What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-06 · 125 added, 62 removed, 112 unchanged (63% of the section changed)

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Further, the Company’s internal structure and executive leadership are likewise shaped by the organizing principle of a single platform, including with regard to technology, operations, accounting, internal reporting (including the nature of information reviewed by our key decision makers), organizational structure, compensation, performance assessment, and resource allocation.

Significant financial metrics for the first quarter of 2026 are set forth in the bullets below.

Revenues of $81.2 million, up 10.5% from $73.5 million in the first quarter of 2025

Operating income of $7.5 million, up 71.6% from $4.4 million in the first quarter of 2025

Net income of $5.9 million, up 36.4% from $4.3 million in the first quarter of 2025

Earnings per share (“EPS”) of $0.20 per share (diluted), up from $0.14 per share (diluted) in the first quarter of 2025

Adjusted EBITDA 1 of $20.1 million, up 24.1% from $16.2 million in the first quarter of 2025

Significant financial metrics for the second quarter of 2026 are set forth in the bullets below.

Revenues of $83.7 million, up 12.5% from $74.4 million in the second quarter of 2025

Operating income of $8.3 million, up 41.4% from $5.9 million in the second quarter of 2025

Net income of $6.7 million, up 23.8% from $5.4 million in the second quarter of 2025

Earnings per share (“EPS”) of $0.23 per share (diluted), up from $0.18 per share (diluted) in the second quarter of 2025

Adjusted EBITDA 1 of $20.6 million, up 16.9% from $17.6 million in the second quarter of 2025

Adjusted EBITDA is a non-GAAP financial measure.

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The sublease commenced in April 2025 and will expire in October 2031.

We recorded sublease income, net of initial direct cost amortization, of $0.8 million during the three months ended March 31, 2026.

In addition, we expect to record sublease income, net, of approximately $2.4 million during the last nine months of 2026 and $3.2 million annually thereafter for the remaining term of the sublease under the caption General and Administrative.

We recorded sublease income, net of initial direct cost amortization, of $0.8 million and $1.6 million during the three and six months ended June 30, 2026, respectively.

In addition, we expect to record sublease income, net, of approximately $1.6 million during the last six months of 2026 and $3.2 million annually thereafter for the remaining term of the sublease under the caption General and Administrative.

Recent Developments

Macroeconomic and other conditions in the United States that directly or indirectly impact the healthcare industry are challenging in certain respects and may become more challenging based on recent and contemplated changes to various policies and regulations.

While healthcare costs continue to increase, government cuts or reimbursement rate reductions affecting healthcare organizations, evolving tariff and trade policies affecting healthcare-related goods and materials, as well as uncertainty surrounding potential policy, regulatory, and economic shifts, continue to be challenging for our healthcare customers.

Macroeconomic and other conditions in the United States that directly or indirectly impact the healthcare industry have been challenging in certain respects, and may continue to be challenging based on recent legislative, regulatory, and other developments and contemplated changes to various policies and regulations.

In particular, the federal budget reconciliation legislation enacted on July 4, 2025 includes significant policy changes that may adversely impact healthcare provider organizations, including changes that are expected to decrease access to health insurance and result in significant cuts to federal healthcare spending, particularly within the Medicaid program.

We believe that these challenges and uncertainties, particularly among healthcare provider organizations with patient populations more dependent on government-funded reimbursement, have caused, and may continue to cause, some delays in purchasing and non-renewals of our products and services, particularly in relation to elective or non-mandatory products and services.

Macroeconomic challenges also persist in the United States in terms of inflationary pressures that have moderated from recent periods but continue to affect cost structures, ongoing elevated interest rate levels, heightened geopolitical tensions (including as a result of ongoing conflicts in the Middle East), and strained global trade relations.

For example, the enhanced subsidies available for individuals to purchase coverage through Affordable Care Act marketplaces expired on December 31, 2025, increasing coverage costs for many individuals.

In addition, the federal budget reconciliation legislation enacted on July 4, 2025 includes significant policy changes, including changes that are expected to decrease access to health insurance and result in significant cuts to federal healthcare spending, particularly within the Medicaid program.

Taking into account these developments, the number of individuals with Affordable Care Act marketplace coverage has declined since 2025.

We believe that these developments have caused, and may continue to cause, financial pressures among our customers in the healthcare industry that may negatively impact demand for our products and services, particularly in relation to our non-mandatory products and services.

