What changed in this filing

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Item 1. Financial Statements

2025-11-03 compared with 2025-08-04 · 132 added, 114 removed, 444 unchanged (36% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

(In thousands, except share and per share data)

2 unchanged sentences

Net investment in leases

Income taxes receivable

Prepaid expenses and other current assets

25 unchanged sentences

Preferred stock, $ 0.001 par value, 50,000,000 shares authorized;

none issued and outstanding as of June 30, 2025 and December 31, 2024

none issued and outstanding as of September 30, 2025 and December 31, 2024

Common stock, $ 0.001 par value, 300,000,000 shares authorized;

22,292,145 shares issued and outstanding as of June 30, 2025;

22,335,582 shares issued and outstanding as of September 30, 2025;

23,883,475 shares issued and outstanding as of December 31, 2024

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except share and per share data)

14 unchanged sentences

Total operating expenses

Income (loss) from operations

Income from operations

Interest income

8 unchanged sentences

(In thousands, except share data)

Balances, March 31, 2025

Balances, June 30, 2025

Stock-based compensation

Exercise of common stock options and vesting of performance and restricted stock units

Share repurchases

( 1,507,496 )

Common shares issued for employee stock purchase plan

Net income for the period

Balances, June 30, 2025

Balances, September 30, 2025

Balances, December 31, 2024

5 unchanged sentences

Net income for the period

Balances, September 30, 2025

Balances, June 30, 2024

Balances, March 31, 2024

Stock-based compensation

Exercise of common stock options and vesting of performance and restricted stock units

Common shares issued for employee stock purchase plan

Net income for the period

Balances, June 30, 2024

Balances, September 30, 2024

Balances, December 31, 2023

3 unchanged sentences

Net income for the period

Balances, June 30, 2024

Balances, September 30, 2024

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands)

8 unchanged sentences

Net investment in leases

Income taxes payable

Prepaid expenses and other assets

53 unchanged sentences

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 six months ended June 30, 2025, are not necessarily indicative of results to be expected for the year ending December 31, 2025, or for any other interim period or for any future year.

The results for the nine months ended September 30, 2025, are not necessarily indicative of results to be expected for the year ending December 31, 2025, 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

9 unchanged sentences

Significant Accounting Policies

There were no material changes in our significant accounting policies during the six months ended June 30, 2025.

There were no material changes in our significant accounting policies during the nine months ended September 30, 2025.

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, 2024, for information regarding our significant accounting policies.

6 unchanged sentences

Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software” which modernizes the accounting for internal-use software costs to better align with the way that software is currently developed.

The update removes all reference to the project stages of software development and establishes two criteria that must be met to begin capitalizing software costs.

This update is effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU No.

2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

6 unchanged sentences

The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the effect this standard will have on its consolidated financial statements and related disclosures.

is currently evaluating the effect this standard will have on its consolidated financial statements and related disclosures.

Inventories consisted of the following:

(In thousands)

At June 30, 2025

At September 30, 2025

At December 31, 2024

7 unchanged sentences

Our patents and other intangible assets are summarized as follows:

At June 30, 2025

At September 30, 2025

(In thousands)

17 unchanged sentences

Total intangible assets

Amortization expense was $ 0.9 million and $ 1.0 million for the three months ended June 30, 2025 and 2024, respectively, and $ 1.9 million for each of the six months ended June 30, 2025 and 2024, of which $ 0.3 million in each of the three months ended June 30, 2025 and 2024, and $ 0.6 million in each of the six months ended June 30, 2025 and 2024, was recorded in cost of sales revenue.

Amortization expense was $ 0.9 million for each of the three months ended September 30, 2025 and 2024, and $ 2.8 million for each of the nine months ended September 30, 2025 and 2024, of which $ 0.3 million in each of the three months ended September 30, 2025 and 2024, and $ 0.9 million in each of the nine months ended September 30, 2025 and 2024, was recorded in cost of sales revenue.

