What changed in this filing

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Item 1. Business

2024-08-27 compared with 2023-08-22 · 180 added, 240 removed, 457 unchanged (48% of the section changed)

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manufactures, markets and sells innovative products that provide airway clearance therapy, including the SmartVest ®

Airway Clearance System (“SmartVest System”) and related products, to patients with compromised pulmonary function

with a commitment to excellence and compassionate service.

Our goal is to make High Frequency Chest Wall Oscillation (“HFCWO”)

treatments as effective, convenient, and comfortable as possible, so our patients can breathe easier and live better with improved

respiratory function and fewer exacerbations.

employ a direct-to-patient and provider model, through which we obtain patient referrals from clinicians, manage insurance claims

on behalf of our patients, and deliver the SmartVest System to patients, training them on proper use in their homes.

allows us to directly approach patients and clinicians, whereby we disintermediate the traditional durable medical equipment (“DME”)

channel and capture both the manufacturer and distributor margins.

We also sell our products in the acute care setting for patients

in a post-surgical or intensive care unit, or who were admitted for a lung infection brought on by compromised airway clearance.

Airway Clearance System (“SmartVest System”) to patients with compromised pulmonary function with a commitment to

excellence and compassionate service.

Our goal is to make High Frequency Chest Wall Oscillation (“HFCWO”) treatments

as effective, convenient, and comfortable as possible, so our patients can breathe easier and live better with improved respiratory

function and fewer exacerbations.

primarily employ a direct-to-patient and provider model, through which we obtain patient referrals from clinicians, manage insurance

claims on behalf of our patients, and deliver the SmartVest System to patients, training them on proper use in their homes.

model allows us to directly approach patients and clinicians, whereby we disintermediate the traditional durable medical equipment

(“DME”) channel and capture both the manufacturer and distributor margins.

We also sell our products in the acute

care setting for patients in a post-surgical or intensive care unit, or who were admitted for a lung infection brought on by compromised

airway clearance.

Electromed was incorporated in Minnesota in 1992.

Our common stock is listed on the NYSE American under the ticker symbol “ELMD.”

SmartVest System features a programmable air pulse generator, a therapy garment worn over the upper body and a connecting hose,

which together provide safe, comfortable, and effective airway clearance therapy.

The SmartVest System generates HFCWO, an airway

clearance therapy.

One factor of respiratory health is the ability to clear secretions from airways.

Impaired airway clearance,

when mucus cannot be expectorated, may result in labored breathing and/or inflammatory and immune systems boosting mucus production

that invites bacteria trapped in stagnant secretions to cause infections.

Studies show that HFCWO therapy is as effective an airway

clearance method for patients who have compromised pulmonary function as traditional chest physical therapy (“CPT”)

administered by a respiratory therapist.

1 However, HFCWO can be self-administered, relieving a caregiver of participation

in the therapy, and eliminating the attendant cost of an in-home care provider.

We believe that HFCWO treatments are cost-effective

primarily because they reduce a patient’s risk of respiratory infections and other secondary complications that are associated

with impaired airway clearance and often result in costly hospital visits and repeated antibiotic use.

Our common stock is listed on the NYSE American under the

ticker symbol “ELMD.”

SmartVest System generates HFCWO, an airway clearance therapy.

The SmartVest System features a programmable air pulse generator,

a therapy garment worn over the upper body and a connecting hose, which together provide safe, comfortable, and effective therapy

to clear the lung and airway from retained secretions and mucus which can harbor bacteria and lead to infection.

One important

factor of respiratory health is the ability to clear secretions from airways.

Impaired airway clearance, when mucus cannot be

expectorated, may result in labored breathing, inflammatory response and/or immune systems boosting mucus production that invites

bacteria trapped in stagnant secretions to cause infections.

Studies show that HFCWO therapy is as effective an airway clearance

method for patients who have compromised pulmonary function as traditional chest physical therapy (“CPT”) administered

by a respiratory therapist.

1 However, HFCWO can be self-administered, relieving a caregiver of participation in the

therapy, and eliminating the attendant cost of an in-home care provider.