Macroeconomic challenges also persist in the United States in terms of inflationary pressures that have moderated in comparison to certain earlier periods but continue to affect cost structures, ongoing elevated interest rate levels, heightened geopolitical tensions (including as a result of ongoing conflicts in the Middle East), and strained global trade relations.

We believe that many of our customers have experienced increased labor, supply chain, capital, and other expenditures associated with recent inflationary pressures.

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Revenues, net, reflect income generated by the sales of goods and services related to our operations.

Revenues, net, were $81.2 million for the three months ended March 31, 2026, compared to $73.5 million for the three months ended March 31, 2025.

Revenues, net, were $83.7 million and $164.9 million for the three and six months ended June 30, 2026, compared to $74.4 million and $147.9 million for the three and six months ended June 30, 2025.

Management utilizes revenue in connection with managing our business and believes that this metric provides useful information to investors as a key indicator of the growth and success of our products.

Net income represents revenues, net, less all expenses.

Net income was $5.9 million for the three months ended March 31, 2026, compared to $4.3 million for the three months ended March 31, 2025.

Net income was $6.7 million and $12.6 million for the three and six months ended June 30, 2026, compared to $5.4 million and $9.7 million for the three and six months ended June 30, 2025.

Management utilizes net income in connection with managing our business, including with regard to our capital deployment strategies.

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Additionally, certain short-term cash incentive bonuses and performance-based equity award grants are based, in whole or in part, on the achievement of adjusted EBITDA (as defined in applicable bonus and equity grant documentation) targets.

Adjusted EBITDA was $20.1 million for the three months ended March 31, 2026, compared to $16.2 million for the three months ended March 31, 2025.

Adjusted EBITDA was $20.6 million and $40.7 million for the three and six months ended June 30, 2026, compared to $17.6 million and $33.8 million for the three and six months ended June 30, 2025.

Capital Expenditures .

Capital expenditures represent cash payments incurred for purchases of property and equipment and during the development phase for projects to develop software and content.

Capital expenditures were $7.5 million for the three months ended March 31, 2026, compared to $8.8 million for the three months ended March 31, 2025.

Capital expenditures were $8.4 million and $15.9 million for the three and six months ended June 30, 2026, compared to $9.0 million and $17.9 million for the three and six months ended June 30, 2025.

Management utilizes this metric in connection with managing the allocation of capitalized expenditures in which the Company invests related to the development of its products and believes that this metric is a key indicator of investment in products relative to their current and expected performance.

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There have been no changes in our critical accounting policies and estimates from those reported in our 2025 Form 10-K.

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Revenues, net.

Revenues increased $7.7 million, or 11%, to $81.2 million for the three months ended March 31, 2026 from $73.5 million for the three months ended March 31, 2025.

Subscription revenues increased by $7.6 million, or 11%, and professional services revenues increased by $0.1 million compared to the first quarter of 2025.

Compared to the first quarter of 2025, revenue growth for the first quarter of 2026 was positively impacted by $5.7 million of growth across our existing portfolio of solutions and $3.4 million from our acquisitions of Virsys12 and MissionCare completed during the three months ended December 31, 2025, but was partially offset by a $1.4 million reduction from legacy applications.

Revenues increased $9.3 million, or 13%, to $83.7 million for the three months ended June 30, 2026 from $74.4 million for the three months ended June 30, 2025.

Subscription revenues increased by $8.0 million, or 11%, and professional services revenues increased by $1.3 million compared to the second quarter of 2025.

Compared to the second quarter of 2025, revenue growth for the second quarter of 2026 was positively impacted by $3.1 million from our acquisitions of Virsys12 and MissionCare completed during the fourth quarter of 2025 and $7.5 million from growth across our existing portfolio solutions, of which $2.0 million related to a variable consideration constraint, which has been resolved and recognized as a cumulative catch-up in accordance with ASC 606 during the second quarter of 2026, partially offset by a $1.3 million reduction from legacy applications.

A comparison of revenues by revenue source is as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Percentage Change

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Cost of Revenues (excluding Depreciation and Amortization).

Cost of revenues increased $2.3 million, or 9%, to $27.8 million for the three months ended March 31, 2026, from $25.5 million for the three months ended March 31, 2025.

Cost of revenues as a percentage of revenues were 34% and 35% for the three months ended March 31, 2026 and 2025, respectively.

