities $ 2,579 $ 2,703 Non-cash right of use assets obtained in exchange for new operating lease obligations $ 132 $ 49 |
Summary of undiscounted cash flows | (In thousands) 2023 (October 1 - December 31) $ 869 2024 3,468 2025 3,569 2026 3,642 2027 3,171 Thereafter 10,082 Total minimum lease payments 24,801 Less: Amount of lease payments representing interest (3,162) Present value of future minimum lease payments 21,639 Less: Current obligations under operating lease liabilities (2,596) Non-current obligations under operating lease liabilities $ 19,043 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Schedule of allocation of total stock-based compensation expense | Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2023 2022 2023 2022 Cost of revenue $ 116 $ 67 $ 340 $ 281 Sales and marketing expenses 634 1,101 2,196 3,352 Research and development expenses 5 54 98 175 Reimbursement, general and administrative expenses 1,011 1,338 2,963 3,873 Total stock-based compensation expense $ 1,766 $ 2,560 $ 5,597 $ 7,681 |
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, 2022 615,307 $ 43.25 4.7 years $ 164 Exercised (4,432) $ 3.04 $ 96 Forfeited (24,498) $ 47.68 Cancelled/Expired (114,932) $ 50.57 Balance at September 30, 2023 471,445 $ 41.62 4.0 years $ 216 Options exercisable at September 30, 2023 400,484 $ 43.45 3.8 years $ 76 (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, 2022 590,542 $ 19.42 $ 6,779 Granted 378,498 $ 15.82 Vested (236,284) $ 19.96 Cancelled (114,060) $ 20.81 Balance at September 30, 2023 618,696 $ 16.75 $ 8,693 (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. |
Performance-based stock-settled restricted stock units | |
Schedule of stock-settled restricted stock unit activity | Weighted- Average Grant Aggregate PSUs Date Fair Value Intrinsic (In thousands except unit and per unit data) Outstanding Per Unit Value (1) Balance at December 31, 2022 155,618 $ 25.05 $ 1,786 Granted 123,575 $ 15.28 Vested (13,842) $ 42.70 Cancelled (67,119) $ 21.50 Balance at September 30, 2023 198,232 $ 18.93 $ 2,785 (1) The aggregate intrinsic value of PSUs outstanding was based on our closing stock price on the last trading day of the period. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue. | |
Summary of revenue disaggregated by product | Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2023 2022 2023 2022 Revenue Lymphedema products $ 62,506 $ 54,214 $ 172,257 $ 146,502 Airway clearance products 7,080 11,048 24,514 26,383 Total $ 69,586 $ 65,262 $ 196,771 $ 172,885 Percentage of total revenue Lymphedema products 90% 83% 88% 85% Airway clearance products 10% 17% 12% 15% Total 100% 100% 100% 100% |
Summary of revenue by channel | Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2023 2022 2023 2022 Private insurers and other payers $ 39,376 $ 36,188 $ 101,300 $ 97,726 Veterans Administration 7,259 6,755 20,203 19,118 Medicare 15,871 11,271 50,754 29,658 Durable medical equipment distributors 7,080 11,048 24,514 26,383 Total $ 69,586 $ 65,262 $ 196,771 $ 172,885 |
Sales-type lease revenue and the associated cost of goods sold | Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2023 2022 2023 2022 Sales-type lease revenue $ 10,720 $ 9,717 $ 25,312 $ 24,905 Cost of sales-type lease revenue 3,211 2,992 9,122 7,640 Gross profit $ 7,509 $ 6,725 $ 16,190 $ 17,265 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Net Income (Loss) Per Share | |
Schedule of computation of the basic and diluted net income (loss) per share | Three Months Ended Nine Months Ended September 30, September 30, (In thousands, except share and per share data) 2023 2022 2023 2022 Net income (loss) $ 22,299 $ (2,279) $ 20,313 $ (22,487) Weighted-average shares outstanding 23,483,269 20,139,944 22,714,574 20,021,966 Weighted-average shares used to compute diluted net loss per share 23,848,729 20,139,944 22,987,667 20,021,966 Net income (loss) per share - Basic $ 0.95 $ (0.11) $ 0.89 $ (1.12) Net income (loss) per share - Diluted $ 0.94 $ (0.11) $ 0.88 $ (1.12) |