We believe that HFCWO treatments are cost-effective primarily

because they reduce a patient’s risk of respiratory infections and other secondary complications that are associated with

impaired airway clearance and often result in costly hospital visits and repeated antibiotic use.

SmartVest System is designed for patient comfort and ease of use which promotes adherence to prescribed treatment schedules, leading

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We offer a broad

range of garments, referred to as vests and wraps, in sizes for children and adults that allow for tailored fit.

range of garments, referred to as vests and wraps, in sizes for children and adults that allow for a tailored fit.

User-friendly

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treatment regimen.

Additionally, our reimbursement department assures we are working on behalf of the patient by processing their

physician paperwork, providing clinical support and billing the applicable insurance provider.

We believe that the advantages

of the SmartVest System and the Company’s customer services to the patient include:

Additionally, our reimbursement department works on behalf of the patient by processing their physician paperwork,

providing clinical support and billing the applicable insurance provider.

We believe that the advantages of the SmartVest System

and the Company’s customer services to the patient include:

quality of life;

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● eligibility

for reimbursement by private insurance, federal or state government programs or combinations of the foregoing.

for reimbursement by private insurance, federal or state government programs or combinations

of the foregoing.

Effectiveness of treatment with high-frequency chest wall oscillation in patients with bronchiectasis.

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airway clearance and improve bronchial drainage.

In addition, Electromed is certified to apply the Conformité Européenne

(“European Conformity” or “CE”) marking for HFCWO device sales in all European Union member countries

and approved for HFCWO device sales in other, select international countries.

The SmartVest System is available only with a physician’s

prescription.

In addition, Electromed is approved for HFCWO device sales in other, select international

The SmartVest System is available only with a physician’s prescription.

SmartVest System is currently available in two models, The SmartVest SQL ® and SmartVest Clearway ® –

which are sold into home care and hospital markets.

which are sold into homecare and hospital markets.

In November 2022, we announced the introduction of SmartVest Clearway ® ,

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and service earlier SmartVest models pursuant to the applicable product warranty.

As part of our growth strategies, we periodically

evaluate opportunities involving products and services, especially those that may provide value to the respiratory homecare and

institutional market.

As part of our growth strategies, we evaluate

opportunities involving products and services, especially those that may provide value to the respiratory homecare and hospital

SmartVest Clearway System

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is designed for maximum comfort and lifestyle convenience, so patients can readily fit therapy into their daily routines.

SmartVest Clearway was designed with the patient experience in mind continuing our history of offering the smallest, lightest

weight generator on the market and introduces an intuitive touch screen to simplify use.

The enhanced features make it easier

to use and enable greater patient freedom in completing therapy.

SmartVest Clearway was designed with patient experience in mind, continuing our history of offering the smallest, lightest weight

generator on the market and featuring an intuitive touch screen to simplify use.

The enhanced features make it easier to use and

enable greater patient freedom in completing therapy.

oscillation coverage and patented Soft Start (R) technology:

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The improved user interface enhances

device programming and simplifies every-day use.

device programming and simplifies everyday use.

The system features multiple operating

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garment available and is designed to resemble an article of clothing.

The light design

takes weight off of the patients shoulders and torso enhancing the therapy experience.

Quick fit Velcro ® -like closures allow for a secure, comfortable fit without

bulky straps and buckles.

The simple design creates a broad size adjustment range to

ensure a properly tailored fit to accommodate pediatric and adult patients.

The garment’s

design takes weight off of the patient’s shoulders and torso, enhancing the therapy

Quick fit Velcro ® -like closures allow for a secure, comfortable

fit without bulky straps and buckles.

The simple design creates a broad size adjustment

range to ensure a properly tailored fit to accommodate pediatric and adult patients.

SmartVest Clearway is the smallest and lightest HFCWO generator on the

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The lightweight design, ergonomic carrying handle

and compact storage case make it easier for patients to move throughout their home, store

and integrate HFCWO therapy into their daily lives.

June 2017, we launched SmartVest Connect ® wireless technology, a personalized HFCWO therapy management portal for

patients with compromised pulmonary function.

In March 2020, we launched the SmartVest Connect app for both the iOS and Android

operating systems.