The increase in amount is primarily associated with investments in several areas of our business, primarily in our platform and SaaS applications, resulting in higher labor costs, increased royalties expense, and higher third-party software and cloud hosting expenses, coupled with increases in expenses from the Virsys12 and MissionCare acquisitions.

Cost of revenues increased $2.7 million, or 10%, to $29.0 million for the three months ended June 30, 2026, from $26.4 million for the three months ended June 30, 2025.

Cost of revenues as a percentage of revenues were 35% for both the three months ended June 30, 2026 and 2025.

The increase in amount is primarily associated with growth in several areas of our business, resulting in higher third-party software expenses, labor costs, cloud hosting expenses, and royalties expense, coupled with increases in expenses from the Virsys12 and MissionCare acquisitions.

Product Development.

Product development expenses increased $1.6 million, or 13%, to $13.6 million for the three months ended March 31, 2026, from $12.0 million for the three months ended March 31, 2025.

Product development expenses as a percentage of revenues were 17% and 16% for the three months ended March 31, 2026 and 2025, respectively.

Product development expenses increased $1.5 million, or 12%, to $13.6 million for the three months ended June 30, 2026, from $12.1 million for the three months ended June 30, 2025.

Product development expenses as a percentage of revenues were 16% for both the three months ended June 30, 2026 and 2025.

The increase in expense is primarily due to an increase in labor costs along with increases in expenses from the Virsys12 and MissionCare acquisitions.

Sales and Marketing.

Sales and marketing expenses, including personnel costs, increased $0.9 million, or 7%, to $13.0 million for the three months ended March 31, 2026, from $12.1 million for the three months ended March 31, 2025.

Sales and marketing expenses were 16% and 17% of revenues for the three months ended March 31, 2026 and 2025, respectively.

The increase in amount is primarily due to increased sales commissions and higher labor costs, coupled with increases in expenses from the Virsys12 and MissionCare acquisitions.

Sales and marketing expenses, including personnel costs, increased $1.7 million, or 14%, to $13.5 million for the three months ended June 30, 2026, from $11.8 million for the three months ended June 30, 2025.

Sales and marketing expenses as a percentage of revenue were 16% for both the three months ended June 30, 2026 and 2025.

The increase in amount is primarily due to increased sales commissions, along with increases in expenses from the Virsys12 and MissionCare acquisitions.

General and Administrative.

General and administrative expenses decreased $0.7 million, or 8%, to $8.0 million for the three months ended March 31, 2026, from $8.7 million for the three months ended March 31, 2025.

General and administrative expenses were 10% and 12% of revenues for the three months ended March 31, 2026 and 2025, respectively.

The decrease in amount is primarily due to sublease income associated with the office sublease that commenced during the second quarter of 2025 as noted above, partially offset by increases in expenses from the Virsys12 and MissionCare acquisitions.

General and administrative expenses increased $0.6 million, or 9%, to $8.0 million for the three months ended June 30, 2026, from $7.4 million for the three months ended June 30, 2025.

General and administrative expenses as a percentage of revenue were 10% for both the three months ended June 30, 2026 and 2025.

The increase in amount is primarily due to higher professional services expenses along with increases in expenses from the Virsys12 and MissionCare acquisitions.

Depreciation and Amortization.

Depreciation and amortization expense increased $0.6 million, or 6%, to $11.4 million for the three months ended March 31, 2026, from $10.8 million for the three months ended March 31, 2025.

Depreciation and amortization expense increased $0.4 million, or 4%, to $11.3 million for the three months ended June 30, 2026, from $10.9 million for the three months ended June 30, 2025.

This increase in amount is due to increased amortization associated with capitalized software coupled with increased amortization associated with the acquired intangibles from Virsys12 and MissionCare.

Interest Income .

Interest income was $0.4 million and $0.9 million for the three months ended March 31, 2026 and 2025, respectively.

Interest income was $0.5 million and $1.0 million for the three months ended June 30, 2026 and 2025, respectively.

This decrease is a result of lower cash balances and lower interest rates on invested funds.

Other Expense, Net .

Other expense, net was $0.1 million for both the three months ended March 31, 2026 and 2025.

Other (Expense) Income, Net .

Other (expense) income, net was expense of $0.1 million and income of $23,000 for the three months ended June 30, 2026 and 2025, respectively.

Income Tax Provision.

The Company recorded a provision for income taxes of $1.9 million for the three months ended March 31, 2026, compared to $0.9 million for the three months ended March 31, 2025.