Schedule of potentially dilutive securities outstanding | Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Restricted stock units 74,972 607,706 190,071 607,706 Common stock options 430,521 613,783 430,521 613,783 Performance stock units — 164,027 17,392 164,027 Employee stock purchase plan — 143,526 — 93,592 Total 505,493 1,529,042 637,984 1,479,108 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurements | |
Schedule of changes in the earn-out liability | (In thousands) Earn-out liability at December 31, 2022 $ 13,050 Payment on earn-out (5,000) Fair value adjustments (2,475) Earn-out liability at September 30, 2023 $ 5,575 (In thousands) Earn-out liability at December 31, 2021 $ 6,200 Fair value adjustments 10,898 Earn-out liability at September 30, 2022 $ 17,098 |
Schedule of fair value measurements for our earn-out liability, cash equivalents and marketable securities | At December 31, 2022 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: Earn-out liability $ — $ — $ 8,050 $ 8,050 Total $ — $ — $ 8,050 $ 8,050 |
Nature of Business and Operat_2
Nature of Business and Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | ||
Feb. 27, 2023 | Aug. 02, 2016 | Sep. 30, 2023 | |
Subsidiary, Sale of Stock | |||
Net proceeds received after deducting underwriting discounts, commissions, and offering expenses | $ 34,625 | ||
IPO | |||
Subsidiary, Sale of Stock | |||
Number of shares of common stock sold | 4,120,000 | ||
IPO price per share (in dollars per share) | $ 10 | ||
Net proceeds from the initial public offering | $ 35,400 | ||
Expense Relating To Initial Public Offering | $ 2,900 | ||
Follow-On Public Offering | |||
Subsidiary, Sale of Stock | |||
Number of shares of common stock sold | 2,875,000 | ||
Stock price | $ 13 | ||
Net proceeds received after deducting underwriting discounts, commissions, and offering expenses | $ 34,600 |
Acquisitions (Details)
Acquisitions (Details) | Nov. 04, 2022 USD ($) | Sep. 08, 2021 USD ($) | Sep. 30, 2023 USD ($) |
Acquisitions | |||
Earn-out liability | $ 5,600,000 | ||
AffloVest APA | |||
Acquisitions | |||
Business revenue to exceed base revenue, Multiplier | 1.5 | ||
Earn-out liability, asset acquisition | $ 10,000,000 | ||
AffloVest APA | Earn-out period on or before November 28,2022 | |||
Acquisitions | |||
Earn-out liability, asset acquisition | 5,000,000 | ||
AffloVest APA | Earn-out period on or before May 26, 2023 | |||
Acquisitions | |||
Earn-out liability, asset acquisition | 5,000,000 | ||
Imputed interest payment | $ 250,000 | ||
AffloVest APA | Second earn-out amendment | |||
Acquisitions | |||
Business revenue to exceed base revenue, Multiplier | 3 | ||
Earn-out liability, asset acquisition | $ 10,000,000 | ||
Contingent consideration | $ 5,600,000 | ||
AffloVest APA | |||
Acquisitions | |||
Purchase price | $ 80,000,000 | ||
Escrow account | 500,000 | ||
Working capital adjustments | 200,000 | ||
Amount released to IBC | 300,000 | ||
Earn-out liability | $ 6,400,000 | ||
AffloVest APA | Earn-out period exceed Base Revenues from October 1, 2021 to September 30, 2022 | |||
Acquisitions | |||
Business revenue to exceed base revenue, Multiplier | 1.5 | ||
AffloVest APA | Earn-out period exceed Base Revenues from October 1, 2022 to September 30, 2023 | |||
Acquisitions | |||
Business revenue to exceed base revenue, Multiplier | 1.5 | ||
AffloVest APA | Maximum | |||
Acquisitions | |||
Total consideration transferred | $ 100,000,000 | ||
AffloVest APA | Maximum | Earn-out period exceed Base Revenues from October 1, 2021 to September 30, 2022 | |||
Acquisitions | |||
Earn-out liability | 10,000,000 | ||
AffloVest APA | Maximum | Earn-out period exceed Base Revenues from October 1, 2022 to September 30, 2023 | |||
Acquisitions | |||
Earn-out liability, asset acquisition | $ 10,000,000 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Inventories | ||
