TACTILE SYSTEMS TECHNOLOGY INC 10-K

Item 8. Financial Statements and Supplementary Data. Index to Financial Statements ​ ​ ​ ​ ​ ​ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID Number 248 ) ​ 88 Consolidated Balance Sheets ​ 90 Consolidated Statements of Operations ​ 91 Consolidated Statements of Stockholders’ Equity ​ 92 Consolidated Statements of Cash Flows ​ 93 Notes to Consolidated Financial Statements ​ 94 ​ ​ ​ 87 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Tactile Systems Technology, Inc. Opinion on the financial statements ​ We have audited the accompanying consolidated balance sheets of Tactile Systems Technology, Inc. (a Delaware corporation) and subsidiary (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. ​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 17, 2026 expressed an unqualified opinion. ​ Basis for opinion ​ These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ Critical audit matter ​ The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. ​ Transaction Price Adjustments – Uncollected Lymphedema Product Sales with Commercial Payers and Medicare ​ As described further in Note 3 Summary of Significant Accounting Policies – Revenue Recognition to the consolidated financial statements, revenue is recognized upon transfer of control of the product to the patient based on a transaction price determined to be the amount of expected consideration to be received for the 88 Table of Contents product. In most cases, there is a contracted third-party payer, such as a commercial insurer or Medicare, involved with the transaction. The transaction price is impacted by multiple factors including the terms and conditions contracted by third-party payers. Thus, payments from third-party payers typically are less than the Company’s standard charge and represent an implicit price concession, resulting in variable consideration. The transaction price for commercial payers and Medicare is determined based on the payment history of the payer drawn from actual write-off and collections experience over a rolling 12-month period, as well as historical patient collections by payer. The results of the variable consideration assessment are the primary source of information in estimating the recognition of net revenue and the net valuation of the related accounts receivable. ​ We identified transaction price adjustments, as it relates to the uncollected lymphedema product sales with commercial payers and Medicare, as a critical audit matter. The principal considerations for our determination that this is a critical audit matter are: ​ ● The transaction price adjustments are related to material accounts and disclosures that are important to the users of the consolidated financial statements ● Significant judgment is required to estimate the expected amount of cash consideration to be collected, which is a key input into management’s transaction price adjustments Our audit procedures related to the transaction price adjustments – uncollected lymphedema product sales with commercial payers and Medicare included the following, among others: ​ ● We tested the design and operating effectiveness of management’s key controls relating to their commercial payer and Medicare transaction price adjustments and lookback analysis through reperformance, observation of the controls being performed, and inspection of supporting documentation providing evidence of control performance. ● To test management’s estimate of the commercial payer and Medicare transaction price adjustments, we: (1) recomputed management’s calculation of the historical collection amounts by payer based on transactions that occurred during the year for a sample of commercial payers and Medicare (2) assessed management’s qualitative adjustments to any claims and (3) tested the completeness and accuracy of the underlying data used in management’s calculation of the historical collection amounts. ● For sales to patients insured by commercial payers and Medicare, we assessed the reasonableness of management’s year-end analysis of the transaction price adjustments recorded in the prior year compared to actual pricing adjustments experienced in the current period by recomputing the results of management’s historical lookback analysis of collection amounts by payer portfolio and total reserve. ​ /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2015. Minneapolis, Minnesota February 17, 2026 ​ 89 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ Tactile Systems Technology, Inc. Consolidated Balance Sheets ​ ​ ​ ​ December 31, ​ ​ ​ December 31, (In thousands, except share and per share data) ​ ​ ​ 2025 ​ ​ ​ 2024 Assets ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ Cash ​ $ 83,446 ​ $ 94,367 Accounts receivable, net ​ 43,876 ​ 44,937 Net investment in leases ​ 15,754 ​ 14,540 Inventories ​ 14,025 ​ 18,666 Prepaid expenses and other current assets ​ 8,066 ​ 5,053 Total current assets ​ 165,167 ​ 177,563 Non-current assets ​ ​ ​ ​ ​ ​ Property and equipment, net ​ 5,117 ​ 5,603 Right of use operating lease assets ​ 13,798 ​ 16,633 Intangible assets, net ​ 39,167 ​ 42,789 Goodwill ​ ​ 31,063 ​ ​ 31,063 Deferred income taxes ​ 9,783 ​ 18,311 Other non-current assets ​ 9,847 ​ 5,962 Total non-current assets ​ 108,775 ​ 120,361 Total assets ​ $ 273,942 ​ $ 297,924 Liabilities and Stockholders' Equity ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 4,968 ​ $ 5,648 Note payable ​ ​ — ​ ​ 2,956 Accrued payroll and related taxes ​ 19,378 ​ 17,923 Accrued expenses ​ 8,531 ​ 7,780 Income taxes payable ​ 1,428 ​ 270 Operating lease liabilities ​ 3,195 ​ 2,980 Other current liabilities ​ 3,457 ​ 3,147 Total current liabilities ​ 40,957 ​ 40,704 Non-current liabilities ​ ​ ​ ​ ​ ​ Note payable, non-current ​ ​ — ​ ​ 23,220 Accrued warranty reserve, non-current ​ 1,045 ​ 1,209 Income taxes payable, non-current ​ 275 ​ 239 Operating lease liabilities, non-current ​ ​ 12,763 ​ 15,955 Total non-current liabilities ​ 14,083 ​ 40,623 Total liabilities ​ 55,040 ​ 81,327 ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.001 par value, 50,000,000 shares authorized; none issued and outstanding as of December 31, 2025 and December 31, 2024 ​ — ​ — Common stock, $ 0.001 par value, 300,000,000 shares authorized; 22,438,926 shares issued and outstanding as of December 31, 2025; 23,883,475 shares issued and outstanding as of December 31, 2024 ​ 22 ​ 24 Additional paid-in capital ​ 163,940 ​ 180,719 Retained earnings ​ 54,940 ​ 35,854 Total stockholders’ equity ​ 218,902 ​ 216,597 Total liabilities and stockholders’ equity ​ $ 273,942 ​ $ 297,924 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 90 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tactile Systems Technology, Inc. Consolidated Statements of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, (In thousands, except share and per share data) 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Revenue ​ ​ ​ ​ ​ ​ ​ ​ Sales revenue $ 292,593 ​ $ 256,012 ​ $ 239,493 Rental revenue 36,929 ​ 36,972 ​ 34,930 Total revenue 329,522 ​ 292,984 ​ 274,423 Cost of revenue ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales revenue 68,686 ​ 64,815 ​ 66,713 Cost of rental revenue 10,690 ​ 11,481 ​ 12,577 Total cost of revenue 79,376 ​ 76,296 ​ 79,290 Gross profit ​ ​ ​ ​ ​ ​ ​ ​ Gross profit - sales revenue 223,907 ​ 191,197 ​ 172,780 Gross profit - rental revenue 26,239 ​ 25,491 ​ 22,353 Gross profit 250,146 ​ 216,688 ​ 195,133 Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ Sales and marketing 121,237 ​ 112,009 ​ 107,119 Research and development 8,481 ​ 8,832 ​ 7,823 Reimbursement, general and administrative 88,705 ​ 71,135 ​ 62,074 Intangible asset amortization and earn-out ​ 2,444 ​ ​ 2,531 ​ ​ 76 Total operating expenses 220,867 ​ 194,507 ​ 177,092 Income from operations 29,279 ​ 22,181 ​ 18,041 Interest income ​ 3,097 ​ ​ 3,384 ​ ​ 1,874 Interest expense ​ ( 1,038 ) ​ ​ ( 2,085 ) ​ ​ ( 4,147 ) Other income 1 ​ 9 ​ 2 Income before income taxes 31,339 ​ 23,489 ​ 15,770 Income tax expense (benefit) 12,253 ​ 6,529 ​ ( 12,745 ) Net income $ 19,086 ​ $ 16,960 ​ $ 28,515 Net income per common share ​ ​ ​ ​ ​ ​ ​ ​ Basic $ 0.83 ​ $ 0.71 ​ $ 1.24 Diluted $ 0.82 ​ $ 0.70 ​ $ 1.23 Weighted-average common shares used to compute net income per common share ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 22,872,841 ​ ​ 23,883,729 ​ ​ 22,925,497 Diluted ​ 23,295,328 ​ ​ 24,138,244 ​ ​ 23,176,169 ​ The accompanying notes are an integral part of these consolidated financial statements . ​ ​ ​ ​ ​ ​ ​ ​ 91 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tactile Systems Technology, Inc. Consolidated Statements of Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Retained ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Earnings ​ ​ ​ (In thousands, except share data) Shares Par Value Capital (Accumulated Deficit) Total Balances, December 31, 2022 ​ 20,252,677 ​ $ 20 ​ $ 131,001 ​ $ ( 9,621 ) ​ $ 121,400 Stock-based compensation ​ — ​ ​ — ​ ​ 7,547 ​ ​ — ​ ​ 7,547 Exercise of common stock options and vesting of performance and restricted stock units ​ 283,624 ​ ​ 1 ​ ​ 13 ​ ​ — ​ ​ 14 Sale of common stock from follow-on public offering, net of offering expenses ​ 2,875,000 ​ ​ 3 ​ ​ 34,622 ​ ​ — ​ ​ 34,625 Common shares issued for employee stock purchase plan ​ 189,283 ​ ​ — ​ ​ 1,541 ​ ​ — ​ ​ 1,541 Net income for the period ​ — ​ ​ — ​ ​ — ​ ​ 28,515 ​ ​ 28,515 Balances, December 31, 2023 ​ 23,600,584 ​ $ 24 ​ — 174,724 ​ — 18,894 ​ — 193,642 Stock-based compensation ​ — ​ ​ — ​ ​ 7,819 ​ ​ — ​ ​ 7,819 Exercise of common stock options and vesting of performance and restricted stock units ​ 317,443 ​ ​ — ​ ​ 24 ​ ​ — ​ ​ 24 Share repurchases ​ ( 195,518 ) ​ ​ — ​ ​ ( 3,508 ) ​ ​ — ​ ​ ( 3,508 ) Common shares issued for employee stock purchase plan ​ 160,966 ​ ​ — ​ ​ 1,660 ​ ​ — ​ ​ 1,660 Net income for the period ​ — ​ ​ — ​ ​ — ​ ​ 16,960 ​ ​ 16,960 Balances, December 31, 2024 ​ 23,883,475 ​ $ 24 ​ $ 180,719 ​ $ 35,854 ​ $ 216,597 Stock-based compensation ​ — ​ ​ — ​ ​ 8,357 ​ ​ — ​ ​ 8,357 Exercise of common stock options and vesting of performance and restricted stock units ​ 533,608 ​ ​ — ​ ​ 222 ​ ​ — ​ ​ 222 Share repurchases ​ ( 2,143,099 ) ​ ​ ( 2 ) ​ ​ ( 26,750 ) ​ ​ — ​ ​ ( 26,752 ) Common shares issued for employee stock purchase plan ​ 164,942 ​ ​ — ​ ​ 1,392 ​ ​ — ​ ​ 1,392 Net income for the period ​ — ​ ​ — ​ ​ — ​ ​ 19,086 ​ ​ 19,086 Balances, December 31, 2025 ​ 22,438,926 ​ $ 22 ​ $ 163,940 ​ $ 54,940 ​ $ 218,902 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 92 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tactile Systems Technology, Inc. Consolidated Statements of Cash Flows ​ ​ ​ ​ ​ Year Ended December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Cash flows from operating activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 19,086 ​ $ 16,960 ​ $ 28,515 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 6,643 ​ ​ 6,792 ​ ​ 6,539 Deferred income taxes ​ ​ 8,528 ​ ​ 1,067 ​ ​ ( 19,378 ) Stock-based compensation expense ​ ​ 8,357 ​ ​ 7,819 ​ ​ 7,547 Loss on disposal of property and equipment and intangibles ​ ​ 78 ​ ​ 308 ​ ​ 3 Change in fair value of earn-out liability ​ ​ — ​ ​ — ​ ​ ( 2,475 ) Changes in assets and liabilities, net of acquisition: ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable, net ​ ​ 1,061 ​ ​ ( 1,764 ) ​ ​ 11,653 Net investment in leases ​ ​ ( 1,214 ) ​ ​ ( 345 ) ​ ​ 1,935 Inventories ​ ​ 4,641 ​ ​ 3,861 ​ ​ 597 Income taxes payable ​ ​ 1,194 ​ ​ ( 1,404 ) ​ ​ ( 721 ) Prepaid expenses and other assets ​ ​ ( 6,898 ) ​ ​ ( 3,929 ) ​ ​ 72 Right of use operating lease assets ​ ​ ( 142 ) ​ ​ 187 ​ ​ 71 Accounts receivable, non-current ​ ​ — ​ ​ 10,936 ​ ​ 12,125 Accounts payable ​ ​ ( 758 ) ​ ​ ( 1,087 ) ​ ​ ( 3,853 ) Accrued payroll and related taxes ​ ​ 1,455 ​ ​ 1,134 ​ ​ ( 311 ) Accrued expenses and other liabilities ​ ​ 780 ​ ​ 120 ​ ​ ( 6,464 ) Net cash provided by operating activities ​ ​ 42,811 ​ ​ 40,655 ​ ​ 35,855 Cash flows from investing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchases of property and equipment ​ ​ ( 2,380 ) ​ ​ ( 2,392 ) ​ ​ ( 2,324 ) Proceeds from sale of property and equipment ​ ​ — ​ ​ 12 ​ ​ — Intangible assets expenditures ​ ​ ( 155 ) ​ ​ ( 117 ) ​ ​ ( 157 ) Net cash used in investing activities ​ ​ ( 2,535 ) ​ ​ ( 2,497 ) ​ ​ ( 2,481 ) Cash flows from financing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from issuance of note payable ​ ​ — ​ ​ — ​ ​ 8,250 Payments on earn-out ​ ​ — ​ ​ — ​ ​ ( 10,575 ) Payments on note payable ​ ​ ( 26,250 ) ​ ​ ( 3,000 ) ​ ​ ( 3,000 ) Payments on revolving line of credit ​ ​ — ​ ​ — ​ ​ ( 25,000 ) Payments of deferred debt issuance costs ​ ​ — ​ ​ — ​ ​ ( 125 ) Proceeds from exercise of common stock options ​ ​ 222 ​ ​ 24 ​ ​ 14 Proceeds from the issuance of common stock from the employee stock purchase plan ​ ​ 1,392 ​ ​ 1,660 ​ ​ 1,541 Payments for repurchases of common stock ​ ​ ( 26,561 ) ​ ​ ( 3,508 ) ​ ​ — Proceeds from issuance of common stock at market ​ ​ — ​ ​ — ​ ​ 34,625 Net cash (used in) provided by financing activities ​ ​ ( 51,197 ) ​ ​ ( 4,824 ) ​ ​ 5,730 Net (decrease) increase in cash ​ ​ ( 10,921 ) ​ ​ 33,334 ​ ​ 39,104 Cash – beginning of period ​ ​ 94,367 ​ ​ 61,033 ​ ​ 21,929 Cash – end of period ​ $ 83,446 ​ $ 94,367 ​ $ 61,033 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow disclosure ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 1,218 ​ $ 2,106 ​ $ 4,560 Cash paid for taxes ​ $ 2,500 ​ $ 6,866 ​ $ 7,353 Accrued excise tax on stock repurchases ​ $ 191 ​ $ — ​ ​ — Capital expenditures incurred but not yet paid ​ $ 78 ​ $ 76 ​ $ 528 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 93 Table of Contents ​ Tactile Systems Technology, Inc. Notes to the Consolidated Financial Statement s Note 1. Nature of Business and Operations Tactile Systems Technology, Inc. (“we,” “us,” and “our”) manufactures and distributes medical devices for the treatment of patients with underserved chronic diseases at home. We provide our Flexitouch Plus, Entre Plus and Nimbl systems, which help control symptoms of lymphedema, a chronic progressive medical condition, through our direct sales force for use in the home and sell or rent them through vascular, wound and lymphedema clinics throughout the United States. On September 8, 2021, we acquired the assets of the AffloVest airway clearance business. AffloVest is a portable, wearable vest that treats patients with chronic respiratory conditions. We sell this device through home medical equipment and durable medical equipment (“DME”) providers throughout the United States. We were originally incorporated in Minnesota under the name Tactile Systems Technology, Inc. on January 30, 1995. During 2006, we established a merger corporation and subsequently, on July 21, 2006, merged with and into this merger corporation, resulting in us being reincorporated as a Delaware corporation. The resulting corporation assumed the name Tactile Systems Technology, Inc. In September 2013, we began doing business as “Tactile Medical.” On August 2, 2016, we closed the initial public offering of our common stock, which resulted in the sale of 4,120,000 shares of our common stock at a public offering price of $ 10.00 per share. We received net proceeds from the initial public offering of approximately $ 35.4 million, after deducting underwriting discounts and approximately $ 2.9 million of transaction expenses. On February 27, 2023, we closed on a public offering of 2,875,000 shares of our common stock at a public offering price of $ 13.00 per share. We received net proceeds from this offering of $ 34.6 million after deducting underwriting discounts, commissions, and offering expenses. Our business is affected by seasonality. In the first quarter of each year, when most patients have started a new insurance year and have not yet met their annual out-of-pocket payment obligations, we experience substantially reduced demand for our products. We typically experience higher revenue in the third and fourth quarters of the year when patients have met their annual insurance deductibles, thereby reducing their out-of-pocket costs for our products, and because patients desire to exhaust their flexible spending accounts at year end. This seasonality applies only to purchases and rentals of our products by patients covered by commercial insurance and is not relevant to Medicare, Medicaid or the Veterans Administration, as those payers either do not have plans that have declining deductibles over the course of the plan year and/or do not have plans that include patient deductibles for purchases or rentals of our products. Note 2. Basis of Presentation Our accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The results for the year ended December 31, 2025, are not necessarily indicative of results to be expected for any future year. Principles of Consolidation Our accompanying consolidated financial statements include the accounts of Tactile Systems Technology, Inc. and its wholly owned subsidiary, Swelling Solutions, Inc. All intercompany balances and transactions have been eliminated in consolidation. 94 Table of Contents Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and to disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. ​ Note 3. Summary of Significant Accounting Policies Cash Cash consists of all cash on hand and deposits. Our cash was held primarily in checking accounts and an Institutional Insured Liquid Deposit demand account as of December 31, 2025 and 2024. At times the amount of cash on deposit may exceed the federally insured limit of the bank. Deposit accounts at each of the institutions are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). At December 31, 2025 and 2024, the Company exceeded FDIC limits at various institutions. The Company has not experienced any losses in such accounts. Equity Investments Equity investments (including equity securities) with readily determinable fair value are reported at fair value, with unrealized gains and losses included in the determination of net income (loss). For equity investments with no readily determinable fair value, we measure these investments at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Such observable price changes may include instances where the investee issues equity securities to new investors, thus creating a new indicator of fair value, as an example. As of each of December 31, 2025 and 2024, the total carrying value of our equity investments, with no readily determinable fair value, was $ 0.3 million, and are included in other non-current assets on our Consolidated Balance Sheets. On an annual basis, we perform a qualitative assessment considering impairment indicators to evaluate whether these investments are impaired and also monitor for any observable price changes. During the years ended December 31, 2025 and 2024, we did not have any impairment loss on these investments. Accounts Receivable The majority of our accounts receivable and revenue are from commercial insurance payers and government payers, such as Medicare, the Veterans Administration and Medicaid. Accounts receivable are recorded based on management’s assessment of the expected consideration to be received, based on a detailed review of historical pricing adjustments and collections. Management relies on the results of the assessment, which includes payment history of the applicable payer as well as historical patient collections, as a primary source of information in estimating the collectability of our accounts receivable. We update our assessment on a quarterly basis, which to date has not resulted in any material adjustments to the valuation of our accounts receivable. We believe the assessment provides reasonable estimates of our accounts receivable valuation, and therefore we believe that substantially all accounts receivable are fully collectible. A portion of claims to Medicare are initially denied and enter the appeals process, where many are ultimately reviewed by an Administrative Law Judge. After final adjudication of all claims, approximately 90 % of the claims submitted are approved (this is on a number of claims, not a dollars claimed, basis across all our products). The appeals process can be lengthy, lasting more than a year in most cases. Accordingly, we classify a portion of our Medicare accounts receivable as non-current based on our experience with Medicare collections. Inventories Inventories are valued at the lower of cost (first-in, first-out method) or net realizable value. 