The Company’s effective tax rate was 24% for the three months ended March 31, 2026, compared to 17% for the three months ended March 31, 2025.

The Company recorded a provision for income taxes of $2.0 million for the three months ended June 30, 2026, compared to $1.5 million for the three months ended June 30, 2025.

The Company’s effective tax rate was 23% for the three months ended June 30, 2026, compared to 22% for the three months ended June 30, 2025.

The Company’s effective tax rate primarily reflects the statutory corporate income tax rate, the net effect of state taxes, foreign income taxes, the effect of various permanent tax differences, and recognition of discrete tax items.

Net income was $5.9 million and $4.3 million for the three months ended March 31, 2026 and 2025, respectively.

EPS was $0.20 per share (diluted) and $0.14 per share (diluted) for the three months ended March 31, 2026 and 2025, respectively.

Adjusted EBITDA was $20.1 million for the three months ended March 31, 2026, compared to $16.2 million for the three months ended March 31, 2025.

Net income was $6.7 million and $5.4 million for the three months ended June 30, 2026 and 2025, respectively.

EPS was $0.23 per share (diluted) and $0.18 per share (diluted) for the three months ended June 30, 2026 and 2025, respectively.

Adjusted EBITDA was $20.6 million for the three months ended June 30, 2026, compared to $17.6 million for the three months ended June 30, 2025.

See “Reconciliation of Non-GAAP Financial Measures” below for our reconciliation of adjusted EBITDA to the most directly comparable measure under US GAAP and disclosure regarding why we believe adjusted EBITDA provides useful information to investors.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Revenues, net.

Revenues increased $17.1 million, or 12%, to $164.9 million for the six months ended June 30, 2026 from $147.9 million for the six months ended June 30, 2025.

Subscription revenues increased by $15.6 million, or 11%, and professional services revenues increased by $1.4 million compared to the six months ended June 30, 2025.

Compared to the six months ended June 30, 2025, revenue growth for the six months ended June 30, 2026 was positively impacted by $13.2 million of growth across our existing portfolio of solutions, of which $2.0 million related to a contract subject to the variable consideration constraint, which has been resolved and recognized as a cumulative catch-up in accordance with ASC 606 during the second quarter of 2026, and $6.6 million from our acquisitions of Virsys12 and MissionCare completed during the three months ended December 31, 2025, partially offset by a $2.7 million reduction from legacy applications.

A comparison of revenues by revenue source is as follows (in thousands):

Six Months Ended June 30,

Percentage Change

Subscription services

Professional services

Total revenues, net

% of Revenues

Subscription services

Professional services

Cost of Revenues (excluding Depreciation and Amortization).

Cost of revenues increased $4.9 million, or 9%, to $56.8 million for the six months ended June 30, 2026, from $51.9 million for the six months ended June 30, 2025.

Cost of revenues as a percentage of revenues were 34% and 35% for the six months ended June 30, 2026 and 2025, respectively.

The increase in amount is primarily associated with growth in several areas of our business, resulting in third-party software costs, labor costs, royalties expense, and cloud hosting expenses, coupled with increases in expenses from the Virsys12 and MissionCare acquisitions.

Product Development.

Product development expenses increased $3.1 million, or 13%, to $27.2 million for the six months ended June 30, 2026, from $24.1 million for the six months ended June 30, 2025.

Product development expenses as a percentage of revenues were 16% for both the six months ended June 30, 2026 and 2025.

The increase in expense is primarily due to an increase in labor costs along with increases in expenses from the Virsys12 and MissionCare acquisitions.

Sales and Marketing.

Sales and marketing expenses, including personnel costs, increased $2.5 million, or 10%, to $26.5 million for the six months ended June 30, 2026, from $24.0 million for the six months ended June 30, 2025.

Sales and marketing expenses as a percentage of revenues were 16% for both the six months ended June 30, 2026 and 2025.

The increase in amount is primarily due to increased sales commissions along with increases in expenses from the Virsys12 and MissionCare acquisitions.

General and Administrative.

General and administrative expenses decreased $30,000, or less than 1%, to $16.0 million for the six months ended June 30, 2026, from $16.1 million for the six months ended June 30, 2025.

General and administrative expenses as a percentage of revenues were 10% and 11% for the six months ended June 30, 2026 and 2025, respectively.

Depreciation and Amortization.