Future amortization expenses are expected as follows:

(In thousands)

2025 (July 1 - December 31)

2025 (October 1 - December 31)

In the third quarter of 2025, we performed our annual goodwill impairment test utilizing both the qualitative and quantitative approach described in FASB ASU No.

4 unchanged sentences

(In thousands)

At June 30, 2025

At September 30, 2025

At December 31, 2024

In-transit inventory

Sales and use tax

In-transit inventory

Legal and consulting

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

23 unchanged sentences

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 % .

As of June 30, 2025, all outstanding borrowings were subject to interest at a rate calculated at Adjusted Term SOFR plus an applicable margin, for an interest rate of 6.13 % .

On August 1, 2023, we entered into a Fourth Amendment Agreement (the “Fourth Amendment”), which further amended 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.

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 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.

On November 1, 2024, we entered into a Fifth Amendment Agreement (the “Fifth Amendment”), which further amended the Credit Agreement.

The Fifth Amendment permits the Company to make payments to repurchase shares of its common stock, as long as the Company is not in default before and after giving effect to such repurchases, and as long as such repurchases do not exceed $ 30.0 million .

As of June 30, 2025, we had outstanding borrowings of $ 24.8 million under the Credit Agreement, comprised entirely of the term loan.

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 two years as of June 30, 2025, are as follows:

(In thousands)

2025 (July 1 - December 31)

Deferred financing fees

Net note payable

current portion of note payable

Non-current portion of note payable

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 June 30, 2025, the Credit Agreement contained a number of restrictions and covenants, including that we maintain compliance with a maximum consolidated total leverage ratio, a minimum fixed charge coverage ratio and a minimum consolidated EBITDA covenant.

As of June 30, 2025, we were in compliance with all covenants under the Credit Agreement.

The Fifth Amendment permitted the Company to make payments to repurchase shares of its common stock, subject to certain limitations .

On July 31, 2025, we entered into an Amended and Restated Credit Agreement (the “2025 Restated Credit Agreement”), which amended and restated the Credit Agreement in its entirety.

The 2025 Restated Credit Agreement, among other things, revised the applicable margin payable under the revolving credit facility under the 2025 Restated Credit Agreement from 1.75 % to 2.75 % and the unused line fee at a rate per annum from 0.125 % to 0.250 % , in each case depending on our consolidated leverage ratio.

The 2025 Restated Credit Agreement, among other things, revised the applicable margin payable based on pricing levels determined by our consolidated total leverage ratio that range from 1.75 % to 2.75 % under the revolving credit facility, and revised the commitment fee to a rate per annum ranging from 0.125 % to 0.250 % for the unused portion of the revolving credit facility, also depending on our consolidated total leverage ratio.

The 2025 Restated Credit Amendment also expanded the revolving credit facility from $ 25.0 million to $ 40.0 million and extended the maturity date of the revolving credit facility from August 1, 2026, to July 31, 2028.

The 2025 Restated Credit Agreement also eliminated the minimum consolidated EBITDA financial covenant, such that the financial covenants now consist of a maximum consolidated total leverage ratio covenant and a minimum fixed charge coverage ratio covenant.

In addition, the 2025 Restated Credit Amendment expanded the revolving credit facility from $ 25.0 million to $ 40.0 million and extended the maturity date of the revolving credit facility from August 1, 2026, to July 31, 2028.

In addition, the 2025 Restated Credit Agreement revised certain negative covenants, including the restricted payment covenant, which now permits the Company to repurchase shares of its common stock and make certain other payments, as long as the Company is not in default under the 2025 Restated Credit Agreement, has a consolidated total leverage ratio of no greater than 1.75 to 1.00, and has liquidity of not less than $ 30.0 million, in each case both before and after giving effect to such stock repurchases or the making of such payments.