95 Table of Contents Property and Equipment Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives of three to seven years . Leasehold improvements are depreciated over the remaining life of the respective building lease agreement. The value of demonstration equipment in the possession of our field sales representatives is capitalized and depreciated over the estimated useful life of the equipment. Major expenditures for property and equipment are capitalized. Maintenance, repairs and minor renewals are expensed as incurred. When assets are retired or otherwise disposed of, their costs and related accumulated depreciation are removed from the accumulated depreciation accounts and the resulting gains or losses are included in income. Software Costs We capitalize certain implementation costs incurred during the development stage of implementing new software. Capitalized costs are included within prepaid expenses and other current assets and other non-current assets on the Consolidated Balance Sheets. We expense costs as incurred during the post-implementation/operation stage. Capitalized implementation costs are amortized on a straight-line basis over the contractual term of the cloud computing arrangement, which includes renewal options that are reasonably certain to be exercised. Revenue Recognition We derive revenue from the sales and rentals of our Flexitouch Plus, Entre Plus and Nimbl systems, and from the sales of our AffloVest product. Flexitouch Plus, Entre Plus and Nimbl We recognize revenue when control of the product has been transferred to our customer, in the amount of the expected consideration to be received for the product. In general, revenue from the sale or rental of a product is recognized upon shipment, unless circumstances dictate that control has not yet passed to the customer. We provide a warranty for these products against defects in material and workmanship for a period of one to five years on garments and one to two years on controllers. In accordance with applicable accounting guidance, we have determined these were assurance warranties and therefore not considered a performance obligation. In addition, we did not evaluate immaterial promised goods or services in the context of the contract. As a result, the sale or rental of these products represent a single performance obligation that is satisfied at a point in time and is short-term in nature. In certain cases, we receive payment from Medicare sales over a period of time that may exceed one year . Despite these extended payment terms, no significant financing component is deemed to exist as the terms are not for the benefit of the patient with whom we have the contract. Rather, the extended payment terms occur as a result of an initial claim denial, which subsequently enters the Medicare appeals process as noted below. We commercially distribute these products directly to patients who are referred to us by physicians, therapists or nurses. In most cases, there is a third-party payer, such as a commercial insurer, Medicare or the Veterans Administration, involved with the transaction. Our contractual relationship resides with the patient when the third-party payer is either a commercial insurer or Medicare and with the Veterans Administration if the patient is covered under their services. Revenue is recognized from such sales upon transfer of control of the product to the customer at a transaction price determined by collection history. As a result, the transaction price is impacted by multiple factors, including the terms and conditions contracted by various third-party payers, and therefore payments from third-party payers typically are less than our standard charge and represent an implicit price concession, resulting in variable consideration. As most contracts are with each individual sale to a patient, we have elected the portfolio approach to determine the transaction price, and ultimately the expected consideration. The portfolios used to determine transaction price are at the payer level, with pricing for each payer assessed based on the underlying similar characteristics. 96 Table of Contents For any of our products sold to patients covered by private payers, such as commercial insurance companies, revenue is recognized upon shipment. A product is not shipped until we have received a prescription from a physician for our products and, as applicable, receipt of prior authorization from payers. At shipment, we invoice the payer for the total product price, and we recognize revenue in the amount of cash consideration anticipated to be received based on the transaction price. After the insurance payer has remitted payment, we separately invoice the patient for their portion of the payment obligation, such as copayments and deductibles. The transaction price is determined based on the payment history of the applicable payer drawn from actual write-off and collections experience from the payer over a rolling 12-month period, as well as historical patient collections. For our products sold to Medicare patients, we recognize revenue from such sales upon shipment of our products, which can occur only after we have received a prescription from a physician and all applicable patient documentation is obtained. The transaction price for our Entre Plus and Nimbl systems is determined based on the payment history using the same methodology as our private insurers. A portion of claims for payment for our Flexitouch Plus system are initially denied, and enter the appeals process, which can be lengthy. We assess the variable consideration for each of these claims as a percentage of the total invoice price based on ultimate approval and collection history. For our products sold to the Veterans Administration on behalf of the patient, our contract is with the Veterans Administration rather than the patient. We enter into individual sales contracts with the Veterans Administration on behalf of each patient. These contracts determine the amount of consideration, which is typically paid in full within 2 - 3 days of shipment, and therefore there is no implicit price concession. In addition, the contracts provide for the right of control to transfer to the Veterans Administration upon delivery of the product to the patient, at which time revenue is recognized. We incur incremental costs that directly relate to the sales of our products; however, as the amortization period would be less than one year , we have elected the practical expedient to expense these costs as incurred. We sell and rent these products either directly to patients or the Veterans Administration on behalf of patients, who are referred to us by physicians, therapists or nurses. We bill private insurers and other payers, Medicare, and the Veterans Administration directly for purchases or rentals of our product on behalf of a patient and bill patients directly for their cost-sharing amounts, including any portion of an unsatisfied deductible and any copayments or co-insurance obligation. A portion of our revenue is derived from patients who obtain our products under multiple-month rental arrangements. We bill these patients’ insurance payers monthly over the duration of the rental term. Title to these products passes to the patients at the end of the rental period. Rental agreements are recorded as sales-type leases in accordance with Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (Topic 842) (“ASC 842”). Accordingly, as sales-type leases, the transaction price for the entire rental term is recognized upon transfer of control. AffloVest The AffloVest device is sold through durable medical equipment providers. Revenue is recognized when control of the promised goods or services is transferred to the distributors, in an amount that reflects the consideration we expect to be entitled to in exchange for transferring those goods or providing services. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. When determining whether the distributor has obtained control of the goods or services, we consider any future performance obligations. Generally, there is no post-shipment obligation on products sold other than warranty obligations in the normal and ordinary course of business. Consequently, revenue from the sale of the AffloVest product is recognized at shipment, unless circumstances dictate that control has not yet passed to the distributor. Certain of our contracts include volume-based incentives which involve rebates that are negotiated at or prior to the time of sale with the customer and are redeemable only if the customer achieves a specified cumulative level of sales or sales increase. Under these incentive programs, at the time of sale, we determine 97 Table of Contents the most likely amount of the rebate to be paid based on forecasted sales levels. These forecasts are updated at least quarterly for applicable customers, and the transaction price is reduced for the anticipated cost of the rebate. If the forecasted sales for a customer change, the accrual for rebates is adjusted to reflect the new rebates expected to be earned by the customer. Amounts billed to customers for shipping and handling activities after the customer obtains control are treated as a promised service performance obligation and recorded in revenue in the accompanying Consolidated Statements of Operations. Shipping and handling costs incurred for the delivery of goods to customers are considered a cost to fulfill the contract and are included in cost of revenue sold in the accompanying Consolidated Statements of Operations. We provide a warranty for the AffloVest products against defects in material and workmanship for a period of five years . In accordance with applicable accounting guidance, we have determined these were assurance warranties and therefore not considered a performance obligation. In addition, we did not evaluate immaterial promised goods or services in the context of the contract. As a result, the sale of these products represents a single performance obligation that is satisfied at a point in time and is short-term in nature. Research and Development Costs We expense research and development costs as incurred, including expenses associated with clinical research studies and development. Shipping and Handling Costs Amounts billed to customers for shipping and handling activities after the customer obtains control are treated as a promised service performance obligation and recorded in total revenue in the