Depreciation and amortization expense increased $1.0 million, or 5%, to $22.6 million for the six months ended June 30, 2026, from $21.6 million for the six months ended June 30, 2025.

Interest Income .

Interest income was $0.9 million and $1.9 million for the six months ended June 30, 2026 and 2025, respectively.

This decrease is a result of lower cash balances and lower interest rates on invested funds.

Other (Expense) Income Net .

Other (expense) income, net was expense of $0.2 million and $39,000 for the six months ended June 30, 2026 and 2025, respectively.

Income Tax Provision.

The Company recorded a provision for income taxes of $3.9 million for the six months ended June 30, 2026, compared to $2.4 million for the six months ended June 30, 2025.

The Company’s effective tax rate was 24% for the six months ended June 30, 2026, compared to 20% for the six months ended June 30, 2025.

Net income was $12.6 million and $9.7 million for the six months ended June 30, 2026 and 2025, respectively.

EPS was $0.43 per share (diluted) and $0.32 per share (diluted) for the six months ended June 30, 2026 and 2025, respectively.

Adjusted EBITDA was $40.7 million for the six months ended June 30, 2026, compared to $33.8 million for the six months ended June 30, 2025.

Reconciliation of Non-GAAP Financial Measures

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In order to better assess the Company’s financial results, management believes that net income before interest, income taxes, stock-based compensation, depreciation and amortization, impairments of long-lived assets, changes in fair value of contingent consideration, and changes in fair value of, including gains (losses) on the sale of, non-marketable equity investments (“adjusted EBITDA”) is a useful measure for evaluating the operating performance of the Company because adjusted EBITDA reflects net income adjusted for certain GAAP accounting, non-cash, and/or non-operating items which may not, in any such case, fully reflect the underlying operating performance of our business.

Beginning with the presentation of adjusted EBITDA for the year ended December 31, 2025, the Company has included adjustments in the definition of adjusted EBITDA for impairment of long-lived assets and changes in fair value of contingent consideration because the Company believes that these amounts may not be reflective of the underlying operational performance of our business and that including these adjustments is consistent with the intended purpose of adjusted EBITDA with respect to reflecting the underlying operating performance of our business and comparing the Company’s operational performance between periods.

We believe that adjusted EBITDA is useful to investors to assess the Company’s ongoing operating performance and to compare the Company’s operating performance between periods.

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A reconciliation of adjusted EBITDA to the most directly comparable GAAP measure, net income, is set forth below (in thousands).

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

GAAP net income

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Depreciation and amortization

Fair value adjustment on contingent consideration

Adjusted EBITDA

Cybersecurity Incident

As disclosed in a Current Report on Form 8-K filed by us on July 29, 2026 (the “July 29 Form 8-K”), the Company detected that it had experienced a cybersecurity incident in which an unauthorized third party gained access to a limited portion of files on the Company’s corporate file server.

Following such detection, the Company initiated response protocols, launched an investigation, which remains ongoing, engaged the services of cybersecurity and forensics specialists and advisors, and notified certain law enforcement authorities.

The Company did not experience any interruption in its business operations in connection with this incident.

In addition, based on our investigation to date, we do not believe that any customer-facing systems were accessed or compromised.

Based on our investigation to date, the Company believes that certain information of our employees, as well as billing related information of certain customers and vendors, and corporate and legal information of the Company, was accessed and/or exfiltrated from the Company’s corporate file servers as the result of the incident.

In addition, based on our investigation to date, the Company believes that, for approximately 65 of our credentialing customers, certain customer data that previously had been copied to the Company’s corporate file servers for purposes of data conversion, analytics, and troubleshooting for these customers, was accessed and exfiltrated.

Further, based on our ongoing investigation to date, we now believe that a limited subset of likely 3 of these 65 customer files contained protected health information (“PHI”), as defined by the Health Insurance Portability and Accountability Act (“HIPAA”).

We have incurred, and expect to continue to incur, certain expenses related to this incident, including, among others, expenses to respond to, remediate and investigate this incident.

To the extent required by contract or law, the Company will ensure that any additional notification is provided to individuals, entities, and regulatory agencies.

While the Company’s investigation is ongoing, based on information currently known, the Company does not expect that this incident will have a material adverse impact on the Company’s business, operations or financial results.

For additional information, see the July 29 Form 8-K.