In connection with the entry into the 2025 Restated Credit Agreement, on July 31, 2025, we paid off the full amount outstanding under the term loan, which was $ 24.4 million (inclusive of principal and interest), using cash on hand.

The 2025 Restated Credit Agreement removes the provisions from the Credit Agreement related to a committed term loan, such that the only term loan related provisions in the 2025 Restated Credit Agreement relate to our ability to request uncommitted incremental term loan facilities and/or an increase in the amount of the revolving loans available under the 2025 Restated Credit Agreement in an amount not to exceed $ 25.0 million in the aggregate, subject to the satisfaction of certain conditions.

As of September 30, 2025, we had no outstanding borrowings under the 2025 Restated Credit Agreement.

Our obligations under the 2025 Restated 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, 2025, the 2025 Restated Credit Agreement contained a number of restrictions and covenants, including that we maintain compliance with a maximum consolidated total leverage ratio and a minimum fixed charge coverage ratio.

As of September 30, 2025, we were in compliance with all covenants under the 2025 Restated Credit Agreement.

Commitments and Contingencies

1 unchanged sentence

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.

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.

9 unchanged sentences

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 recognized on a straight-line basis over the term of the lease.

The remaining lease terms vary from approximately one to six years as of June 30, 2025.

The remaining lease terms vary from approximately one to six years as of September 30, 2025.

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.

8 unchanged sentences

We also have operating lease agreements for certain computer and office equipment.

The remaining lease terms as of June 30, 2025, ranged from less than one year to approximately three years with fixed monthly payments that are included in the ROU operating lease assets and operating lease liabilities.

The remaining lease terms as of September 30, 2025, ranged from less than one year to approximately three 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.

3 unchanged sentences

(In thousands)

At June 30, 2025

At September 30, 2025

At December 31, 2024

4 unchanged sentences

Weighted average discount rate

Six Months Ended June 30,

Nine Months Ended September 30,

Supplemental cash flow information for our operating leases:

3 unchanged sentences

(In thousands)

2025 (July 1 - December 31)

2025 (October 1 - December 31)

Total minimum lease payments

3 unchanged sentences

Non-current obligations under operating lease liabilities

Operating lease costs were $ 0.9 million for each of the three months ended June 30, 2025 and 2024.

Operating lease costs were $ 1.8 million for each of the six months ended June 30, 2025 and 2024.

Operating lease costs were $ 0.9 million for each of the three months ended September 30, 2025 and 2024.

Operating lease costs were $ 2.7 million and $ 2.6 million for the nine months ended September 30, 2025 and 2024, respectively.

Major Vendors

We had purchases from one vendor that accounted for 12 % and 17 % of our total purchases for the three months ended June 30, 2025 and 2024, respectively.

We had purchases from one vendor that accounted for 12 % and 20 % of our total purchases for the six months ended June 30, 2025 and 2024, respectively.

We had purchases from one vendor that accounted for 16 % and 22 % of our total purchases for the three months ended September 30, 2025 and 2024, respectively.

We had purchases from one vendor that accounted for 14 % and 20 % of our total purchases for the nine months ended September 30, 2025 and 2024, respectively.

Purchase Commitments

We issued purchase orders prior to June 30, 2025, totaling $ 30.4 million for goods that we expect to receive within the next year.

We issued purchase orders prior to September 30, 2025, totaling $ 31.0 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 $ 0.7 and $ 0.4 million for the three months ended June 30, 2025 and 2024, respectively, and $ 1.4 million and $ 1.1 million for the six months ended June 30, 2025 and 2024, respectively.

We recorded an expense related to our discretionary contributions to the 401(k) plan of $ 0.5 million and $ 0.6 million for the three months ended September 30, 2025 and 2024, respectively, and $ 2.0 million and $ 1.7 million for the nine months ended September 30, 2025 and 2024, respectively.

Legal Proceedings

22 unchanged sentences

Upon purchase of the shares, we reduce our common stock for the par value of the shares with the excess cost applied against additional paid-in capital.