accompanying Consolidated Statements of Operations. Shipping and handling costs incurred for the delivery of goods to customers are considered a cost to fulfill the contract and are included in cost of revenue in the accompanying Consolidated Statements of Operations. Product Warranty We provide a warranty for our products against defects in material and workmanship for a period of one to five years . We record a liability for future warranty claims at the time of sale for the warranty period offered to a customer. If the assumptions used in calculating the provision were to materially change, such as incurring higher than anticipated warranty claims, an additional provision may be required. Impairment of Long-Lived Assets We review long-lived assets, including property and equipment and patents, for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be fully recoverable. We will assess long-lived assets used in operations for impairment indicators, including when undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount (see Note 7 – “Goodwill and Intangible Assets”). Goodwill Goodwill represents the excess of the purchase price paid over the estimated fair value of the net assets acquired and liabilities assumed in the acquisition of a business. Goodwill is not amortized, but is tested for impairment at least annually or on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We perform our annual assessment of goodwill for impairment as of July 1st of each fiscal year. See Note 7 – “Goodwill and Intangible Assets” for additional information. 98 Table of Contents Stock-Based Compensation We provide stock-based compensation in the form of various types of equity-based awards, including time-based restricted stock units, performance-based restricted stock units, stock options, and through our Employee Stock Purchase Plan (“ESPP”). Stock-based compensation expense is based on the estimated fair value of the award on the grant date for equity awards, or on the first date of the ESPP purchase period for shares under the ESPP, and recognized over the requisite service periods on our Consolidated Statements of Operations using the straight-line expense attribution approach. The estimated fair value of time-based and performance based restricted stock units is based on the closing price of our common stock on the grant date. Stock options and ESPP shares are valued using the Black-Scholes option-pricing model. The Black-Scholes valuation model requires the input of highly subjective assumptions. The assumptions include the expected term of the option or ESPP shares, the expected volatility of the price of our common stock, expected dividend yield and the risk-free interest rate. These estimates involve inherent uncertainties and the significant application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future (see Note 12 – “Stockholders’ Equity”). Income Taxes Income taxes are accounted for under the liability method. Deferred income taxes are provided for temporary differences between the financial reporting and the tax basis of assets and liabilities. If we determine in the future that it is more likely than not that we will not realize all or a portion of the deferred tax assets, we will record a valuation allowance in the period the determination is made (see Note 14 – “Income Taxes”). Changes in tax rates are reflected in the tax provision as they occur. Net Income (Loss) Per Common Share Basic net income (loss) per common share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential stock-based awards outstanding during the period using the treasury stock method. Dilutive potential stock-based awards include outstanding common stock options, time- and performance-based restricted stock units and ESPP shares. Business Segments The Company operates as one operating segment. The Company's Chief Operating Decision Maker ("CODM") is its Chief Executive Officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated net income (loss) as the measure of segment profit or loss. Significant segment expenses are those expenses reported in the Consolidated Statement of Operations. The CODM assesses performance for the segment, allocates resources and monitors budget versus actual results using consolidated revenue and net income (loss) which is reflected in the Consolidated Statement of Operations. 99 Table of Contents Immaterial Correction of an Error During the three months ended December 31, 2025, the Company identified an immaterial error related to the calculation of the Company’s deferred tax asset related to stock-based compensation. The Company did not properly reverse the deferred tax asset balance for certain stock options that had vested but later expired and as such its deferred income tax balance was overstated. In accordance with Staff Accounting Bulletin (“SAB”) No. 99, “Materiality”, and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”, the Company evaluated the quantitative and qualitative considerations of the error and determined that the related impact was not material to results of operations, financial position, or cash flows for any historical annual or interim period. To correct the error, the Company recorded an out-of-period adjustment. The out-of-period adjustment reduced the Company’s deferred income tax balance, and increased its income tax expense, by $ 2.8 million as of and for the year ended December 31, 2025. Accounting Pronouncement Not Yet Adopted 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): Disaggregation of Income Statement Expenses” which requires entities to disclose additional information about specific expense categories in the notes to financial statements on an annual and interim basis. The guidance is effective for annual periods beginning after December 15, 2026, and interim 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. Recently Adopted Accounting Pronouncement In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” which requires entities to enhance disclosures around income taxes. The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We retrospectively adopted this ASU for the year ended December 31, 2025. The adoption of this ASU affects only our disclosures, with no impacts to our financial condition and results of operations. Note 4. Accounts Receivable We had accounts receivable from two insurers representing approximately 18 % and 10 % of accounts receivable as of December 31, 2025. We had accounts receivable from two insurers representing approximately 23 % and 12 % of accounts receivable as of December 31, 2024. Revenue from these insurers accounted for 24 % and 2 % of our total revenue for the year ended December 31, 2025, and 18 % and 2 % for the year ended December 31, 2024. The credit risks associated with customers which for these purposes are insurers considers aggregation for entities that are known to be under common control. ​ ​ ​ ​ ​ 100 Table of Contents Note 5. Inventories Inventories consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ At December 31, 2025 ​ ​ ​ At December 31, 2024 Finished goods ​ $ 5,280 ​ $ 6,149 Component parts and work-in-process ​ 8,745 ​ 12,517 Total inventories ​ $ 14,025 ​ $ 18,666 ​ ​ Note 6. Property and Equipment Property and equipment consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Equipment ​ $ 5,895 ​ $ 5,108 Tooling ​ 4,490 ​ 4,652 Furniture and fixtures ​ 2,152 ​ 2,095 Leasehold improvements ​ 3,473 ​ 3,466 Demonstration equipment ​ ​ 1,197 ​ ​ 1,106 Construction in progress ​ ​ 597 ​ ​ 152 Subtotal ​ 17,804 ​ 16,579 Less: accumulated depreciation ​ ( 12,687 ) ​ ( 10,976 ) Property and equipment, net ​ $ 5,117 ​ $ 5,603 ​ Depreciation expense was $ 2.9 million, $ 3.0 million and $ 2.7 million for the years ended December 31, 2025, 2024 and 2023, respectively. Note 7. Goodwill and Intangible Assets Goodwill In the third quarter of fiscal 2021, we completed the AffloVest acquisition. The purchase price of the AffloVest business exceeded the net acquisition-date estimated fair value amounts of the identifiable assets acquired and the liabilities assumed by $ 31.1 million, which was assigned to goodwill. Intangible Assets Our patents and other intangible assets are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ At December 31, 2025 ​ ​ Average ​ Gross ​ ​ ​ ​ ​ ​ Amortization ​ Carrying ​ Accumulated ​ Net (In thousands) ​ ​ ​ Period ​ Amount ​ Amortization ​ Amount Definite-lived intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Patents ​ 11 years ​ $ 1,083 ​ $ 318 ​ $ 765 Customer relationships ​ 9 years ​ ​ 31,000 ​ ​ 10,280 ​ ​ 20,720 Developed technology ​ 7 years ​ ​ 13,000 ​ ​ 5,095 ​ ​ 7,905 Subtotal ​ ​ ​ ​ 45,083 ​ ​ 15,693 ​ ​ 29,390 Unamortized intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tradenames ​ ​ ​ ​ 9,500 ​ ​ — ​ ​ 9,500 Patents pending ​ ​ ​ ​ 277 ​ ​ — ​ ​ 277 Total intangible assets ​ ​ ​ $ 54,860 ​ $ 15,693 ​ $ 39,167 ​ ​ 101 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ At December 31, 2024 ​ ​ Average ​ Gross ​ ​ ​ ​ ​ ​ Amortization ​ Carrying ​ Accumulated ​ Net (In thousands) ​ ​ ​ Period ​ Amount ​ Amortization ​ Amount Definite-lived intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Patents ​ 12 years ​ $ 1,148 ​ $ 333 ​ $ 815 Defensive intangible assets ​ < 1 year ​ ​ 1,125 ​ ​ 1,065 ​ ​ 60 Customer accounts ​ — ​ ​ 125 ​ ​ 125 ​ — Customer relationships ​ 10 years ​ ​ 31,000 ​ ​ 7,896 ​ ​ 23,104 Developed technology ​ 8 years ​ ​ 13,000 ​ ​ 3,913 ​ ​ 9,087 Subtotal ​ ​ ​ ​ 46,398 ​ ​ 13,332 ​ ​ 33,066 Unamortized intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tradenames ​ ​ ​ ​ 9,500 ​ ​ — ​ ​ 9,500 Patents pending ​ ​ ​ ​ 223 ​ ​ — ​ ​ 223 Total intangible assets ​ ​ ​ $ 56,121 ​ $ 13,332 ​ $ 42,789 ​ Amortization expense was $ 3.7 million for the year ended December 31, 2025, and $ 3.8 million for each of the years ended December 31, 2024 and 2023, of which $ 1.3 million in each of the years ended December 31, 2025, 2024 and 2023, were recorded in cost of sales revenue. Future amortization expenses are expected as follows: ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ 2026 ​ ​ ​ $ 3,648 2027 ​ ​ 3,640 2028 ​ 3,640 2029 ​ 3,637 2030 ​ 3,632 Thereafter ​ 11,193 Total ​ $ 29,390 ​ The weighted-average remaining amortization period for these intangible assets was 8.2 years as of December 31, 2025. Note 