The SmartVest Connect app securely connects to the SmartVest System through Bluetooth™ technology.

interface allows patients and healthcare teams to track therapy in real-time and collaborate on care decisions to improve therapy

adherence and patient outcomes.

and compact storage case make it easier for patients to move throughout their home as

well as store and integrate HFCWO therapy into their daily lives.

market the Single Patient Use (“SPU”) SmartVest and SmartVest Wrap ® to health care providers in the

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is prescribed for patients with a chronic condition upon discharge for use in the home.

estimate the total served U.S.

market for HFCWO is approximately $250 million in 2022 growing at a 9% compound annual growth rate

based on independent third-party market research.

We believe the market for HFCWO is under recognized and underdiagnosed and is

continuing to expand due to an aging population, higher incidence of chronic lung disease, growing awareness by physicians of

diseases and conditions for which patients can benefit from using HFCWO therapy, and treatments moving to lower cost home care

estimate the U.S.

market for HFCWO was approximately $235 million in 2023 growing at an 8% compound annual growth rate based on

independent third-party market research 15 .

We believe the market for HFCWO is under recognized and underdiagnosed and

is continuing to expand due to an aging population, higher incidence of chronic lung disease, growing awareness by physicians

of diseases and conditions for which patients can benefit from using HFCWO therapy, and treatments moving to lower cost homecare

Indications for when HFCWO may be prescribed are not specific to any one disease.

A physician may elect to prescribe

HFCWO when such individual believes the patient will benefit from improved airway clearance and external chest manipulation is

the treatment of choice to enhance mucus transport and improve bronchial drainage.

HFCWO when they believe the patient will benefit from improved airway clearance and external chest manipulation as the best treatment

to enhance mucus transport and improve bronchial drainage.

SmartVest System is primarily prescribed for patients with bronchiectasis, cystic fibrosis, and neuromuscular conditions such

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We believe that bronchiectasis represents the fastest growing diagnostic category and greatest potential

for HFCWO growth in the United States exhibiting an 8.7% increase in patients diagnosed between 2000 and 2007 9 .

Bronchiectasis

is an irreversible, chronic lung condition characterized by enlarged and permanently damaged bronchi.

The condition is associated

with recurrent lower respiratory infections, inflammation, reduction in pulmonary function, impaired respiratory secretion clearance,

increased hospitalizations and medication use, and increased morbidity and mortality.

for HFCWO growth in the United States growing at 12% annually in recent years 15 .

Bronchiectasis is an irreversible,

chronic lung condition characterized by enlarged and permanently damaged bronchi.

The condition is associated with recurrent lower

respiratory infections, inflammation, reduction in pulmonary function, impaired respiratory secretion clearance, increased hospitalizations

and medication use, and increased morbidity and mortality.

are driven to make life’s important moments possible, one breath at a time, by leading the HFCWO therapy market in clinical

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and Critical Care Medicine reviewing outcomes among non-cystic fibrosis bronchiectasis patients with HFCWO Therapy 2-6.

addition, we designed and ran a quality-of-life study for COPD patients using SmartVest, which was shared at the 2023 American

In addition, we designed and ran a quality-of-life study for COPD patients using SmartVest, which was shared at the 2023 American

Thoracic Society International Conference and published in American Journal of Respiratory and Critical Care Medicine.

results demonstrated statistically significant favorable responses to HFCWO as add on therapy for patients with a primary diagnosis

We have also shared data from our bronchiectasis quality of life trial at the 2023 World Bronchiectasis and NTM Conference

highlight effects of HFCWO on clinical symptoms of patients with bronchiectasis Generating additional clinical evidence to further

support the SmartVest System as a preferred treatment for bronchiectasis patients will remain a focus in fiscal 2024.

believe that bronchiectasis is under recognized and underdiagnosed but is experiencing a surge in clinical interest and awareness,

We have also shared data from our bronchiectasis quality of life trial at the 2023 World Bronchiectasis and NTM

Conference, highlighting the effects of HFCWO with SmartVest on clinical symptoms of patients with bronchiectasis.

additional clinical evidence to further support the SmartVest System as a preferred treatment for bronchiectasis patients

will remain a focus in the fiscal year ended June 30, 2025 (“fiscal 2025”).

believe that bronchiectasis is underrecognized and under-diagnosed but is experiencing a surge in clinical interest and awareness,

including the relationship to COPD, commonly referred to as bronchiectasis COPD overlap syndrome.