Repurchases are funded through available cash balances and ongoing business operating cash generation and could have been suspended or discontinued at any time.

Shares of stock repurchased under the program are immediately retired.

As of June 24, 2025, the Company had utilized substantially all of the repurchase authorization under the program and therefore completed the share repurchase program.

In aggregate under the program, the Company repurchased a total of 2,338,617 shares of common stock at a total cost of $ 30.0 million.

Repurchases were funded through available cash balances and ongoing business operating cash generation and could have been suspended or discontinued at any time.

Shares of stock repurchased under the program were immediately retired.

Repurchases under our share repurchase program reduce the weighted-average number of shares of common stock outstanding for basic and diluted earnings per share calculations.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except share and per share data)

2 unchanged sentences

Average total cost per repurchased share

As of June 24, 2025, the Company had utilized substantially all of the repurchase authorization under the program and therefore completed the share repurchase program.

In aggregate under the program, the Company repurchased a total of 2,338,617 shares of common stock at a total cost of $ 30.0 million.

Stock-Based Compensation

2 unchanged sentences

The 2025 Plan provides for the issuance of up to 1,850,000 shares of our common stock, plus the number of shares subject to any award under the 2016 Equity Incentive Plan (the “2016 Plan”) that was outstanding on May 7, 2025 and that later expires, is cancelled or forfeited, is settled for cash or otherwise does not result in the issuance of all of the shares subject to such award.

As of June 30, 2025, 1,595,027 shares were available for future grant pursuant to the 2025 Plan.

Following our stockholders’ approval of the 2025 Plan on May 7, 2025, no additional grants will be made under 2016 Plan.

As of September 30, 2025, 1,856,492 shares were available for future grant pursuant to the 2025 Plan.

Following our stockholders’ approval of the 2025 Plan on May 7, 2025, no additional grants will be made under the 2016 Plan.

However, outstanding awards under the 2016 Plan will continue to be governed by their respective original terms.

We recorded stock-based compensation expense of $ 1.9 million for each of the three months ended June 30, 2025 and 2024, and $ 4.0 million and $ 3.9 million for the six months ended June 30, 2025 and 2024, respectively.

We recorded stock-based compensation expense of $ 1.8 million and $ 2.1 million for the three months ended September 30, 2025 and 2024, respectively, and $ 5.8 million and $ 6.0 million for the nine months ended September 30, 2025 and 2024, respectively.

This expense was allocated as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

6 unchanged sentences

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 $ 0.0 million and $ 0.1 million for the three months ended June 30, 2025 and 2024, respectively, and $ 0.0 million and $ 0.2 million for the six months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, there was approximately $ 12,050 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 0.4 years.

Our stock option activity for the six months ended June 30, 2025, was as follows:

Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $ 0.0 million for each of the three months ended September 30, 2025 and 2024, and $ 0.0 million and $ 0.2 million for the nine months ended September 30, 2025 and 2024, respectively.

As of September 30, 2025, there was approximately $ 3,648 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 0.1 years.

Our stock option activity for the nine months ended September 30, 2025, was as follows:

Exercise Price

3 unchanged sentences

Cancelled/Expired

Balance at June 30, 2025

Options exercisable at June 30, 2025

Balance at September 30, 2025

Options exercisable at September 30, 2025

(1) 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 392,239 as of June 30, 2024, had a weighted-average exercise price of $ 42.19 per share.

Options exercisable of 385,514 as of September 30, 2024, had a weighted-average exercise price of $ 42.11 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 $ 1.4 million and $ 1.5 million for the three months ended June 30, 2025 and 2024, respectively, and $ 2.9 million for each of the six months ended June 30, 2025 and 2024.

As of June 30, 2025, there was approximately $ 9.1 million of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 2.0 years.