8. Accrued Expenses Accrued expenses consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 In-transit inventory ​ ​ 1,931 ​ ​ 1,013 Sales and use tax ​ $ 1,837 ​ $ 802 Travel ​ ​ 1,424 ​ ​ 1,120 Warranty ​ ​ 1,285 ​ ​ 1,784 Legal and consulting ​ ​ 1,285 ​ ​ 1,318 Clinical studies ​ ​ 64 ​ ​ 304 Other ​ 705 ​ 1,439 Total ​ $ 8,531 ​ $ 7,780 ​ ​ 102 Table of Contents Note 9. Warranty Reserves The activity in the warranty reserve during and as of the end of the years presented was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ 2023 Beginning balance ​ $ 2,993 ​ $ 4,038 ​ $ 4,212 Warranty provision ​ 1,722 ​ 2,677 ​ 4,611 Processed warranty claims ​ ( 2,385 ) ​ ( 3,722 ) ​ ( 4,785 ) Ending balance ​ $ 2,330 ​ $ 2,993 ​ $ 4,038 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrued warranty reserve, current ​ $ 1,285 ​ $ 1,784 ​ $ 2,357 Accrued warranty reserve, non-current ​ ​ 1,045 ​ ​ 1,209 ​ ​ 1,681 Total accrued warranty reserve ​ $ 2,330 ​ $ 2,993 ​ $ 4,038 ​ ​ Note 10. Credit Agreement On April 30, 2021, we entered into an Amended and Restated Credit Agreement (the “2021 Restated Credit Agreement”) with the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative Agent. The 2021 Restated Credit Agreement amended and restated in its entirety our prior credit agreement. On September 8, 2021, we entered into a First Amendment Agreement (the “Amendment”), which amended the 2021 Restated Credit Agreement (as amended by the Amendment, the “Credit Agreement”) with the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent. The Amendment, among other things, added a $ 30.0 million incremental term loan to the $ 25.0 million revolving credit facility provided by the 2021 Restated Credit Agreement. The term loan is reflected on our consolidated financial statements as a note payable. The Credit Agreement provides that, subject to satisfaction of certain conditions, we may increase the amount of the revolving loans available under the Credit Agreement and/or add one or more term loan facilities in an amount not to exceed $ 25.0 million in the aggregate, such that the total aggregate principal amount of loans available under the Credit Agreement (including under the revolving credit facility) does not exceed $ 80.0 million. On September 8, 2021, in connection with the closing of the AffloVest acquisition, we borrowed the $ 30.0 million term loan and utilized that borrowing, together with a draw of $ 25.0 million under the revolving credit facility and cash on hand, to fund the purchase price. On February 22, 2022, we entered into a Second Amendment Agreement (the “Second Amendment”), which further amended the Credit Agreement. The Second Amendment modified the maximum leverage ratio, the minimum fixed charge coverage ratio and the minimum consolidated EBITDA covenants under the Credit Agreement, and added a minimum liquidity covenant, through the quarter ended June 30, 2023. The Second Amendment also increased the applicable margin for LIBOR rate loans under the Credit Agreement during the period commencing on the date of the Second Amendment and ending on the last day of the fiscal quarter ending June 30, 2023. Pursuant to the Second Amendment, we made a mandatory principal prepayment of the term loan of $ 3.0 million on February 22, 2022. On June 21, 2023, we entered into a Third Amendment Agreement (the “Third Amendment”) that replaced the interest rate benchmark under the Credit Agreement from LIBOR to the term Secured Overnight Financing Rate (“SOFR”). All tenors of term SOFR are subject to a credit spread adjustment of 0.10 % (“Adjusted Term SOFR”). Following the Third Amendment, the term loan and amounts drawn under the revolving credit facility bear interest, at our option, at a rate equal to (a) the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50 % and (iii) Adjusted Term SOFR for a one-month tenor plus 1 % (the “Base Rate”) plus an applicable margin or (b) Adjusted Term SOFR for an interest period of one, three or six months, at our option, plus the applicable 103 Table of Contents margin. The applicable margin is 0.75 % to 2.25 % on loans bearing interest at the Base Rate and 1.75 % to 3.25 % on loans bearing interest at Adjusted Term SOFR, in each case depending on our consolidated total leverage ratio; except that, pursuant to the Second Amendment and the Third Amendment, during the period commencing on February 22, 2022 and ending on the last day of the fiscal quarter ending June 30, 2023, the applicable margin for LIBOR rate loans and Adjusted Term SOFR loans, as applicable, was 3.50 %. At December 31, 2024, all outstanding borrowings were subject to interest at a rate calculated at Adjusted Term SOFR plus an applicable margin, for an interest rate of 6.42 %. 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. 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 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 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 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 December 31, 2025, we had no outstanding borrowings under the 2025 Restated Credit Agreement. 104 Table of Contents 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 December 31, 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 December 31, 2025, we were in compliance with all covenants under the 2025 Restated Credit Agreement. Note 11. Commitments and Contingencies Lease Obligations We lease property and equipment under operating leases, typically with terms greater than 12 months , and determine if an arrangement contains a lease at inception. In general, an arrangement contains a lease if there is an identified asset and we have the right to direct the use of and obtain substantially all of the economic benefit from the use of the identified asset. We record an operating lease liability at the present value of lease payments over the lease term on the commencement date. The related right of use (“ROU”) operating lease asset reflects rental escalation clauses, as well as renewal options and/or termination options. The exercise of lease renewal and/or termination options are at our discretion and are included in the determination of the lease term and lease payment obligations when it is deemed reasonably certain that the option will be exercised. When available, we use the rate implicit in the lease to discount lease payments to present value; however, certain leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. We classify our leases as buildings, vehicles or computer and office equipment and do not separate lease and nonlease components of contracts for any of the aforementioned classifications. In accordance with applicable guidance, we do not record leases with terms that are less than one year on the Consolidated Balance Sheets. None of our lease agreements contain material restrictive covenants or residual value guarantees. Buildings We lease certain office and warehouse space at various locations in the United States where we provide services. These leases are typically greater than one year with fixed, escalating rents over the noncancelable terms and, therefore, ROU operating lease assets and operating lease liabilities are recorded on the 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 December 31, 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. In December 2018, we amended the initial lease to add approximately 29,000 square feet of additional office space, which is accounted for as a separate lease (“second lease”) in accordance with ASU No. 2016-02, “Leases” (Topic 842) (“ASC 842”). In December 2019, we further amended the lease which extended the expiration date of the initial lease, extended the expiration date of and added approximately 4,000 square feet to the second lease, as well as added approximately 37,000 square feet of additional office space, accounted for as a separate lease (“third lease”) in accordance with ASC 842. The portion of the space covered under the initial lease was placed in service in September 2019. The portion of the space covered under the second lease commenced in September 2020. Finally, the portion of the space covered under the third lease commenced in September 2021. The three portions were recognized as an operating lease and included in the ROU operating lease assets and operating lease liabilities on the Consolidated Balance Sheets. Computer and Office Equipment We also have operating lease agreements for certain computer and office equipment. The remaining lease terms as of December 31, 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. The 105 Table of Contents leases will automatically renew as a month-to-month rental at the end of the lease if the equipment is not purchased or returned. Lease Position, Undiscounted Cash Flow and Supplemental Information ​ The table below presents information related to our ROU operating lease assets and operating lease liabilities that we have recorded: ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ At December 31, 2025 ​ ​ ​ At December 31, 2024 Right of use operating lease assets ​ $ 13,798 ​ $ 16,633 ​ ​ ​ ​ ​ ​ ​ Operating lease liabilities: ​ ​ ​ ​ ​ ​ Current ​ $ 3,195 ​ $ 2,980 Non-current ​ 12,763 ​ 15,955 Total ​ $ 15,958 ​ $ 18,935 ​ ​ ​ ​ ​ ​ ​ Operating leases: ​ ​ ​ ​ ​ ​ Weighted average remaining lease term ​ 4.9 years ​ ​ 5.8 years Weighted average discount rate ​ ​ 4.3 % ​ ​ 4.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ 2024 ​ 2023 Supplemental cash flow information for our operating leases: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for operating lease liabilities ​ $ 3,421 ​ $ 3,566 ​ $ 3,453 Non-cash right of use assets obtained in exchange for new operating lease obligations ​ $ — ​ $ 390 ​ $ 293 ​ The table below reconciles the undiscounted cash flows under the operating lease liabilities recorded on the Consolidated Balance Sheets for the periods presented: ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ 2026 ​ ​ ​ $ 3,808 2027 ​ ​ 3,311 2028 ​ 3,275 2029 ​ 3,309 2030 ​ 3,340 Thereafter ​ 352 Total minimum lease payments ​ ​ 17,395 Less: Amount of lease payments representing interest ​ ​ ( 1,437 ) Present value of future minimum lease payments ​ ​ 15,958 Less: Current obligations under operating lease liabilities ​ ​ ( 3,195 ) Non-current obligations under operating lease liabilities ​ $ 12,763 ​ Operating lease costs were $ 3.6 million, $ 3.5 million and $ 3.