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have estimated prevalence of bronchiectasis, which we believe are helpful for estimating a range of the overall market size.

(2017) projected 4.2 million adults in the United States over the age of 40 may have bronchiectasis, suggesting there is a large

pool of patients with undiagnosed disease.

(2018) confirmed a high prevalence of bronchiectasis in the United States, identifying over 600,000 unique patients with at least

one bronchiectasis claim (ICD-9 claims 494.0 or 494.1).

(2017) projected 4.2 million adults in the United States over the age of 40 may have

bronchiectasis, suggesting there is a large pool of patients with undiagnosed disease.

(2018) confirmed a high prevalence of bronchiectasis in the United States, identifying

over 600,000 unique patients with at least one bronchiectasis claim (ICD-9 claims 494.0

The study also observed that patients with dual diagnosis of bronchiectasis

and COPD were in poorer health, with more office visits, more inpatient admissions and more acute respiratory infections.

(2012) estimated that 190,000 unique cases of bronchiectasis were diagnosed in Medicare patients in 2007 and bronchiectasis prevalence

increased 8.7% annually between 2000 and 2007.

and COPD were in poorer health, with more office visits, more inpatient admissions and

more acute respiratory infections.

(2012) estimated that 190,000 unique cases of bronchiectasis were diagnosed in Medicare

patients in 2007 and bronchiectasis prevalence increased 8.7% annually between 2000 and

9 Based on historic growth in prevalence and assuming a constant growth

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(2017) found 20% (n=350) of patients with bronchiectasis enrolled in the U.S.

Bronchiectasis Research Registry between 2008 and

2014 also had COPD and 29% (n=515) also had asthma.

7 Other studies have found that the overlap between bronchiectasis

and COPD is observed in 27% to 57% of patients with COPD.

(2017) found that prevalence of bronchiectasis in patients with COPD ranged from a low of 4% to as high as 69% with mean prevalence

In many studies in patients with COPD, the presence of bronchiectasis was associated with reduced lung function, greater

sputum production, more frequent exacerbations and increased mortality versus those with COPD alone.

Bronchiectasis

Research Registry between 2008 and 2014 also had COPD and 29% (n=515) also had asthma.

Other studies have found that the overlap between bronchiectasis and COPD is observed

in 27% to 57% of patients with COPD.

(2017) found that prevalence of bronchiectasis in patients with COPD ranged from a low

of 4% to as high as 69% with mean prevalence of 54%.

In many studies in patients with

COPD, the presence of bronchiectasis was associated with reduced lung function, greater

sputum production, more frequent exacerbations and increased mortality versus those with

studies indicate a wide range of potential prevalence of bronchiectasis patients in the United States.

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Internal company estimates derived

from 2020 analysis of the IQVIA PharMetrics Plus database, one of the largest US health plan databases of adjudicated integrated

medical and pharmacy claims, indicate a 15% to 20% penetration of HFCWO within the diagnosed Bronchiectasis population 15 .

By conservatively assessing the market size in relation to the clinical studies cited above, we calculate that current HFCWO adoption

may account for only 100,000 patients of the 500,000 to 600,000 currently diagnosed and treatable patients (see Figure 1 below).

from a 2023 analysis of claims data indicate a 15% penetration of HFCWO within the 824,000 diagnosed Bronchiectasis population

(see Figure 1 below).

We believe that bronchiectasis is underdiagnosed in the U.S.

based on clinical study and epidemiology evidence with an even greater

number of patients that could potentially benefit from diagnosis and treatment.

We believe that HFCWO is under prescribed for

bronchiectasis patients resulting in a large, underpenetrated US market opportunity and growth potential for HFCWO therapy.

based on clinical study and epidemiology evidence

with an even greater number of patients that could potentially benefit from diagnosis and treatment.

We believe that HFCWO is

under prescribed for bronchiectasis patients resulting in a large, underpenetrated US market opportunity and growth potential

for HFCWO therapy.