Finished goods | $ 7,880 | $ 5,100 |
Component parts and work-in-process | 15,618 | 18,024 |
Total inventories | $ 23,498 | $ 23,124 |
Goodwill And Intangible Asset_2
Goodwill And Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Sep. 30, 2021 | |
Patents and Intangibles | ||||||
Goodwill | $ 31,063 | $ 31,063 | $ 31,063 | |||
Impairment recognized | 0 | |||||
Definite-lived intangible assets: | ||||||
Gross Carrying Amount | 46,240 | 46,240 | 46,148 | |||
Accumulated Amortization | 8,591 | 8,591 | 5,728 | |||
Total | 37,649 | 37,649 | 40,420 | |||
Unamortized intangible assets: | ||||||
Total intangible assets (Gross) | 56,219 | 56,219 | 56,103 | |||
Total intangible assets (Net) | 47,628 | 47,628 | 50,375 | |||
Amortization expense | 900 | $ 1,000 | 2,900 | $ 2,900 | ||
Future Amortization | ||||||
2023 (October 1 - December 31) | 948 | 948 | ||||
2024 | 3,792 | 3,792 | ||||
2025 | 3,703 | 3,703 | ||||
2026 | 3,637 | 3,637 | ||||
2027 | 3,629 | 3,629 | ||||
Thereafter | 21,940 | 21,940 | ||||
Total | 37,649 | 37,649 | 40,420 | |||
Tradenames | ||||||
Unamortized intangible assets: | ||||||
Gross Carrying Amount, Indefinite | 9,500 | 9,500 | 9,500 | |||
Patents | ||||||
Unamortized intangible assets: | ||||||
Gross Carrying Amount, Indefinite | $ 479 | $ 479 | $ 455 | |||
Patents | ||||||
Definite-lived intangible assets: | ||||||
Weighted Average Amortization Period | 12 years | 12 years | 12 years | |||
Gross Carrying Amount | $ 990 | $ 990 | $ 897 | |||
Accumulated Amortization | 232 | 232 | 173 | |||
Total | 758 | 758 | 724 | |||
Future Amortization | ||||||
Total | $ 758 | $ 758 | $ 724 | |||
Defensive intangible assets | ||||||
Definite-lived intangible assets: | ||||||
Weighted Average Amortization Period | 1 year | 1 year | 2 years | |||
Gross Carrying Amount | $ 1,125 | $ 1,125 | $ 1,126 | |||
Accumulated Amortization | 883 | 883 | 764 | |||
Total | 242 | 242 | 362 | |||
Future Amortization | ||||||
Total | 242 | 242 | 362 | |||
Customer accounts | ||||||
Definite-lived intangible assets: | ||||||
Gross Carrying Amount | 125 | 125 | 125 | |||
Accumulated Amortization | $ 125 | $ 125 | 114 | |||
Total | 11 | |||||
Future Amortization | ||||||
Total | $ 11 | |||||
Customer relationships | ||||||
Definite-lived intangible assets: | ||||||
Weighted Average Amortization Period | 11 years | 11 years | 12 years | |||
Gross Carrying Amount | $ 31,000 | $ 31,000 | $ 31,000 | |||
Accumulated Amortization | 4,915 | 4,915 | 3,127 | |||
Total | 26,085 | 26,085 | 27,873 | |||
Future Amortization | ||||||
Total | $ 26,085 | $ 26,085 | $ 27,873 | |||
Developed technology | ||||||
Definite-lived intangible assets: | ||||||
Weighted Average Amortization Period | 9 years | 9 years | 10 years | |||
Gross Carrying Amount | $ 13,000 | $ 13,000 | $ 13,000 | |||
Accumulated Amortization | 2,436 | 2,436 | 1,550 | |||
Total | 10,564 | 10,564 | 11,450 | |||
Future Amortization | ||||||
Total | $ 10,564 | $ 10,564 | $ 11,450 | |||
Maximum | ||||||
Definite-lived intangible assets: | ||||||
Weighted Average Amortization Period | 1 year | |||||
AffloVest APA | ||||||
Patents and Intangibles | ||||||
Goodwill | $ 31,100 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 |
Accrued Expenses | |||
Warranty | $ 1,872 | $ 2,005 | $ 1,732 |
Travel | 1,019 | 1,121 | |
Legal and consulting | 821 | 730 | |
Clinical studies | 379 | 3,228 | |
In-transit inventory | 385 | 276 | |
Sales and use tax | 142 | 147 | |
Other | 709 | 1,733 | |
Total | $ 5,327 | $ 9,240 |
Warranty Reserves (Details)
Warranty Reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||||
Beginning balance | $ 3,828 | $ 4,818 | $ 4,212 | $ 4,959 | |
Warranty provision | 1,228 | 589 | 3,128 | 1,586 | |
Processed warranty claims | (1,403) | (783) | (3,687) | (1,921) | |
Ending balance | 3,653 | 4,624 | 3,653 | 4,624 | |
Accrued warranty reserve, current | 1,872 | 1,732 | 1,872 | 1,732 | $ 2,005 |