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. Major Vendors We had purchases from one vendor that accounted for 13 % and 20 % of our total purchases for the years ended December 31, 2025, and 2024, respectively. Purchase Commitment We issued purchase orders in 2025 totaling $ 31.9 million for goods that we expect to receive within the next year. 106 Table of Contents Retirement Plan We maintain a 401(k) retirement plan for our employees to 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 $ 3.3 million, $ 2.2 million and $ 1.5 million for the years ended December 31, 2025, 2024 and 2023, respectively. Legal Proceedings From time to time, we are subject to various claims and legal proceedings arising in the ordinary course of business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. On October 25, 2024, the United States District Court, District of Massachusetts (Boston) unsealed two qui tam complaints against us, and we were served with these complaints on January 14, 2025 and January 21, 2025. The United States has indicated that it is not intervening in either matter at this time. The first complaint is captioned United States ex. rel. Benjaman Scarborough vs. Tactile Systems Technology, Inc., Case No. 1:21-cv-10813-IT, and was filed under seal on May 17, 2021, on behalf of the United States by a former employee (the “Scarborough Complaint”). The Scarborough Complaint alleges that we submitted false claims and made false statements in connection with the Medicare programs, in violation of the Federal False Claims Act. The second complaint is captioned United States ex. rel. Jackie Gorham, an individual, and Dustin Gast, an individual, vs. Tactile Systems Technology, Inc. Case No. 1:21-cv-11809-IT, and was filed under seal on September 1, 2021, on behalf of the United States by two former employees (the “Gorham Complaint”). The Gorham Complaint alleges that we submitted false claims and made false statements in connection with the Medicare, Medicare Advantage plans, Medicaid and other government payers, in violation of the Federal False Claims Act and submitted false claims resulting from kickbacks in violation of the Federal False Claims Act and the Federal Anti-Kickback Statute. Both complaints seek damages, statutory penalties, attorneys’ fees, and costs. On February 24, 2025, the parties (the relators under both complaints and the Company) filed a joint motion requesting that both actions be stayed until November 25, 2025, to provide time for the government to review and assess sample claims for the purpose of assessing the allegations. On February 25, 2025, the court granted the motion and issued orders that stay both actions until November 25, 2025. On November 21, 2025, the parties filed a joint motion to extend the stay to March 25, 2026. That same day, the court issued an order granting the motion. We will defend the actions as they proceed. Note 12. Stockholders' Equity We completed an initial public offering of our common stock on August 2, 2016, in which we sold 4,120,000 shares of our common stock at a public offering price of $ 10.00 per share. Immediately prior to the completion of the initial public offering, all then-outstanding shares of our Series A and Series B preferred stock were converted into 5,924,453 shares of our common stock. Our Series A preferred stock converted to common stock at a ratio of 1-for- 1.03 and our Series B preferred stock converted to common stock at a ratio of 1-for- 1 . In addition, immediately prior to the completion of the initial public offering, we issued 2,354,323 additional shares of our common stock that our Series A and Series B preferred stockholders were entitled to receive in connection with the conversion of the preferred stock, and we issued 956,842 shares of our common stock to pay accrued dividends on our Series B preferred stock. We also paid $ 8.2 million in cumulative accrued dividends to our Series A convertible preferred stockholders in connection with the initial public offering, including $ 0.1 million of dividends paid to the holders of the common restricted shares. On February 27, 2023, we closed on a public offering of 2,875,000 shares of our common stock at a public offering price of $ 13.00 per share. We received net proceeds from this offering of $ 34.6 million after deducting underwriting discounts, commissions, and offering expenses. Share Repurchase Program On November 4, 2024, we announced that our board of directors authorized a program to repurchase shares of our common stock in the open market or in privately negotiated purchases, or both, in an aggregate amount not to exceed $ 30.0 million. The share repurchase program became effective on October 30, 2024 and 107 Table of Contents was scheduled to expire on October 31, 2026. 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. ​ 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. ​ 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. ​ We made repurchases under the share repurchase program in the following periods, which include the market price of the shares, commissions and excise tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ December 31, ​ (In thousands, except share and per share data) ​ ​ 2025 ​ ​ 2024 ​ Number of shares repurchased ​ ​ 2,143,099 ​ ​ 195,518 ​ Total shares repurchased cost ​ $ 26,752 ​ $ 3,508 ​ Average total cost per repurchased share ​ $ 12.48 ​ $ 17.94 ​ ​ Stock-Based Compensation On May 7, 2025, our stockholders approved the Tactile Systems Technology, Inc. 2025 Equity Incentive Plan (the “2025 Plan”), which authorizes us to grant stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards to employees, non-employee directors and certain consultants and advisors. 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 December 31, 2025, 1,873,013 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. ​ ​ ​ ​ ​ 108 Table of Contents We recorded total stock-based compensation expense of $ 8.4 million, $ 7.8 million and $ 7.5 million for the years ended December 31, 2025, 2024 and 2023, respectively. This expense was allocated as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, (In thousands) 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Cost of revenue $ 415 ​ $ 365 ​ $ 420 Sales and marketing expenses ​ 1,836 ​ ​ 2,413 ​ ​ 2,985 Research and development expenses ​ 176 ​ ​ 157 ​ ​ 133 Reimbursement, general and administrative expenses ​ 5,930 ​ ​ 4,884 ​ ​ 4,009 Total stock-based compensation expense $ 8,357 ​ $ 7,819 ​ $ 7,547 ​ Stock Options Stock options issued to participants other than non-employees typically vest over three or four years and typically have a contractual term of seven or ten years . Stock options are settled in new shares of our common stock. Stock-based compensation expense included in our Consolidated Statements of Operations for stock options was $ 0.0 million, $ 0.2 million and $ 0.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. The total grant date fair value of options vested during the year was $ 0.2 million, $ 0.6 million and $ 1.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, there was no unrecognized pre-tax stock option expense under our equity compensation plans. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. Annually, we make predictive assumptions regarding future stock price volatility, dividend yield, expected term and forfeiture rate. We estimate our forfeiture rate based on an analysis of our actual forfeitures and will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover behavior and other factors. The dividend yield assumption is based on expected annual dividend yield on the grant date. To date, no dividend on common stock has been paid by us. Expected volatility for grants issued in and prior to the first fiscal quarter of 2021 was estimated using the average historical volatility of public companies of similar size and industry over a similar period as the expected term assumption used for our options. Beginning in the second fiscal quarter of 2021, we had sufficient historical data to transition to utilizing our average historical volatility over a similar period as the expected term assumption used for our options as the expected volatility. We use the "simplified method" to determine the expected term of the stock option. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group. There were no stock options granted in the years ended December 31, 2025, 2024 or 2023. ​ 109 Table of Contents Our stock option activity for the three years ended December 31, 2025, 2024 and 2023, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ Weighted- ​ ​ ​ ​ ​ ​ ​ Average ​ Average ​ Aggregate ​ ​ Options ​ Exercise Price ​ Remaining ​ Intrinsic (In thousands except options and per share data) ​ Outstanding ​ Per Share (1) ​ Contractual Life ​ Value (2) Balance at December 31, 2022 ​ 615,307 ​ $ 43.25 ​ 4.7 years ​ $ 164 Exercised ​ ( 4,625 ) ​ $ 2.97 ​ ​ ​ $ 98 Forfeited ​ ( 25,045 ) ​ $ 47.54 ​ ​ ​ ​ ​ Cancelled/Expired ​ ( 155,677 ) ​ $ 50.72 ​ ​ ​ ​ ​ Balance at December 31, 2023 ​ 429,960 ​ $ 40.74 ​ 3.8 years ​ $ 223 Exercised ​ ( 2,571 ) ​ $ 9.40 ​ ​ ​ $ 18 Cancelled/Expired ​ ( 32,518 ) ​ $ 43.63 ​ ​ ​ ​ ​ Balance at December 31, 2024 ​ 394,871 ​ $ 40.70 ​ 2.8 years ​ $ 309 Exercised ​ ( 26,780 ) ​ $ 8.27 ​ ​ ​ $ 22 Cancelled/Expired ​ ( 142,643 ) ​ $ 41.77 ​ ​ ​ ​ ​ Balance at December 31, 2025 ​ 225,448 ​ $ 43.87 ​ 1.8 years ​ $ 316 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options exercisable at December 31, 2025 ​ 225,448 ​ $ 43.87 ​ 1.8 years ​ $ 316 ​ (1) The exercise price of each option granted during the periods shown was equal to the market price of the underlying stock on the date of grant. (2) The aggregate intrinsic value of options exercised represents the difference between the exercise price of the option and the closing stock price of our common stock on the date of exercise. The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period. Options exercisable of 386,990 at December 31, 2024, and 386,457 at December 31, 2023 had weighted average exercise prices per share of $ 41.36 and $ 41.53 , respectively. The following summarizes additional information about our stock options: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, Number of: ​ 2025 ​ 2024 Non-vested options, beginning of the year ​ ​ 7,881 ​ ​ 43,503 Non-vested options, end of the year ​ ​ — ​ ​ 7,881 Vested options, end of the year ​ ​ 225,448 ​ ​ 386,990 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, Weighted-average grant date fair value of: ​ 2025 ​ 2024 Non-vested options, beginning of the year ​ $ 4.23 ​ $ 13.57 Non-vested options, end of the year ​ ​ — ​ ​ 4.23 Vested options, end of the year ​ ​ 17.73 ​ ​ 16.52 ​ Time-Based Restricted Stock Unit s We have granted time-based restricted stock units to certain participants under the 2016 Plan that are stock-settled with common shares. Time-based restricted stock units granted under the 2016 Plan vest over one to three years . Stock-based compensation expense included in our Consolidated Statements of Operations for time-based restricted stock units was $ 5.5 million, $ 5.9 million and $ 5.1 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, there was approximately $ 6.0 million of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 1.7 years. 