Using High Frequency Chest Wall Oscillation in a Bronchiectasis Patient Population:

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Respiratory Therapy Journal.

Employment of an algorithm of care including chest physiotherapy results in reduced hospitalizations and stability of

lung function in bronchiectasis.

Employment of an algorithm of care including chest physiotherapy results in reduced hospitalizations and stability

of lung function in bronchiectasis.

BMC Pulmonary Medicine .

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NPJ Prim Care Respir Med .

Internal company estimates derived from IQVIA 2018 PharMetrics Plus Database

Internal company estimates derived from VGM claims database

Effects of High Frequency Chest Wall Oscillation

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Poster Abstract 310-B

Internal company estimates derived from Guidehouse 2023 literature review and 2023 CDC NHANES data

HFCWO Market Opportunity - Bronchiectasis Patients (U.S.) – Figure 1

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volume remained stable post enrollment, suggesting early initiation of HFCWO therapy

may slow the otherwise normal progression of the disease.

with SmartVest may slow the otherwise normal progression of the disease.

2022, the American Journal of Respiratory and Crucial Care Medicine published the results

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employees, including six regional sales managers, 53 clinical area managers (“CAMs”) and three clinical educators.

We also have developed a network of approximately 170 respiratory therapists and health care professionals across the U.S.

assist with in-home SmartVest System patient training on a non-exclusive, independent contractor basis.

These independent contractors

are credentialed by the National Board for Respiratory Care as either Certified Respiratory Therapists or Registered Respiratory

Therapists and provide national coverage to an internal team of Registered Respiratory Therapists dedicated to supporting SmartVest

Additionally, Electromed employs a team of reimbursement specialists dedicated to managing insurance and payer relations

and supporting prescribers and patients in navigating financial considerations.

The availability of reimbursement is an important

consideration for health care professionals and patients.

Because our product has an assigned Healthcare Common Procedure Coding

System (“HCPCS”) code, a claim can be billed for reimbursement using that code.

We must demonstrate the effectiveness

of our products to public and private insurance providers.

The availability of reimbursement exists primarily due to an established

HCPCS code for HFCWO.

We also have developed a network of approximately 170 respiratory therapists across the U.S.

to assist with in-home SmartVest

System patient training on a non-exclusive, independent contractor basis.

These independent contractors are credentialed by the

National Board for Respiratory Care as either Certified Respiratory Therapists or Registered Respiratory Therapists and provide

national coverage to an internal team of Registered Respiratory Therapists dedicated to supporting SmartVest patients.

Additionally,

Electromed employs a team of reimbursement specialists dedicated to managing insurance and payer relations and supporting prescribers

and patients in navigating financial considerations.

The availability of reimbursement is an important consideration for health

care professionals and patients.

Because our product has an assigned Healthcare Common Procedure Coding System (“HCPCS”)

code, a claim can be billed for reimbursement using that code.

We must demonstrate the effectiveness of our products to public

and private insurance providers.

The availability of reimbursement exists primarily due to an established HCPCS code for HFCWO.

A HCPCS code is assigned to services and products by the Centers for Medicare and Medicaid Services (“CMS”).

the $54.2 million of our revenue derived from the U.S.

in fiscal 2023, approximately 92% represented home care and 4% represented

hospital sales.

We expect to achieve future sales, earnings, and overall market share growth through a continued focus on product

innovation, differentiation and improved patient experiences and outcomes in the home care segment.

We believe that our position

in the market, direct sales team and a dedication to advancing education on HFCWO awareness positions us to drive market awareness

and growth to the benefits of HFCWO in treatment of bronchiectasis.

We believe that dedicated service to our providers and patients

is a key component of achieving future sales.

Providers seek companies that are easy to work with, are responsive and care for

their patients as an extension of their practices.

in fiscal 2024, approximately 94.7% represented homecare, inclusive of

homecare distributor sales, and 4.7% represented hospital sales.

We expect to achieve future sales, earnings, and overall market

share growth through a continued focus on product innovation, differentiation and improved patient experiences and outcomes in

the homecare market.

We believe that our position in the market, direct sales team and a dedication to advancing education on

HFCWO awareness positions us to drive market awareness and growth to the benefits of HFCWO in treatment of bronchiectasis.

believe that dedicated service to our providers and patients is a key component of achieving future sales.