Our time-based restricted stock unit activity for the six months ended June 30, 2025, was as follows:

We have granted time-based restricted stock units to certain participants under the 2016 Plan and the 2025 Plan that are stock-settled with common shares.

Time-based restricted stock units 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 $ 1.3 million and $ 1.5 million for the three months ended September 30, 2025 and 2024, respectively, and $ 4.2 million and $ 4.4 million for the nine months ended September 30, 2025 and 2024, respectively.

As of September 30, 2025, there was approximately $ 7.5 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 1.9 years.

Our time-based restricted stock unit activity for the nine months ended September 30, 2025, was as follows:

Average Grant

2 unchanged sentences

Balance at December 31, 2024

Balance at June 30, 2025

Balance at September 30, 2025

(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.

We have granted performance-based restricted stock units (“PSUs”) to certain participants.

These PSUs have both performance-based and time-based vesting features.

2 unchanged sentences

All earned and vested PSUs will be settled in shares of common stock.

Stock-based compensation expense recognized for PSUs was $ 0.3 and $ 0.2 million for the three months ended June 30, 2025 and 2024, respectively, and $ 0.7 and $ 0.6 million for the six months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, there was approximately $ 2.5 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.4 years.

Our PSU activity for the six months ended June 30, 2025, was as follows:

Stock-based compensation expense recognized for PSUs was $ 0.4 million for each of the three months ended September 30, 2025 and 2024, and $ 1.1 million and $ 1.0 million for the nine months ended September 30, 2025 and 2024, respectively.

As of September 30, 2025, there was approximately $ 2.1 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.2 years.

Our PSU activity for the nine months ended September 30, 2025, was as follows:

Average Grant

2 unchanged sentences

Balance at December 31, 2024

Balance at June 30, 2025

Balance at September 30, 2025

(1) The aggregate intrinsic value of PSUs outstanding was based on our closing stock price on the last trading day of the period.

2 unchanged sentences

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.

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.

2 unchanged sentences

Pursuant to the automatic increase feature of the ESPP, 240,780 shares were added as available for issuance thereunder on January 1, 2025 and 236,003 shares were added as available for issuance thereunder on January 1, 2024.

As of June 30, 2025, 1,582,926 shares were available for future issuance under the ESPP.

We recognized stock-based compensation expense associated with the ESPP of $ 0.2 million and $ 0.1 million for the three months ended June 30, 2025 and 2024, respectively.

We recognized stock-based compensation expense associated with the ESPP of $ 0.4 million and $ 0.2 million for the six months ended June 30, 2025 and 2024, respectively.

As of September 30, 2025, 1,582,926 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, 2025 and 2024, respectively.

We recognized stock-based compensation expense associated with the ESPP of $ 0.5 million and $ 0.4 million for the nine months ended September 30, 2025 and 2024, respectively.

We derive our revenue from the sale and rental of our products to our customers in the United States.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

4 unchanged sentences

Airway clearance products

Our revenue by channel, inclusive of sales and rental revenue, for the three and six months ended June 30, 2025 and 2024, are summarized in the following table:

Our revenue by channel, inclusive of sales and rental revenue, for the three and nine months ended September 30, 2025 and 2024, are summarized in the following table:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

7 unchanged sentences

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.

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.

4 unchanged sentences

Completion of these payments represents the fair market value of the equipment, and as such, interest income is not applicable.

Rental revenue for each of the three and six months ended June 30, 2025 and 2024, was primarily from private insurers.

Sales-type lease revenue and the associated cost of revenue for the three and six months ended June 30, 2025 and 2024, was:

Three Months Ended June 30,

Six Months Ended June 30,

Rental revenue for each of the three and nine months ended September 30, 2025 and 2024, was primarily from private insurers.

Sales-type lease revenue and the associated cost of revenue for the three and nine months ended September 30, 2025 and 2024, was:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

1 unchanged sentence

Cost of sales-type lease revenue

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.