110 Table of Contents Our time-based restricted stock unit activity for the years ended December 31, 2025, 2024 and 2023 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Grant ​ ​ ​ Aggregate ​ ​ Units ​ Date Fair Value ​ Intrinsic (In thousands except unit and per unit data) ​ Outstanding ​ Per Unit ​ Value (1) Balance at December 31, 2022 ​ 590,542 ​ $ 19.42 ​ $ 6,779 Granted ​ 398,698 ​ $ 15.52 ​ ​ ​ Vested ​ ( 270,651 ) ​ $ 20.18 ​ ​ ​ Cancelled ​ ( 129,447 ) ​ $ 19.79 ​ ​ ​ Balance at December 31, 2023 ​ 589,142 ​ $ 16.35 ​ $ 8,425 Granted ​ 541,547 ​ $ 13.82 ​ ​ ​ Vested ​ ( 281,917 ) ​ $ 17.38 ​ ​ ​ Cancelled ​ ( 120,346 ) ​ $ 14.78 ​ ​ ​ Balance at December 31, 2024 ​ 728,426 ​ $ 14.33 ​ $ 12,478 Granted ​ 473,901 ​ $ 13.85 ​ ​ ​ Vested ​ ( 406,102 ) ​ $ 14.46 ​ ​ ​ Cancelled ​ ( 77,604 ) ​ $ 14.46 ​ ​ ​ Balance at December 31, 2025 ​ 718,621 ​ $ 13.92 ​ $ 20,840 ​ (1) The aggregate intrinsic value of time-based 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. These PSUs have both performance-based and time-based vesting features. The PSUs granted in 2022 were earned if and to the extent performance goals based on revenue change and adjusted EBITDA margin were achieved in 2023. The number of PSUs earned under these grants depended on the level at which the performance targets were achieved and could range from 50 % of target if threshold performance was achieved and up to 150 % of target if maximum performance was achieved. One-third of the earned PSUs vested on the date the Compensation and Organization Committee certified the number of PSUs earned, and the remaining two-thirds of the earned PSUs vested on the first anniversary of that certification date. All earned and vested PSUs were settled in shares of common stock. The PSUs granted in 2023 have three separate performance periods, and one-third of each grant will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA margin are achieved in each of 2023 and 2024 (ranging from 25 % to 175 % of target), and one-third will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA change (ranging from 25 % to 175 % of target) are achieved in 2025. All earned and vested PSUs will be settled in shares of common stock. The PSUs granted in 2024 have three separate performance periods, and one-third of each grant will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA margin are achieved in each of 2024 and 2025 (ranging from 25 % to 175 % of target), and one-third will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA change (ranging from 25 % to 175 % of target) are achieved in 2026. The PSUs granted in 2025 have three separate performance periods, and one-third of each grant will be earned if and to the extent performance goals based on revenue and adjusted EBITDA margin are achieved in 2025 and revenue change and adjusted EBITDA change are achieved in each of 2026 and 2027 (in each case, ranging from 25 % to 175 % of target). All earned and vested PSUs will be settled in shares of common stock. Stock-based compensation expense included in our Consolidated Statements of Operations for PSUs was $ 2.3 million, $ 1.2 million and $ 0.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. The stock-based compensation expense for the year ended December 31, 2025 reflects an expense of $ 1.1 million related to the PSUs granted in 2025, an expense of $ 0.9 million related to the PSUs granted in 2024 and an expense of $ 0.2 million related to PSUs granted in 2023. The stock-based compensation expense for the year ended December 31, 2024 reflects an expense of $ 0.5 million related to 111 Table of Contents the PSUs granted in 2024, an expense of $ 0.4 million related to PSUs granted in 2023 and an expense of $ 0.3 million related to PSUs granted in 2022. As of December 31, 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 2.0 years. ​ Our PSU activity at the estimated payout of 100 % of target for the years ended December 31, 2025, 2024 and 2023, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Grant ​ ​ ​ Aggregate ​ ​ PSUs ​ Date Fair Value ​ Intrinsic (In thousands except unit and per unit data) ​ Outstanding ​ Per Unit ​ Value (1) Balance at December 31, 2022 ​ 155,618 ​ $ 25.05 ​ $ 1,786 Granted ​ 123,575 ​ $ 15.28 ​ ​ ​ Vested ​ ( 13,842 ) ​ $ 42.70 ​ ​ ​ Cancelled ​ ( 67,119 ) ​ $ 21.50 ​ ​ ​ Balance at December 31, 2023 ​ 198,232 ​ $ 18.93 ​ $ 2,785 Granted ​ 223,762 ​ $ 13.76 ​ ​ ​ Vested ​ ( 44,162 ) ​ $ 27.31 ​ ​ ​ Cancelled ​ ( 104,913 ) ​ $ 14.14 ​ ​ ​ Balance at December 31, 2024 ​ 272,919 ​ $ 15.19 ​ $ 4,675 Granted ​ 168,722 ​ $ 15.38 ​ ​ ​ Vested ​ ( 120,436 ) ​ $ 16.67 ​ ​ ​ Cancelled ​ ( 10,909 ) ​ $ 13.85 ​ ​ ​ Balance at December 31, 2025 ​ 310,296 ​ $ 14.76 ​ $ 8,999 ​ (1) The aggregate intrinsic value of performance-based restricted stock units outstanding was based on our closing stock price on the last trading day of the period. Employee Stock Purchase Plan Our ESPP, which was approved by our Board of Directors on April 27, 2016, and by our stockholders on June 20, 2016, allows participating employees to purchase shares of our common stock at a discount through payroll deductions. The ESPP is available to all of our employees and employees of participating subsidiaries. Participating employees may purchase common stock, on a voluntary after-tax basis, at a price equal to 85 % of the lower of the closing market price per share of our common stock on the first or last trading day of each stock purchase period. The ESPP provides for six-month purchase periods, beginning on May 16 and November 16 of each calendar year. A total of 1,600,000 shares of common stock was initially reserved for issuance under the ESPP. This share reserve will automatically be supplemented each January 1, commencing in 2017 and ending on and including January 1, 2026, by an amount equal to the least of (a) 1 % of the shares of our common stock outstanding on the immediately preceding December 31, (b) 500,000 shares or (c) such lesser amount as our Board of Directors may determine. Pursuant to the automatic increase feature of the ESPP, 224,381 shares were added as available for issuance thereunder on January 1, 2026, 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 December 31, 2025, 1,520,743 shares were available for future issuance under the ESPP. We recognized $ 0.6 million, $ 0.5 million and $ 0.6 million in stock-based compensation expense related to the ESPP for the years ended December 31, 2025, 2024 and 2023, respectively. ​ 112 Table of Contents Note 13. Revenue We derive our revenue from the sale and rental of our products to our customers in the United States. The following table presents our revenue, inclusive of sales and rental revenue, disaggregated by product: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) ​ 2025 ​ 2024 ​ 2023 Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ Lymphedema products ​ $ 278,380 ​ $ 259,361 ​ $ 241,721 Airway clearance products ​ ​ 51,142 ​ ​ 33,623 ​ ​ 32,702 Total ​ $ 329,522 ​ $ 292,984 ​ $ 274,423 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of total revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ Lymphedema products ​ 84 % ​ 89 % ​ 88 % Airway clearance products ​ ​ 16 % ​ ​ 11 % ​ ​ 12 % Total ​ 100 % ​ 100 % ​ 100 % ​ Our revenue by channel, inclusive of sales and rental revenue, for the years ended December 31, 2025, 2024 and 2023, are summarized in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (In thousands) ​ 2025 ​ 2024 ​ 2023 Private insurers and other payers ​ $ 168,920 ​ $ 175,432 ​ $ 148,901 Veterans Administration ​ ​ 28,997 ​ ​ 30,890 ​ ​ 27,003 Medicare ​ ​ 80,463 ​ ​ 53,039 ​ ​ 65,817 Durable medical equipment distributors ​ ​ 51,142 ​ ​ 33,623 ​ ​ 32,702 Total ​ $ 329,522 ​ $ 292,984 ​ $ 274,423 ​ Our rental revenue is derived from rent-to-purchase arrangements that typically range from three to ten months . As title transfers to the patient, with whom we have the contract, upon the termination of the lease term and because collectability is probable, under ASC 842, these are recognized as sales-type leases. Each rental agreement contains two components, the controller and related garments, both of which are interdependent and recognized as one lease component. The revenue and associated cost of revenue of sales-type leases are recognized on the lease commencement date and a net investment in leases is recorded on the Consolidated Balance Sheet. We bill the patients’ insurance payers monthly over the duration of the rental term. We record the net investment in leases and recognize revenue upon commencement of the lease in the amount of the expected consideration to be received through the monthly payments. Similar to our sales revenue, the transaction price is impacted by multiple factors, including the terms and conditions contracted by various third party payers. As the rental contract resides with the patients, we have elected the portfolio approach, at the payer level, to determine the expected consideration, which considers the impact of early terminations. While the contract is with the patient, in certain circumstances, the third party payer elects an initial rental period with an option to extend. We assess the likelihood of extending the lease at the onset of the lease to determine if the option is reasonably certain to be