Accrued warranty reserve, non-current | 1,781 | 2,892 | 1,781 | 2,892 | $ 2,207 |
Total accrued warranty reserve | $ 3,653 | $ 4,624 | $ 3,653 | $ 4,624 |
Credit Agreement (Details)
Credit Agreement (Details) - USD ($) | 6 Months Ended | 9 Months Ended | |||||
Aug. 01, 2023 | Jun. 21, 2023 | Feb. 22, 2022 | Sep. 08, 2021 | Jun. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Credit Agreement | |||||||
Basis spread (as a percent) | 0.10% | ||||||
Credit facility outstanding amount | $ 25,000,000 | $ 16,677,000 | $ 24,916,000 | ||||
Line of credit, threshold contingent increase in borrowing capacity | 25,000,000 | ||||||
Credit agreement, total aggregate principal amount | 80,000,000 | ||||||
Long-term debt | $ 46,800,000 | ||||||
SOFR | |||||||
Credit Agreement | |||||||
Basis spread (as a percent) | 3.50% | ||||||
Revolving credit facility | |||||||
Credit Agreement | |||||||
Line of credit | 25,000,000 | ||||||
Credit facility outstanding amount | $ 16,800,000 | ||||||
Revolving credit facility | Federal Funds | |||||||
Credit Agreement | |||||||
Basis spread (as a percent) | 0.50% | ||||||
Revolving credit facility | Base Rate | |||||||
Credit Agreement | |||||||
Basis spread (as a percent) | 1% | ||||||
Revolving credit facility | SOFR | |||||||
Credit Agreement | |||||||
Basis spread (as a percent) | 3.50% | 7.72% | |||||
Revolving credit facility | Maximum | |||||||
Credit Agreement | |||||||
Unused line fee (as a percent) | 0.20% | ||||||
Revolving credit facility | Maximum | Base Rate | |||||||
Credit Agreement | |||||||
Basis spread (as a percent) | 2.25% | ||||||
Revolving credit facility | Maximum | SOFR | |||||||
Credit Agreement | |||||||
Basis spread (as a percent) | 3.25% | ||||||
Revolving credit facility | Minimum | |||||||
Credit Agreement | |||||||
Unused line fee (as a percent) | 0.125% | ||||||
Revolving credit facility | Minimum | Base Rate | |||||||
Credit Agreement | |||||||
Basis spread (as a percent) | 0.75% | ||||||
Revolving credit facility | Minimum | SOFR | |||||||
Credit Agreement | |||||||
Basis spread (as a percent) | 1.75% | ||||||
Term Loan | |||||||
Credit Agreement | |||||||
Increase in term debt | $ 8,250,000 | ||||||
Debt instrument face amount | 30,000,000 | ||||||
Long-term debt | $ 30,000,000 | $ 30,000,000 | 30,000,000 | ||||
Debt instrument periodic payment | $ 750,000 | ||||||
Debt instrument frequency of periodic payment | quarterly | ||||||
Principal prepayment of term loan | $ 3,000,000 |
Credit Agreement - Maturities o
Credit Agreement - Maturities of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Jun. 30, 2023 | Sep. 08, 2021 |
Maturities of notes payable | |||
Total | $ 46,800 | ||
Term Loan | |||
Maturities of notes payable | |||
2023 (October 1 - December 31) | $ 750 | ||
2024 | 3,000 | ||
2025 | 3,000 | ||
2026 | 23,250 | ||
Total | $ 30,000 | $ 30,000 | $ 30,000 |
Commitments and Contingencies -
Commitments and Contingencies - Lease Obligations (Details) - ft² | 9 Months Ended | |||
Sep. 30, 2023 | Dec. 31, 2019 | Dec. 31, 2018 | Oct. 31, 2018 | |
Minimum | ||||
Commitments and Contingencies | ||||
Remaining lease terms | 12 months | |||
Building | Minimum | ||||
Commitments and Contingencies | ||||
Remaining lease terms | 1 year | |||
Building | Maximum | ||||
Commitments and Contingencies | ||||
Remaining lease terms | 8 years | |||
Vehicles | ||||
Commitments and Contingencies | ||||
Remaining lease terms | 367 days | |||
Equipment | ||||
Commitments and Contingencies | ||||
Option to renew | true | |||
Equipment | Minimum | ||||
Commitments and Contingencies | ||||
Remaining lease terms | 1 year | |||
Equipment | Maximum | ||||
Commitments and Contingencies | ||||
Remaining lease terms | 4 years | |||
Initial lease | ||||
Commitments and Contingencies | ||||
Area of office space | 80,000 | |||
Second lease | ||||
Commitments and Contingencies | ||||
Area of office space | 29,000 | |||
Additional office space added to the lease | 4,000 | |||
Third lease | ||||