Liquidity and Capital Resources

Net cash provided by operating activities increased by $0.1 million to $27.1 million during the three months ended March 31, 2026.

The increase in net cash provided by operating activities is primarily due to higher cash receipts from customers during the period, partially offset by higher payments for personnel related expenses and sales commissions.

Our days sales outstanding ("DSO") was 39 days for the first quarter of 2026 compared to 37 days for the first quarter of 2025.

Net cash provided by operating activities increased by $8.5 million to $40.6 million during the six months ended June 30, 2026.

Our days sales outstanding ("DSO") was 38 days for the second quarter of 2026 compared to 35 days for the second quarter of 2025.

The Company calculates DSO by dividing the average accounts receivable balance for the quarter by average daily revenues for the quarter.

The Company’s primary sources of cash were receipts generated from the sales of our products and services.

The primary uses of cash to fund operations included personnel expenses, sales commissions, royalty payments, payments for contract labor and other direct expenses associated with delivery of our products and services, income tax payments, general corporate expenses, and initial direct costs related to the sublease discussed above.

Net cash used in investing activities was $6.3 million for the three months ended March 31, 2026, compared to $7.2 million for the three months ended March 31, 2025.

During the three months ended March 31, 2026, the Company invested in marketable securities of $10.2 million, made payments for capitalized software development of $6.7 million, purchased strategic investments of $1.8 million, purchased property and equipment of $0.7 million, and paid a $0.3 million post-closing working capital adjustment related to the acquisition of MissionCare.

Net cash used in investing activities was $18.2 million for the six months ended June 30, 2026, compared to $18.4 million for the six months ended June 30, 2025.

During the six months ended June 30, 2026, the Company invested in marketable securities of $22.7 million, made payments for capitalized software development of $14.3 million, purchased strategic investments of $2.6 million, purchased property and equipment of $1.7 million, and paid a $0.3 million post-closing working capital adjustment related to the acquisition of MissionCare.

These uses of cash were partially offset by $23.3 million in maturities of marketable securities.

During the three months ended March 31, 2025, the Company invested in marketable securities of $9.2 million, made payments for capitalized software development of $7.8 million, purchased property and equipment of $1.1 million.

and purchased an investment of $0.5 million.

During the six months ended June 30, 2025, the Company invested in marketable securities of $26.1 million, made payments for capitalized software development of $14.5 million, purchased property and equipment of $3.4 million, and purchased an investment of $0.5 million.

These uses of cash were partially offset by $26.1 million in maturities of marketable securities.

Net cash used in financing activities was $8.3 million for the three months ended March 31, 2026, compared to $2.0 million for the three months ended March 31, 2025.

The uses of cash for the three months ended March 31, 2026 included $6.7 million for repurchases of common stock, $1.0 million for the payment of cash dividends, and $0.6 million for the payment of employee payroll taxes in relation to the vesting of restricted share units.

The uses of cash for the three months ended March 31, 2025 included $1.1 million for the payment of employee payroll taxes in relation to the vesting of restricted share units and $0.9 million for the payment of cash dividends.

Our balance sheet reflects negative working capital of $3.5 million at March 31, 2026, compared to negative working capital of $4.5 million at December 31, 2025.

Net cash used in financing activities was $12.3 million for the six months ended June 30, 2026, compared to $21.1 million for the six months ended June 30, 2025.

The uses of cash for the six months ended June 30, 2026 included $9.3 million for repurchases of common stock, $2.1 million for the payment of cash dividends, $0.6 million for the payment of employee payroll taxes in relation to the vesting of restricted share units, and $0.4 million for an earn-out payment related to a prior acquisition.

The uses of cash for the six months ended June 30, 2025 included $18.1 million for repurchases of common stock, $1.9 million for the payment of cash dividends, and $1.1 million for the payment of employee payroll taxes in relation to the vesting of restricted share units.

Our balance sheet reflects positive working capital of $7.6 million at June 30, 2026, compared to negative working capital of $4.5 million at December 31, 2025.

The change in working capital is primarily a result of an increase in cash and cash equivalents.

The Company’s primary source of liquidity as of March 31, 2026 was $48.7 million of cash and cash equivalents and $17.8 million of marketable securities.

The Company’s primary source of liquidity as of June 30, 2026 was $46.2 million of cash and cash equivalents and $20.6 million of marketable securities.

The Company also has a $50.0 million revolving credit facility, the availability of which is subject to certain covenants and minimum liquidity requirements.