exercised. As the lease is short-term in nature, we anticipate collection of substantially all of the net investment within the first year of the lease agreement. Completion of these payments represents the fair market value of the equipment, and as such, interest income is not applicable. ​ 113 Table of Contents Rental revenue for the years ended December 31, 2025, 2024 and 2023, was primarily from private insurers. Sales-type lease revenue and the associated cost of revenue for the years ended December 31, 2025, 2024 and 2023, was: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, (In thousands) ​ ​ 2025 ​ 2024 ​ 2023 Sales-type lease revenue ​ ​ $ 36,929 ​ $ 36,972 ​ $ 34,930 Cost of sales-type lease revenue ​ ​ 10,690 ​ 11,481 ​ 12,577 Gross profit ​ ​ $ 26,239 ​ $ 25,491 ​ $ 22,353 ​ ​ ​ Note 14. Income Taxes The provision (benefit) for income tax expense consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Current income taxes, Federal ​ $ 2,290 ​ $ 4,304 ​ $ 5,045 Current income taxes, State ​ ​ 1,400 ​ ​ 1,365 ​ ​ 1,440 ​ ​ ​ 3,690 ​ ​ 5,669 ​ ​ 6,485 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred income taxes, Federal ​ 7,163 ​ 702 ​ ( 19,046 ) Deferred income taxes, State ​ ​ 1,364 ​ ​ 365 ​ ​ ( 332 ) ​ ​ ​ 8,527 ​ ​ 1,067 ​ ​ ( 19,378 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrecognized tax benefit, Federal ​ 36 ​ ( 207 ) ​ 148 Unrecognized tax benefit, State ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ 36 ​ ​ ( 207 ) ​ ​ 148 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total provision (benefit) for income taxes ​ $ 12,253 ​ $ 6,529 ​ $ ( 12,745 ) ​ 114 Table of Contents The components of our deferred tax assets and liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Deferred tax assets: ​ ​ ​ ​ ​ ​ Operating lease liability ​ $ 4,034 ​ $ 4,755 Net operating loss carryforwards ​ ​ — ​ ​ 1 Accounts receivable and inventory reserves ​ ​ 2,930 ​ ​ 5,406 Stock-based compensation ​ ​ 2,519 ​ ​ 5,818 Accrued liabilities ​ 2,638 ​ 1,766 Warranty reserves ​ ​ 589 ​ ​ 752 Intangible assets ​ ​ 755 ​ ​ 875 Business credits ​ ​ 830 ​ ​ 761 R&D expenses ​ ​ — ​ ​ 3,253 Other ​ 712 ​ 342 Total deferred tax assets ​ ​ 15,007 ​ ​ 23,729 ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Right of use operating lease assets ​ ( 3,488 ) ​ ( 4,177 ) Fixed assets ​ ​ ( 802 ) ​ ​ ( 877 ) Prepaid expenses ​ ​ ( 151 ) ​ ​ ( 209 ) R&D expenses ​ ​ ( 710 ) ​ ​ — Other ​ ​ ( 73 ) ​ ​ ( 155 ) Total deferred tax liabilities ​ ​ ( 5,224 ) ​ ​ ( 5,418 ) ​ ​ ​ ​ ​ ​ ​ Net deferred tax assets ​ $ 9,783 ​ $ 18,311 ​ A reconciliation of income tax expense (benefit) to the statutory federal tax rate is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ($ In thousands) ​ ​ ​ 2025 ​ 2024 ​ 2023 US Federal Statutory Tax Expense/Rate ​ $ 6,581 ​ 21.00 % ​ $ 4,933 ​ 21.00 % ​ $ 3,304 ​ 21.00 % State and Local Income Taxes, Net of Federal Benefit (1) ​ 2,184 ​ 6.97 ​ ​ ​ 1,330 ​ 5.66 ​ ​ ​ ( 3,765 ) ​ ( 23.93 ) ​ Tax Credits - Research & Experimentation ​ ​ ( 265 ) ​ ( 0.85 ) ​ ​ ​ ( 350 ) ​ ( 1.49 ) ​ ​ ​ ( 244 ) ​ ( 1.55 ) ​ Change in Valuation Allowance ​ ​ — ​ — ​ ​ ​ — ​ — ​ ​ ​ ( 13,223 ) ​ ( 84.04 ) ​ Nontaxable or Nondeductible Items - Meals & Entertainment ​ 424 1.35 ​ ​ ​ 393 ​ 1.67 ​ ​ ​ 322 ​ 2.04 ​ Nontaxable or Nondeductible Items - Executive Compensation ​ ​ 258 ​ 0.82 ​ ​ ​ 252 ​ 1.07 ​ ​ ​ 137 ​ 0.87 ​ Nontaxable or Nondeductible Items - Other ​ ​ 132 ​ 0.43 ​ ​ ​ 131 ​ 0.56 ​ ​ ​ 165 ​ 1.05 ​ Changes in Unrecognized Tax Benefits ​ ​ 65 ​ 0.21 ​ ​ ​ ( 167 ) ​ ( 0.71 ) ​ ​ ​ 82 ​ 0.52 ​ Other Reconciling Items - Stock Based Compensation ​ ​ 2,811 ​ 8.97 ​ ​ ​ — ​ — ​ ​ ​ — ​ — ​ Other Reconciling Items ​ ​ 63 ​ 0.20 ​ ​ ​ 7 ​ 0.03 ​ ​ ​ 477 ​ 3.03 ​ Net tax expense / effective rate ​ $ 12,253 ​ 39.10 % ​ $ 6,529 ​ 27.79 % ​ $ ( 12,745 ) ​ ( 81.01 ) % (1) State taxes in California, Pennsylvania, Illinois, New York, Texas, Maryland, and Tennessee made up the majority (greater than 50 percent) of the tax effect in this line item. 115 Table of Contents A reconciliation of income taxes paid is as follows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 United States - Federal ​ $ 1,300 ​ $ 5,650 ​ $ 5,138 United States - California ​ ​ 160 ​ ​ 73 ​ ​ 127 United States - Tennessee ​ ​ 239 ​ ​ 13 ​ ​ 21 United States - Other States ​ ​ 801 ​ ​ 1,130 ​ ​ 2,067 Total Income Taxes Paid ​ $ 2,500 ​ $ 6,866 ​ $ 7,353 ​ A reconciliation of unrecognized tax benefits (“UTB”) is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (In thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Balance beginning of the year ​ $ 547 ​ $ 702 ​ $ 612 Gross changes — tax positions in prior year ​ ​ ( 22 ) ​ ​ ( 272 ) ​ ​ — Gross changes — tax positions in current year ​ ​ 95 ​ ​ 117 ​ ​ 90 Balance end of the year ​ $ 620 ​ $ 547 ​ $ 702 ​ 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 purposes including depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable, and inventory reserves. As of December 31, 2025, the Company had no remaining state net operating loss ("NOL") carryforwards. The Company is subject to income tax examinations in the U.S. federal jurisdiction as well as in various state jurisdictions. U.S. federal and state tax years prior to 2022 are closed to examination. In the event of any future tax assessments, we have elected to record the income taxes and any related interest and penalties as income tax expense on our Consolidated Statement of Operations. The Company is not under exam in any jurisdictions. The effective tax rate for the twelve months ended December 31, 2025, was an expense of 39.1 %, compared to 27.8 % for the twelve months ended December 31, 2024. We recorded an income tax expense of $ 12.3 million and $ 6.5 million for the twelve months ended December 31, 2025 and 2024, respectively. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. On the basis of this evaluation, all deferred tax assets are expected to be realizable. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. ​ 116 Table of Contents Note 15. Net Income Per Common Share The following table sets forth the computation of our basic and diluted net income per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, (In thousands, except share and per share data) 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Net income $ 19,086 ​ $ 16,960 ​ $ 28,515 Weighted-average shares outstanding ​ 22,872,841 ​ ​ 23,883,729 ​ ​ 22,925,497 Weighted-average shares used to compute diluted net income per share ​ 23,295,328 ​ ​ 24,138,244 ​ ​ 23,176,169 Net income per share - Basic $ 0.83 ​ $ 0.71 ​ $ 1.24 Net income per share - Diluted $ 0.82 ​ $ 0.70 ​ $ 1.23 ​ The following common stock equivalents were excluded from the computation of diluted net income per common share for the periods presented because including them would have been anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Restricted stock units 129 ​ 313,458 ​ 337,202 Common stock options 277,233 ​ 360,246 ​ 389,229 Performance stock units — ​ 53,791 ​ 17,392 Employee stock purchase plan 85,957 ​ 83,598 ​ — Total 363,319 ​ 811,093 ​ 743,823 ​ ​ Note 16. Fair Value Measurements We determine the fair value of our assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We use a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1). The next highest priority is based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in non-active markets or other observable inputs (Level 2). The lowest priority is given to unobservable inputs (Level 3). As of December 31, 2023, our obligations under the AffloVest earn-out arrangements had been paid in full. Prior to the determination of the actual amount of the earn-out, the earn-out liability was valued by employing a Monte Carlo Simulation model in a risk-neutral framework, which is a Level 3 input. The underlying simulated variable included recognized revenue. The recognized revenue volatility estimate was based on a study of historical asset volatility for a set of comparable public companies. The model included other assumptions including the market price of risk, which was calculated as the weighted average cost of capital less the long-term risk-free rate. The earn-out liability was adjusted to fair value at each reporting date until the end of the earn-out period, which was September 30, 2023. Changes in fair value were included in intangible asset amortization and earn-out expenses in our Consolidated Statements of Operations. ​ 117 Table of Contents Changes in the earn-out liability measured at fair value using Level 3 inputs were as follows: ​ ​ ​ ​ ​ (In thousands) ​ ​ Earn-out liability at December 31, 2022 ​ $ 13,050 Payments on earn-out ​ ​ ( 10,575 ) Fair value adjustments ​ ​ ( 2,475 ) Earn-out liability at December 31, 2023 ​ $ — ​ On May 25, 2023, the Company paid $ 5.0 million, plus an imputed interest payment of $ 250,000 , relating to the initial earn-out. Subsequent to September 30, 2023, it was determined that the calculated amount of the second earn-out payment was $ 5.6 million, which was paid by the Company on November 28, 2023. 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. 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. Note 17. Subsequent Event On February 17, 2026, the Company completed the acquisition of LymphaTech, a provider of digital 3D scanning technology for chronic swelling detection, measurement, and monitoring. The acquisition is expected to enhance the Company’s expanding lymphedema portfolio. The transaction included an initial cash payment of $ 6.8 million, which was paid at closing. The acquisition agreement also provided for additional consideration contingent upon the achievement of certain milestones during periods following the acquisition date. As of the date the financial statements were issued, the Company has not determined the probability of the milestones, and the related contingent consideration cannot be reasonably estimated. The transaction will be accounted for as a business combination under ASC 805. The Company is in the process of determining the preliminary purchase price allocation, including the valuation of acquired assets and contingent consideration. The results of LymphaTech will be included in the Company’s consolidated financial statements beginning on the acquisition date. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.