Commitments and Contingencies | ||||
Additional office space added to the lease | 37,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Lease related assets and liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Lease-related assets and liabilities | |||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Right of use operating lease assets | Right of use operating lease assets | |
Right of use operating lease assets | $ 19,303 | $ 21,322 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Operating lease liabilities, Current | Operating lease liabilities, Current | |
Operating lease liabilities, Current | $ 2,596 | $ 2,500 | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Operating lease liabilities, non-current | Operating lease liabilities, non-current | |
Operating lease liabilities, non-current | $ 19,043 | $ 20,866 | |
Present value of future minimum lease payments | $ 21,639 | $ 23,366 | |
Weighted average remaining lease term | 7 years | 7 years 8 months 12 days | |
Weighted average discount rate | 4.30% | 4.20% | |
Cash paid for operating lease liabilities | $ 2,579 | $ 2,703 | |
Non-cash right of use assets obtained in exchange for new operating lease obligations | $ 132 | $ 49 |
Commitments and Contingencies_3
Commitments and Contingencies - Undiscounted cash flows (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Undiscounted cash flows | ||
2023 (October 1 - December 31) | $ 869 | |
2024 | 3,468 | |
2025 | 3,569 | |
2026 | 3,642 | |
2027 | 3,171 | |
Thereafter | 10,082 | |
Total minimum lease payments | 24,801 | |
Less: Amount of lease payments representing interest | (3,162) | |
Present value of future minimum lease payments | 21,639 | $ 23,366 |
Less: Current obligations under operating lease liabilities | (2,596) | (2,500) |
Non-current obligations under operating lease liabilities | $ 19,043 | $ 20,866 |
Commitments and Contingencies_4
Commitments and Contingencies - Lease commitments and operating lease cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Commitments and Contingencies | ||||
Operating lease cost | $ 0.9 | $ 0.9 | $ 2.7 | $ 2.8 |
Commitments and Contingencies_5
Commitments and Contingencies - Major Vendors (Details) - item | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Vendor One | ||||
Commitments and Contingencies | ||||
Number of vendors | 1 | 1 | 1 | 1 |
Vendor Two | ||||
Commitments and Contingencies | ||||
Number of vendors | 2 | 2 | ||
Purchases | Vendor | Vendor One | ||||
Commitments and Contingencies | ||||
Total purchases (in percentage) | 29% | 24% | 26% | |
Purchases | Vendor | Vendor Two | ||||
Commitments and Contingencies | ||||
Total purchases (in percentage) | 44% |
Commitments and Contingencies_6
Commitments and Contingencies - Purchase Commitments (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Purchase commitments | |
Purchase orders issued | $ 27.7 |
Commitments and Contingencies_7
Commitments and Contingencies - Retirement Plan (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
401(k) | ||||
Retirement Plan | ||||
Discretionary contributions | $ 0.4 | $ 0.4 | $ 1.1 | $ 1.1 |
Commitments and Contingencies_8
Commitments and Contingencies - Legal Proceedings (Details) $ in Millions | Nov. 21, 2022 USD ($) |
Commitments and Contingencies | |
Settlement amount | $ 5 |
Stockholders' Equity - Stock-Ba
Stockholders' Equity - Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock-based compensation | ||||
Compensation expense | $ 1,766 | $ 2,560 | $ 5,597 | $ 7,681 |
Cost of revenue. | ||||
Stock-based compensation | ||||
Compensation expense | 116 | 67 | 340 | 281 |
Sales and marketing expenses | ||||
Stock-based compensation | ||||
Compensation expense | 634 | 1,101 | 2,196 | 3,352 |
Research and development expenses | ||||
Stock-based compensation | ||||
Compensation expense | 5 | 54 | 98 | 175 |
Reimbursement, general and administrative expenses | ||||
Stock-based compensation | ||||