There currently are no outstanding borrowings under the revolving credit facility.

The revolving credit facility expires on October 6, 2026, which we intend to renew on or prior to its expiration.

The revolving credit facility expires on October 6, 2026, unless earlier renewed, amended, or replaced.

Prior to the expiration of this facility, we expect to evaluate our liquidity needs and financing alternatives, including whether to renew, amend, or replace the Revolving Credit Facility We can provide no assurance that any such renewal, amendment, or replacement of this facility will be available on terms acceptable to us or at all.

For additional information regarding our revolving credit facility, see Note 8 to the Condensed Consolidated Financial Statements included herein.

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On February 23, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, which was paid on March 20, 2026 to holders of record of our common stock on March 9, 2026.

In addition, on May 4, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, which will be payable on May 29, 2026 to holders of record of our common stock on May 18, 2026.

On May 4, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, which was paid on May 29, 2026 to holders of record of our common stock on May 18, 2026.

On August 3, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, payable on August 28, 2026 to holders of record on August 17, 2026.

T he dividend policy and the declaration and payment of each quarterly cash dividend will be subject to our Board’s continuing determination that the policy and the declaration and payment of dividends thereunder are in the best interests of our shareholders and are in compliance with applicable law and our credit agreement.

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The terms of this program provided that it would terminate on the earlier of February 26, 2026, or when the maximum dollar amount had been expended.

During the three months ended March 31, 2026, the Company repurchased and subsequently retired 222,978 shares of common stock at an aggregate fair value of $5.0 million, reflecting an average price per share of $22.42 (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022).

During the six months ended June 30, 2026, the Company repurchased and subsequently retired 222,978 shares of common stock at an aggregate fair value of $5.0 million under this authorization, reflecting an average price per share of $22.42 (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022).

This program terminated in January 2026 when the maximum dollar amount under this program was expended.

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This share repurchase program terminates on the earlier of September 12, 2026 or when the maximum dollar amount under the plan has been expended.

During the three months ended March 31, 2026, the Company repurchased 119,367 shares of common stock at an aggregate fair value of $2.5 million under this authorization, reflecting an average price per share of $20.94 (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022), and the Company continued to repurchase shares pursuant to this authorization during the second quarter of 2026 , repurchasing 90,131 additional shares valued at $1.8 million through April 30, 2026.

During the six months ended June 30, 2026, the Company repurchased 209,498 shares of common stock at an aggregate fair value of $4.3 million under this authorization, reflecting an average price per share of $20.51 (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022).

This share repurchase program does not require the Company to acquire any amount of shares and may be suspended, modified, or discontinued at any time.

We believe that our existing cash, cash equivalents, marketable securities, cash generated from operations, and available borrowings under our revolving credit facility (available through October 6, 2026) will be sufficient to meet anticipated working capital needs, new product development, pay our quarterly dividends, any share repurchases we may elect to make under any future share repurchase program, and fund capital expenditures for at least the next 12 months and for the foreseeable future thereafter.

In the aggregate, during the six months ended June 30, 2026, the Company repurchased 432,476 shares of common stock at an aggregate fair value of $9.3 million under both of the share repurchase programs described above, reflecting an average price per share of $21.50 (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022).

We believe that our existing cash, cash equivalents, marketable securities, cash generated from operations, and available borrowings under our revolving credit facility (through the date of its maturity on October 6, 2026) and any amended, renewed, or replacement credit facility that we may enter into in connection with the upcoming maturity of our current revolving credit facility as noted above, will be sufficient to meet anticipated working capital needs, new product development, pay our quarterly dividends, any share repurchases we may elect to make under any future share repurchase program, and fund capital expenditures for at least the next 12 months and for the foreseeable future thereafter.

The Company’s growth strategy includes acquiring businesses or making strategic investments in businesses that complement or enhance our business.

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Therefore, the maximum borrowings against our revolving credit facility would be dependent on the covenant calculations at the time of borrowing.

March 31, 2026, we were in compliance with all covenants under our revolving credit facility.

As of June 30, 2026, we were in compliance with all covenants under our revolving credit facility.

There can be no assurance that amounts available for borrowing under our revolving credit facility will be sufficient to consummate any possible acquisitions, and we cannot provide assurance that if we need additional financing, it will be available on terms favorable to us or at all.

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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-Q

Item 2. Management’s Discussion and Analysis