Providers seek companies

that are easy to work with, are responsive and care for their patients as an extension of their practices.

generate sales interest through multiple channels that include visits to pulmonology clinics and medical centers, participation

in medical conferences, maintenance of industry contacts to increase the visibility and acceptance of our products by physicians

and health care professionals, support of industry events such as the Cystic Fibrosis Foundation World Bronchiectasis Day and

American Lung Association Fight for Air Climb, as well as through a focus on increasing patients by word of mouth and traffic

to our website and social media channels.

We continue to evaluate opportunities to offer the SmartVest System through selected

Home Medical Equipment (“HME”) distributors.

We maintain agreements with a limited number of HME distributors to distribute

and sell the SmartVest System in the United States home care market.

We expect to continue our direct sales channel as our primary

homecare revenue source.

International

and health care professionals, support of industry through the COPD Foundation, as well as through a focus on increasing patients

by word of mouth and traffic to our website and social media channels.

We continue to evaluate opportunities to offer the SmartVest

System through selected Home Medical Equipment (“HME”) distributors.

We maintain agreements with a limited number

of HME distributors to distribute and sell the SmartVest System in the United States homecare market.

We expect to continue our

direct sales channel as our primary homecare revenue source.

Approximately

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Our principal

distributors are located in Europe, the Arab states of the Persian Gulf, Southeast Asia, South America and Central America.

are sold at a fixed contract price with payments made directly from the distributor, rather than being tied to reimbursement rates

of a patient’s insurance provider as is the case for domestic sales.

distributors are located in Europe, the Arab states of the Persian Gulf, Southeast Asia, and Central America.

Units are sold at

a fixed contract price with payments made directly from the distributor, rather than being tied to reimbursement rates of a patient’s

insurance provider as is the case for domestic sales.

Our sales strategy outside of the U.S.

is to maintain

our current distributors with less emphasis on contracting with new distributors.

is to support our current distributors

with less emphasis on contracting with new distributors.

Reimbursement

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payers such as Medicare and Medicaid, to cover and reimburse all or part of the cost of using the SmartVest System.

Our home care

revenue comes from reimbursement from commercial payers, Medicare, Medicaid, Veterans Affairs and direct patient payments.

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processes and policies.

The reimbursement department includes the payer relations function working directly with all payer types

The reimbursement department includes our payer relations function working directly with all payer types

to increase the covered lives for the SmartVest System with national and regional private insurers and applicable state and federal

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respectively.

As a percentage of sales, we expect spending on R&D expenses to remain within a range of 1-2% of net revenues

for fiscal 2024.

of June 30, 2024, we held 12 United States and 44 foreign-issued patents covering the SmartVest System and its underlying technology.

and had 9 pending United States and foreign patent applications.

These patents and patent applications offer coverage in the field

of air pressure pulse delivery to a human in support of airway clearance.

These patents and patent applications offer coverage in the field of air pressure pulse delivery to a human in support of airway

generally pursue patent protection for patentable subject matter in our proprietary devices in foreign countries that we have

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These markets include the European Union, Japan, and other countries.

also have received 13 U.S.

and 111 foreign trademark and service mark registrations.

trademark registrations along with 111 foreign trademark registrations.

Manufacturing

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13485 quality system standards.

Our site has been audited regularly by the FDA and ISO, in accordance with their practices, and

we maintain our operations in a manner consistent with their requirements for a medical device manufacturer.

Our site has been audited regularly by the FDA and Notified Body, in accordance with their practices,

and we maintain our operations in a manner consistent with their requirements for a medical device manufacturer.

While components

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suppliers are located within 100 miles of our headquarters, which enables us to closely monitor our component supply chain.

maintain established inventory levels for critical components and finished goods to assure continuity of supply.

During fiscal

2022 and 2023, we experienced longer lead times for critical electronic components related to worldwide supply shortages due to

COVID-19 and the related U.S.

and global economic recovery.

continually review our suppliers and component sources to ensure adequate availability of critical components and we maintain

established inventory levels for critical components and finished goods to assure continuity of supply.

provide a warranty on the SmartVest System that covers the cost of replacement parts and labor, or a new SmartVest System in the

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For each homecare SmartVest System initially purchased and currently located

and Canada, we provide a lifetime warranty to the individual patient for whom the SmartVest System is prescribed.