Compensation expense | $ 1,011 | $ 1,338 | $ 2,963 | $ 3,873 |
2016 Plan | ||||
Stock-based compensation | ||||
Number of shares authorized | 4,800,000 | 4,800,000 | ||
Automatic annual increase to the number of shares reserved and available for issuance as a percentage of outstanding common stock (as a percent) | 5% | 5% | ||
Automatic annual increase to the number of shares reserved and available for issuance | 2,500,000 | 2,500,000 | ||
Shares available for future issuance | 5,773,265 | 5,773,265 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Options and Restricted Stock (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2023 USD ($) item $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | |
Stock-based compensation, general disclosures. | |||||
Stock-based compensation expense | $ | $ 1,766 | $ 2,560 | $ 5,597 | $ 7,681 | |
Employee Stock Option [Member] | |||||
Stock-based compensation, general disclosures. | |||||
Stock-based compensation expense | $ | 200 | $ 600 | 800 | $ 2,000 | |
Total unrecognized pre-tax compensation expense related to nonvested stock option awards | $ | $ 400 | $ 400 | |||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 10 months 24 days | ||||
Options Outstanding | |||||
Outstanding at beginning of period | shares | 615,307 | ||||
Exercised | shares | (4,432) | ||||
Forfeited | shares | (24,498) | ||||
Cancelled/Expired | shares | (114,932) | ||||
Outstanding at end of period | shares | 471,445 | 471,445 | 615,307 | ||
Weighted Average Exercise Price Per Share | |||||
Outstanding at beginning of period | $ / shares | $ 43.25 | ||||
Exercised | $ / shares | 3.04 | ||||
Forfeited | $ / shares | 47.68 | ||||
Cancelled/Expired | $ / shares | 50.57 | ||||
Outstanding at end of period | $ / shares | $ 41.62 | $ 41.62 | $ 43.25 | ||
Other information | |||||
Options exercisable number of shares exercisable | shares | 400,484 | 402,979 | 400,484 | 402,979 | |
Options exercisable, weighted-average exercise price | $ / shares | $ 43.45 | $ 44.18 | $ 43.45 | $ 44.18 | |
Weighted average remaining contractual life (in years) | 4 years | 4 years 8 months 12 days | |||
Options exercisable, weighted-average remaining contractual life | 3 years 9 months 18 days | ||||
Aggregate Intrinsic Value, Options outstanding | $ | $ 216 | $ 216 | $ 164 | ||
Aggregate Intrinsic Value, Exercised | $ | 96 | ||||
Aggregate Intrinsic Value, Options exercisable | $ | 76 | $ 76 | |||
Employee Stock Option [Member] | Minimum | |||||
Stock-based compensation, general disclosures. | |||||
Vesting period (in years) | 3 years | ||||
Term (in years) | 7 years | ||||
Employee Stock Option [Member] | Maximum | |||||
Stock-based compensation, general disclosures. | |||||
Vesting period (in years) | 4 years | ||||
Term (in years) | 10 years | ||||
2016 Plan | Time-Based Restricted Stock Units | |||||
Stock-based compensation, general disclosures. | |||||
Stock-based compensation expense | $ | 1,200 | $ 1,500 | $ 3,800 | $ 4,500 | |
Total unrecognized pre-tax compensation expense related to awards | $ | $ 7,600 | $ 7,600 | |||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 1 year 7 months 6 days | ||||
Units Outstanding | |||||
Restricted stock unit awards outstanding at the beginning of the period (in shares) | shares | 590,542 | ||||
Granted (in shares) | shares | 378,498 | ||||
Vested (in shares) | shares | (236,284) | ||||
Cancelled (in shares) | shares | (114,060) | ||||
Restricted stock unit awards outstanding at the end of the period (in shares) | shares | 618,696 | 618,696 | 590,542 | ||
Weighted Average Grant Date Fair Value Per Unit | |||||
Restricted stock unit awards outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 19.42 | ||||
Granted (in dollars per share) | $ / shares | 15.82 | ||||
Vested (in dollars per share) | $ / shares | 19.96 | ||||
Cancelled (in dollars per share) | $ / shares | 20.81 | ||||