We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjusting for discrete tax items recorded in the period.

Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes.

These differences relate primarily to different methods used for income tax reporting purposes, including for depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable and inventory reserves.

Our provision for income taxes includes 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 June 30, 2025 was an expense of 28.9 % , compared to an expense of 29.2 % for the three months ended June 30, 2024.

The primary driver of the change in the Company’s effective tax rate was attributable to the relative impact of stock-based compensation discrete tax items.

We recorded an income tax expense of $ 1.3 million and an income tax expense of $ 1.8 million for the three months ended June 30, 2025 and 2024, respectively.

The effective tax rate for the six months ended June 30, 2025 was an expense of 46.4 % , compared to an expense of 36.0 % for the six months ended June 30, 2024.

The primary driver of the change in the Company’s effective tax rate was attributable to the relative impact of stock-based compensation discrete tax items.

Although discrete tax expense was lower in absolute terms in the current year period, it represented a larger proportion of pre-tax income due to lower overall earnings.

As a result, the discrete items had a more significant effect on the effective tax rate, increasing it compared to the same prior year period.

We recorded an income tax expense of $ 0.2 million and an income tax expense of $ 1.2 million for the six months ended June 30, 2025 and 2024, respectively.

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, 2025 was an expense of 28.2 % , compared to an expense of 28.7 % for the three months ended September 30, 2024.

The primary driver of the change in the Company’s effective tax rate is attributable to the relative impact of stock based-compensation discrete tax items.

We recorded an income tax expense of $ 3.2 million and an expense of $ 2.1 million for the three months ended September 30, 2025 and 2024, respectively.

The effective tax rate for the nine months ended September 30, 2025 was an expense of 28.9 % , compared to an expense of 31.0 % for the nine months ended September 30, 2024.

The primary drivers of the change in the Company’s effective tax rate were attributable to a lower discrete expense in the current year period as compared to true-ups recognized in the prior year period and rate changes in the current year period compared to prior year period.

We recorded an income tax expense of $ 3.4 million and an expense of $ 3.3 million for the nine months ended September 30, 2025 and 2024, respectively.

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority is more-likely-than-not to sustain the position following an audit.

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expenditures under Internal Revenue Code (IRC) Section 174 (reinstating full expensing beginning in 2025), extension of bonus depreciation, and revisions to international tax regimes.

We are evaluating the financial implications of the OBBBA and will begin reflecting its effects in the third quarter of 2025.

We currently expect the OBBBA to have a minimal impact on our effective tax rate and to favorably impact the timing of cash taxes.

Based on our estimates and assumptions, we currently expect that, after taking into account the anticipated impacts of the OBBBA, our full-year 2025 cash tax benefit will be approximately $ 4.6 million.

We have evaluated the financial implications of the OBBBA and have reflected its effects in the three months ended September 30, 2025 .

The OBBBA is expected to have no impact on our effective tax rate and a favorable impact on the timing of cash taxes.

We currently expect our full-year 2025 cash tax benefit will be approximately $ 4.5 million.

Net Income Per Share

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except share and per share data)

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Restricted stock units

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Performance stock units

Employee stock purchase plan

Fair Value Measurements

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The lowest priority is given to unobservable inputs (Level 3).

The carrying amounts of financial instruments such as 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.

The carrying amounts of financial instruments such as accounts receivable, other current assets, accounts payable, accrued expenses and other current 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.

Subsequent Event

On October 16, 2025, our Board of Directors authorized a new program to repurchase up to $ 25.0 million of our common stock.

Under the program, purchases may be made from time to time in the open market, in privately negotiated purchases, or both.

The timing and number of shares to be purchased will be based on

the price of the Company's common stock, general business and market conditions and other investment considerations and factors.

This share repurchase program expires on November 3, 2027.

The program does not obligate the Company to repurchase any specific number of shares and may be suspended or discontinued at any time without prior notice.

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 1. Financial Statements