For sales to institutions and HME distributors within the U.S., and for all international sales, except Canadian home care, we

provide a three-year warranty.

in the U.S., we provide a lifetime warranty to the individual patient for whom the SmartVest System is prescribed.

hospitals and HME distributors within the U.S., and for all international sales, we provide a one to five year warranty.

original HFCWO technology was licensed to American Biosystems, Inc.

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as our SmartVest System.

Tactile Medical primarily sells its device through DME companies who distribute home care medical devices

Tactile Medical primarily sells its device through HME companies who distribute homecare medical devices

and supplies.

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costs through resource utilization evidence.

Technology innovations and enhancements to the patient experience such as size, weight

of the generator, and optimized user interaction increase product reputation and patient satisfaction.

We believe we distinguish

ourselves in these areas with competitive advantages over alternative treatments ultimately improving the patient comfort, ease

of use, and the effectiveness of HFCWO treatment.

Because HFCWO is not “technique dependent,” as compared to most

other alternative pulmonary therapy products, therapy remains consistent and controlled for the duration of treatment.

Technology innovations and enhancements to the patient experience such as size and

weight of the generator, as well as optimized user interaction increase product reputation and patient satisfaction.

we distinguish ourselves in these areas with competitive advantages over alternative treatments ultimately improving the patient

comfort, ease of use, and the effectiveness of HFCWO treatment.

Because HFCWO is not “technique dependent,” as compared

to most other alternative pulmonary therapy products, therapy remains consistent and controlled for the duration of treatment.

government and private sector initiatives in the U.S.

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Medical Equipment Licensing

we do not fall under competitive bidding for Medicare, we often must satisfy the same licensing requirements as other DME providers

we do not fall under competitive bidding for Medicare, we often must satisfy the same licensing requirements as other HME providers

that qualify for competitive bidding.

In response to out-of-state businesses winning the competitive bidding process, which had

a significant impact on small local DME businesses, many states have enacted regulations that require a DME provider to have an

a significant impact on small local HME businesses, many states have enacted regulations that require a HME provider to have an

in-state business presence, specifically through state HME licensing boards or through state Medicaid programs.

In order to do

business with any patients in the state or to be a provider for the state Medicaid program, a DME provider must have an in-state

In addition to Minnesota, the location of our corporate headquarters, we have a licensed in-state presence in three

business with any patients in the state or to be a provider for the state Medicaid program, a HME provider must have an in-state

In addition to Minnesota, the location of our corporate headquarters, we have a licensed in-state presence in seven

other states.

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requirements vary from state to state, but generally require a physical location that is staffed and open during regular business

We are licensed to do business in all states except for Alaska and Hawaii.

We are licensed to do business in all 50 states.

medical devices are subject to regulation by numerous government agencies, including the FDA and comparable foreign regulatory

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our promotional or training materials constitute promotion of an unapproved use, which could result in significant fines or penalties.

Union and Other Regions

Union rules require that medical products receive the right to affix the CE mark, demonstrating adherence to quality standards

and compliance with relevant European Union Medical Device Directives (“MDD”).

Products that bear CE mark can be imported

to, sold or distributed within the European Union.

We obtained clearance to use the CE mark on our products in April 2005.

of CE marking is required every five years, and our notified body performs an annual audit to ensure that we are in compliance

with all applicable regulations.

We have maintained our CE marking in good standing since originally receiving it and most recently

renewed it in January 2020.

The renewal of our MDD certificate will allow us to continue to CE mark and sell our SmartVest SQL

device, with no substantial changes, in the European Union until the certificate expires in May 2024.

We are currently working

on finalizing updates to the quality system to achieve full compliance with Regulation (EU) 2017/745 (EU MDR) which came into

effect in May 2021.

We also require all our distributors in the European Union and other regions to comply with their home country

regulations in our distributor agreements.

Physician Payments Sunshine Act

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physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse midwives.