Restricted stock unit awards outstanding at the end of the period (in dollars per share) | $ / shares | $ 16.75 | $ 16.75 | $ 19.42 | ||
Aggregate Intrinsic Value | |||||
Restricted stock unit awards, Average Intrinsic Value | $ | $ 8,693 | $ 8,693 | $ 6,779 | ||
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 | $ | 300 | $ 300 | $ 600 | $ 500 | |
Total unrecognized pre-tax compensation expense related to awards | $ | $ 1,700 | $ 1,700 | |||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 2 years 1 month 6 days | ||||
Number of performance awards under share-based payment arrangement | item | 3 | ||||
Units Outstanding | |||||
Restricted stock unit awards outstanding at the beginning of the period (in shares) | shares | 155,618 | ||||
Granted (in shares) | shares | 123,575 | ||||
Vested (in shares) | shares | (13,842) | ||||
Cancelled (in shares) | shares | (67,119) | ||||
Restricted stock unit awards outstanding at the end of the period (in shares) | shares | 198,232 | 198,232 | 155,618 | ||
Weighted Average Grant Date Fair Value Per Unit | |||||
Restricted stock unit awards outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 25.05 | ||||
Granted (in dollars per share) | $ / shares | 15.28 | ||||
Vested (in dollars per share) | $ / shares | 42.70 | ||||
Cancelled (in dollars per share) | $ / shares | 21.50 | ||||
Restricted stock unit awards outstanding at the end of the period (in dollars per share) | $ / shares | $ 18.93 | $ 18.93 | $ 25.05 | ||
Aggregate Intrinsic Value | |||||
Restricted stock unit awards, Average Intrinsic Value | $ | $ 2,785 | $ 2,785 | $ 1,786 | ||
2016 Plan | Performance-based stock-settled restricted stock units | Minimum | |||||
Stock-based compensation, general disclosures. | |||||
Performance goals revenue change and adjusted EBITDA margin | 25% | ||||
Units Outstanding | |||||
Percentage to earn or vest the performance-based stock-settled restricted stock units | 50% | ||||
2016 Plan | Performance-based stock-settled restricted stock units | Maximum | |||||
Stock-based compensation, general disclosures. | |||||
Performance goals revenue change and adjusted EBITDA margin | 175% | ||||
Units Outstanding | |||||
Percentage to earn or vest the performance-based stock-settled restricted stock units | 150% | ||||
2016 Plan | Tranche one | Performance-based stock-settled restricted stock units | |||||
Stock-based compensation, general disclosures. | |||||
Award vesting percentage | 33.33% | ||||
2016 Plan | Tranche two | Performance-based stock-settled restricted stock units | |||||
Stock-based compensation, general disclosures. | |||||
Award vesting percentage | 33.33% |
Stockholders' Equity - Employee
Stockholders' Equity - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Apr. 27, 2016 | |
Stockholders' Equity | |||||
Stock-based compensation expense | $ 1,766 | $ 2,560 | $ 5,597 | $ 7,681 | |
2016 Plan | |||||
Stockholders' Equity | |||||
Shares reserved | 5,773,265 | 5,773,265 | |||
Employee Stock Purchase Plan | |||||
Stockholders' Equity | |||||
Purchase price of common stock under plan (as a percent) | 85% | ||||
Offering period (in months) | 6 months | ||||
Shares reserved | 1,438,335 | 1,438,335 | 1,600,000 | ||
Incremental share increase (as a percent) | 1% | ||||
Incremental share increase (in shares) | 500,000 | ||||
Stock-based compensation expense | $ 100 | $ 200 | $ 400 | $ 700 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue | ||||
Revenue | $ 69,586 | $ 65,262 | $ 196,771 | $ 172,885 |
Percentage of total revenue (in percent) | 100% | 100% | 100% | 100% |
Revenue from sale type lease | ||||
Sales-type lease revenue | $ 10,720 | $ 9,717 | $ 25,312 | $ 24,905 |
Cost of sales-type lease revenue | 3,211 | 2,992 | 9,122 | 7,640 |
Gross profit | 7,509 | 6,725 | $ 16,190 | 17,265 |
Minimum | ||||
Revenue from sale type lease | ||||
Rental period of rent-to-purchase arrangements | 3 months | |||
Maximum | ||||
Revenue from sale type lease | ||||
Rental period of rent-to-purchase arrangements | 10 months | |||