The Sunshine Act requires all manufacturers of drugs and medical devices to annually report to CMS any payments or any other “transfers

Sunshine Act requires all manufacturers of drugs and medical devices to annually report to CMS any payments or any other “transfers

of value” made to any covered recipients, including but not limited to consulting fees, grants, clinical research support,

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financial position, or cash flows.

Cybersecurity

and Data Privacy

the privacy of customer and personnel information is important to us, and we maintain security protocols and processes, including

ongoing training and education for all personnel, designed to combat the risk of unauthorized access or inadvertent disclosure.

Our business operations involve confidential information, including patient health information subject to regulation as discussed

under “ HIPAA, HITECH and Other Privacy Regulations ” above.

Our information technology infrastructure is designed

to offer reliability, scalability, performance, security and privacy for our personnel, clients, and third-party contractors.

maintain comprehensive compliance and security programs designed to help safeguard and ensure the integrity of the confidential

information we possess, which includes both organizational and technical control measures.

We also have programs in place to monitor

the safety of confidential information as well as plans for immediate, coordinated action in the event of a potential security

We routinely conduct employee trainings on important information security procedures and engage with independent third-party

firms to test and measure compliance on these security measures.

In addition, we have maintained appropriate cyber insurance policies

that limit the financial risk of any potential incident.

Our cyber insurance policies include dedicated support for remediating

a specific cybersecurity or data privacy incident and limit the potential financial risk associated with an actual incident.

though we have implemented administrative, physical, and technical safeguards designed to help protect the confidential data we

possess and the integrity of our information systems and infrastructure, these safeguards may not be effective in preventing future

cybersecurity incidents or data breaches.

believe that our dedicated, talented employees are our most valuable resource and a key strength in accomplishing our collective

mission and goals.

As of June 30, 2023, we had 170 employees, an increase of 9% from fiscal 2022, who are in 30 states throughout

the United States.

18 of our employees were respiratory therapists licensed by appropriate state professional organizations.

also had approximately 170 respiratory therapists and health care professionals retained on a non-exclusive, independent contractor

basis to provide training to our customers in the U.S.

As of June 30, 2024, we had 174 employees, who are in 31 states throughout the United States.

employees were respiratory therapists licensed by appropriate state professional organizations.

We also had approximately 170

respiratory therapists and health care professionals retained on a non-exclusive, independent contractor basis to provide training

to our customers in the U.S.

None of our employees are covered by a collective bargaining agreement.

We believe our relations with our employees are good.

We believe our relations

with our employees are good.

are committed to attracting, retaining, and developing diverse and high-performing talent that includes a strong focus on performance

8 unchanged sentences

In addition, every employee

is eligible to participate in our incentive plan, which allows for us to share the rewards of the company with the people who

significantly contribute to our success.

is eligible to participate in our incentive plan, which allows us to share the rewards of the company with the people who significantly

contribute to our success.

cultivate a learning culture that provides enhancement and growth for our people, we offer educational assistance, online training,

17 unchanged sentences

multiple approaches and points of view and building on an inclusive and diverse culture.

is a vital aspect to the success of our people and business.

is a vital aspect of the success of our people and business.

We are proud of our employees’ collective commitment to secure

and maintain safe work practices that have resulted in zero lost time injuries within our manufacturing operations.

We also provide

wellbeing services to support each employee’s physical and mental health and will continue to emphasize the importance of

the safety and health of our employees in all we do.

and maintain safe work practices within our manufacturing operations.

We also provide wellbeing services to support each employee’s

physical and mental health and will continue to emphasize the importance of the safety and health of our employees in all we do.

Internet address is www.smartvest.com.

8 unchanged sentences

a smaller reporting company, we are not required to provide disclosure pursuant to this item.

Staff Comments.

a smaller reporting company, we are not required to provide disclosure pursuant to this item.

own our principal headquarters and manufacturing facilities, consisting of approximately 37,000 square feet, which are located

on an approximately 2.3-acre parcel in New Prague, Minnesota.

All of the Company’s revenues, profits, and assets are associated

with this facility.

We believe that our facilities are satisfactory for our long-term growth plans.

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

What changed 10-K

Item 1. Business