Private insurers and other payers | ||||
Revenue | ||||
Revenue | 39,376 | 36,188 | $ 101,300 | 97,726 |
Veterans Administration | ||||
Revenue | ||||
Revenue | 7,259 | 6,755 | 20,203 | 19,118 |
Medicare | ||||
Revenue | ||||
Revenue | 15,871 | 11,271 | 50,754 | 29,658 |
Durable medical equipment distributors | ||||
Revenue | ||||
Revenue | 7,080 | 11,048 | 24,514 | 26,383 |
Lymphedema products | ||||
Revenue | ||||
Revenue | $ 62,506 | $ 54,214 | $ 172,257 | $ 146,502 |
Percentage of total revenue (in percent) | 90% | 83% | 88% | 85% |
Airway clearance products | ||||
Revenue | ||||
Revenue | $ 7,080 | $ 11,048 | $ 24,514 | $ 26,383 |
Percentage of total revenue (in percent) | 10% | 17% | 12% | 15% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Taxes | ||||
Net effective rate | (194.00%) | (3.40%) | (407.10%) | 0.50% |
Income tax (benefit) expense | $ (14,714) | $ (77) | $ (16,307) | $ 114 |
Additional deferred taxes | $ 17,900 | $ 17,900 |
Net Income (Loss) Per Share - B
Net Income (Loss) Per Share - Basic and Diluted Net income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Net Income (Loss) Per Share | ||||
Net Income (Loss) | $ 22,299 | $ (2,279) | $ 20,313 | $ (22,487) |
Weighted-average shares outstanding | 23,483,269 | 20,139,944 | 22,714,574 | 20,021,966 |
Weighted-average shares used to compute diluted net loss per share | 23,848,729 | 20,139,944 | 22,987,667 | 20,021,966 |
Net income (loss) per share - Basic | $ 0.95 | $ (0.11) | $ 0.89 | $ (1.12) |
Net income (loss) per share - Diluted | $ 0.94 | $ (0.11) | $ 0.88 | $ (1.12) |
Net Income (Loss) Per Share - A
Net Income (Loss) Per Share - Antidilutive Securities Excluded From Computation of Earnings Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Net Income (Loss) Per Share | ||||
Antidilutive securities excluded from computation of earnings per share | 505,493 | 1,529,042 | 637,984 | 1,479,108 |
Restricted stock units | ||||
Net Income (Loss) Per Share | ||||
Antidilutive securities excluded from computation of earnings per share | 74,972 | 607,706 | 190,071 | 607,706 |
Common stock options | ||||
Net Income (Loss) Per Share | ||||
Antidilutive securities excluded from computation of earnings per share | 430,521 | 613,783 | 430,521 | 613,783 |
Performance stock units | ||||
Net Income (Loss) Per Share | ||||
Antidilutive securities excluded from computation of earnings per share | 164,027 | 17,392 | 164,027 | |
Employee stock purchase plan | ||||
Net Income (Loss) Per Share | ||||
Antidilutive securities excluded from computation of earnings per share | 143,526 | 93,592 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Fair Value Measurements | |
Additional earn out payment | $ 5.6 |
Remaining contingent earn-out liability | $ 0 |
Fair Value Measurements - Earn
Fair Value Measurements - Earn out liability (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Payment on earn-out | $ (5,000) | |
Earn-out liability, ending balance | 5,600 | |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Earn-out liability, beginning balance | 13,050 | $ 6,200 |
Payment on earn-out | (5,000) | |
Fair value adjustments | (2,475) | 10,898 |
Earn-out liability, ending balance | $ 5,575 | $ 17,098 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Hierarchy (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value Measurements | ||||
Earn-out liability | $ 5,600 | |||
Significant Unobservable Inputs (Level 3) | ||||
Fair Value Measurements | ||||
Earn-out liability | $ 5,575 | $ 13,050 | $ 17,098 | $ 6,200 |
Recurring | ||||
Fair Value Measurements | ||||
Earn-out liability | 8,050 | |||
Total | 8,050 | |||
Recurring | Significant Unobservable Inputs (Level 3) | ||||
Fair Value Measurements | ||||
Earn-out liability | 8,050 | |||
Total | $ 8,050 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 22,299 | $ (2,279) | $ 20,313 | $ (22,487) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |