TACTILE SYSTEMS TECHNOLOGY INC 10-Q

Item 1. Financial Statements ​ ​ ​ ​ ​ ​ ​ Tactile Systems Technology, Inc. Condensed Consolidated Balance Sheets (Unaudited) ​ ​ ​ ​ March 31, ​ ​ ​ December 31, (In thousands, except share and per share data) ​ ​ ​ 2026 ​ ​ ​ 2025 Assets ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ Cash ​ $ 74,993 ​ $ 83,446 Accounts receivable, net ​ 38,219 ​ 43,876 Net investment in leases ​ 15,198 ​ 15,754 Inventories ​ 16,581 ​ 14,025 Prepaid expenses and other current assets ​ 7,851 ​ 8,066 Total current assets ​ 152,842 ​ 165,167 Non-current assets ​ ​ ​ ​ ​ ​ Property and equipment, net ​ 5,196 ​ 5,117 Right of use operating lease assets ​ 13,310 ​ 13,798 Intangible assets, net ​ 42,306 ​ 39,167 Goodwill ​ ​ 39,554 ​ ​ 31,063 Deferred income taxes ​ 8,721 ​ 9,783 Other non-current assets ​ 10,187 ​ 9,847 Total non-current assets ​ 119,274 ​ 108,775 Total assets ​ $ 272,116 ​ $ 273,942 Liabilities and Stockholders' Equity ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 7,124 ​ $ 4,968 Accrued payroll and related taxes ​ 11,041 ​ 19,378 Accrued expenses ​ 8,545 ​ 8,531 Income taxes payable ​ 2,161 ​ 1,428 Operating lease liabilities ​ 3,237 ​ 3,195 Other current liabilities ​ 3,904 ​ 3,457 Total current liabilities ​ 36,012 ​ 40,957 Non-current liabilities ​ ​ ​ ​ ​ ​ Accrued warranty reserve, non-current ​ 1,068 ​ 1,045 Income taxes payable, non-current ​ 370 ​ 275 Operating lease liabilities, non-current ​ ​ 11,937 ​ 12,763 Other non-current liabilities ​ ​ 4,863 ​ ​ — Total non-current liabilities ​ 18,238 ​ 14,083 Total liabilities ​ 54,250 ​ 55,040 ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.001 par value, 50,000,000 shares authorized; none issued and outstanding as of March 31, 2026 and December 31, 2025 ​ — ​ — Common stock, $ 0.001 par value, 300,000,000 shares authorized; 22,710,160 shares issued and outstanding as of March 31, 2026; 22,438,926 shares issued and outstanding as of December 31, 2025 ​ 22 ​ 22 Additional paid-in capital ​ 164,667 ​ 163,940 Retained earnings ​ 53,177 ​ 54,940 Total stockholders’ equity ​ 217,866 ​ 218,902 Total liabilities and stockholders’ equity ​ $ 272,116 ​ $ 273,942 ​ ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ ​ 4 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ Tactile Systems Technology, Inc. Condensed Consolidated Statements of Operations (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, (In thousands, except share and per share data) ​ ​ ​ 2026 ​ ​ ​ 2025 Revenue ​ ​ ​ ​ ​ ​ Sales revenue ​ $ 66,966 ​ $ 52,469 Rental revenue ​ 8,301 ​ 8,799 Total revenue ​ 75,267 ​ 61,268 Cost of revenue ​ ​ ​ ​ ​ ​ Cost of sales revenue ​ 15,259 ​ 13,891 Cost of rental revenue ​ 2,394 ​ 2,031 Total cost of revenue ​ 17,653 ​ 15,922 Gross profit ​ ​ ​ ​ ​ ​ Gross profit - sales revenue ​ 51,707 ​ 38,578 Gross profit - rental revenue ​ 5,907 ​ 6,768 Gross profit ​ 57,614 ​ 45,346 Operating expenses ​ ​ ​ ​ ​ ​ Sales and marketing ​ 32,732 ​ 27,516 Research and development ​ 2,776 ​ 1,741 Reimbursement, general and administrative ​ 23,044 ​ 19,998 Intangible asset amortization and earn-out ​ ​ 596 ​ ​ 633 Total operating expenses ​ 59,148 ​ 49,888 Loss from operations ​ ( 1,534 ) ​ ( 4,542 ) Interest income ​ ​ 666 ​ ​ 895 Interest expense ​ ​ ( 28 ) ​ ​ ( 424 ) Loss before income taxes ​ ( 896 ) ​ ( 4,071 ) Income tax expense (benefit) ​ 867 ​ ( 1,097 ) Net loss ​ $ ( 1,763 ) ​ $ ( 2,974 ) Net loss per common share ​ ​ ​ ​ ​ ​ Basic ​ $ ( 0.08 ) ​ $ ( 0.13 ) Diluted ​ $ ( 0.08 ) ​ $ ( 0.13 ) Weighted-average common shares used to compute net loss per common share ​ ​ ​ ​ ​ ​ Basic ​ ​ 22,561,053 ​ ​ 23,710,643 Diluted ​ ​ 22,561,053 ​ ​ 23,710,643 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ ​ 5 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tactile Systems Technology, Inc. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Retained ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Earnings ​ ​ ​ (In thousands, except share data) Shares Par Value Capital (Accumulated Deficit) Total Balances, December 31, 2025 ​ 22,438,926 ​ $ 22 ​ $ 163,940 ​ $ 54,940 ​ $ 218,902 Stock-based compensation ​ — ​ ​ — ​ ​ 1,780 ​ ​ — ​ ​ 1,780 Exercise of common stock options and vesting of performance and restricted stock units ​ 311,484 ​ ​ — ​ ​ 20 ​ ​ — ​ ​ 20 Share repurchases ​ ( 40,250 ) ​ ​ — ​ ​ ( 1,073 ) ​ ​ — ​ ​ ( 1,073 ) Net loss for the period ​ — ​ ​ — ​ ​ — ​ ​ ( 1,763 ) ​ ​ ( 1,763 ) Balances, March 31, 2026 ​ 22,710,160 ​ $ 22 ​ $ 164,667 ​ $ 53,177 ​ $ 217,866 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances, December 31, 2024 ​ 23,883,475 ​ $ 24 ​ $ 180,719 ​ $ 35,854 ​ $ 216,597 Stock-based compensation ​ — ​ ​ — ​ ​ 2,066 ​ ​ — ​ ​ 2,066 Exercise of common stock options and vesting of performance and restricted stock units ​ 336,599 ​ ​ — ​ ​ 10 ​ ​ — ​ ​ 10 Share repurchases ​ ( 635,603 ) ​ ​ — ​ ​ ( 10,068 ) ​ ​ — ​ ​ ( 10,068 ) Net loss for the period ​ — ​ ​ — ​ ​ — ​ ​ ( 2,974 ) ​ ​ ( 2,974 ) Balances, March 31, 2025 ​ 23,584,471 ​ $ 24 ​ $ 172,727 ​ $ 32,880 ​ $ 205,631 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ Tactile Systems Technology, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) ​ ​ ​ ​ ​ Three Months Ended March 31, (In thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 Cash flows from operating activities ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 1,763 ) ​ $ ( 2,974 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 1,639 ​ ​ 1,726 Deferred income taxes ​ ​ 24 ​ ​ 252 Stock-based compensation expense ​ ​ 1,780 ​ ​ 2,066 Loss on disposal of property and equipment and intangibles ​ ​ 73 ​ ​ 5 Changes in assets and liabilities, net of acquisition: ​ ​ ​ ​ ​ ​ Accounts receivable, net ​ ​ 5,676 ​ ​ 9,244 Net investment in leases ​ ​ 556 ​ ​ ( 310 ) Inventories ​ ​ ( 2,556 ) ​ ​ ( 201 ) Income taxes payable ​ ​ 828 ​ ​ ( 1,347 ) Prepaid expenses and other assets ​ ​ ( 125 ) ​ ​ ( 2,452 ) Right of use operating lease assets ​ ​ ( 296 ) ​ ​ ( 267 ) Accounts payable ​ ​ 2,171 ​ ​ 1,387 Accrued payroll and related taxes ​ ​ ( 8,337 ) ​ ​ ( 6,994 ) Accrued expenses and other liabilities ​ ​ ( 9 ) ​ ​ 282 Net cash (used in) provided by operating activities ​ ​ ( 339 ) ​ ​ 417 Cash flows from investing activities ​ ​ ​ ​ ​ ​ Payments related to acquisition, net of cash acquired ​ ​ ( 6,226 ) ​ ​ — Purchases of property and equipment ​ ​ ( 821 ) ​ ​ ( 379 ) Intangible assets expenditures ​ ​ ( 14 ) ​ ​ ( 28 ) Net cash used in investing activities ​ ​ ( 7,061 ) ​ ​ ( 407 ) Cash flows from financing activities ​ ​ ​ ​ ​ ​ Payments on note payable ​ ​ — ​ ​ ( 750 ) Proceeds from exercise of common stock options ​ ​ 20 ​ ​ 10 Payments for repurchases of common stock ​ ​ ( 1,073 ) ​ ​ ( 10,018 ) Net cash used in financing activities ​ ​ ( 1,053 ) ​ ​ ( 10,758 ) Net decrease in cash ​ ​ ( 8,453 ) ​ ​ ( 10,748 ) Cash – beginning of period ​ ​ 83,446 ​ ​ 94,367 Cash – end of period ​ $ 74,993 ​ $ 83,619 ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow disclosure ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 21 ​ $ 444 Cash paid for taxes ​ $ 14 ​ $ 15 Accrued excise tax on stock repurchases ​ $ — ​ $ 50 Capital expenditures incurred but not yet paid ​ $ 63 ​ $ 189 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ 7 Table of Contents ​ Tactile Systems Technology, Inc. Notes to the Condensed Consolidated Financial Statements (Unaudited) Note 1. Nature of Business and Operations Tactile Systems Technology, Inc. (“we,” “us,” “our,” and the “Company”) manufactures and distributes medical devices for the treatment of patients with underserved chronic diseases at home. Our lymphedema product portfolio includes 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 Acquisition”). 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. On February 17, 2026, we acquired all outstanding equity interests of LymphaTech, Inc. (“LymphaTech”). LymphaTech is a medical technology company pioneering a digital, three-dimensional (the “3D”) full body measurement and monitoring platform designed specifically for lymphedema . We were originally incorporated in Minnesota under the name Tactile Systems Technology, Inc. on January 30, 1995. During 2006, we established a merger corporation and subsequently, on July 21, 2006, merged with and into this merger corporation, resulting in our reincorporation as a Delaware corporation. The resulting corporation assumed the name Tactile Systems Technology, Inc. In September 2013, we began doing business as “Tactile Medical”. On August 2, 2016, we closed the initial public offering of our common stock, which resulted in the sale of 4,120,000 shares of our common stock at a public offering price of $ 10.00 per share. We received net proceeds from the initial public offering of approximately $ 35.4 million, after deducting underwriting discounts and approximately $ 2.9 million of transaction expenses. On February 27, 2023, we closed on a public offering of 2,875,000 shares of our common stock at a public offering price of $ 13.00 per share. We received net proceeds from this offering of $ 34.6 million after deducting underwriting discounts, commissions, and offering expenses. Our business is affected by seasonality. In the first quarter of each year, when most patients have started a new insurance year and have not yet met their annual out-of-pocket payment obligations, we experience substantially reduced demand for our products. We typically experience higher revenue in the third and fourth quarters of the year when patients have met their annual insurance deductibles, thereby reducing their out-of-pocket costs for our products, and 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 The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. 8 Table of Contents The results for the three months ended March 31, 2026, are not necessarily indicative of results to be expected for the year ending December 31, 2026, or for any other interim period or for any future year. The condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025. Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Tactile Systems Technology, Inc. and its wholly owned subsidiaries, Swelling Solutions, Inc. and LymphaTech, Inc. All intercompany balances and transactions have been eliminated in consolidation. 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 Significant Accounting Policies There were no material changes in our significant accounting policies during the three months ended March 31, 2026. See Note 3 – “Summary of Significant Accounting Policies” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, for information regarding our significant accounting policies. 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. Accounting Pronouncements 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. 9 Table of Contents Note 4. Inventories Inventories consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ At March 31, 2026 ​ ​ ​ At December 31, 2025 Finished goods ​ $ 5,528 ​ $ 5,280 Component parts and work-in-process ​ 11,053 ​ 8,745 Total inventories ​ $ 16,581 ​ $ 14,025 ​ ​ ​ Note 5. Goodwill and Intangible Assets Goodwill In the third quarter of fiscal 2021, we completed the AffloVest Acquisition. The purchase price of the AffloVest product line exceeded the net acquisition-date estimated fair value amounts of the identifiable assets acquired and the liabilities assumed by $ 31.1 million, which was assigned to goodwill. In the first quarter of fiscal 2026, we completed the acquisition of LymphaTech. The purchase price of LymphaTech exceeded the net acquisition-date estimated fair value amounts of the identifiable assets acquired and the liabilities assumed by $ 8.5 million, which was assigned to goodwill. The changes in the carrying amount of goodwill were as follows: ​ ​ ​ ​ ​ (In thousands) ​ ​ Goodwill at December 31, 2025 ​ $ 31,063 Addition for acquisition ​ ​ 8,491 Goodwill at March 31, 2026 ​ $ 39,554 ​ Intangible Assets ​ Our patents and other intangible assets are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ At March 31, 2026 ​ ​ Average ​ Gross ​ ​ ​ ​ ​ ​ Amortization ​ Carrying ​ Accumulated ​ Net (In thousands) ​ ​ ​ Period ​ Amount ​ Amortization ​ Amount Definite-lived intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Patents ​ 11 years ​ $ 1,099 ​ $ 338 ​ $ 761 Tradenames ​ 10 years ​ ​ 370 ​ ​ — ​ ​ 370 Customer relationships ​ 8 years ​ ​ 31,540 ​ ​ 10,877 ​ ​ 20,663 Developed technology ​ 7 years ​ ​ 16,200 ​ ​ 5,390 ​ ​ 10,810 Subtotal ​ ​ ​ ​ 49,209 ​ ​ 16,605 ​ ​ 32,604 Unamortized intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tradenames ​ ​ ​ ​ 9,500 ​ ​ — ​ ​ 9,500 Patents pending ​ ​ ​ ​ 202 ​ ​ — ​ ​ 202 Total intangible assets ​ ​ ​ $ 58,911 ​ $ 16,605 ​ $ 42,306 ​ ​ 10 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ Amortization expense was $ 0.9 million and $ 1.0 million for the three months ended March 31, 2026 and 2025, respectively, of which $ 0.3 million in each of the three months ended March 31, 2026 and 2025, was recorded in cost of sales revenue. Future amortization expenses are expected as follows: ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ 2026 (April 1 - December 31) ​ ​ ​ $ 3,152 2027 ​ ​ 4,107 2028 ​ 4,106 2029 ​ 4,103 2030 ​ 4,098 Thereafter ​ 13,038 Total ​ $ 32,604 ​ In the third quarter of 2025, we performed our annual goodwill impairment test utilizing both the qualitative and quantitative approach described in FASB ASU No. 2021-03, “Intangibles—Goodwill and Other (Topic 350) – Accounting Alternative for Evaluating Triggering Events.” Based on the testing using the qualitative approach, it was determined that it was not more likely than not that the fair value of the reporting unit was less than the carrying value. As a result, it was not deemed necessary to proceed to the quantitative test and no impairment was recognized. Note 6. Accrued Expenses Accrued expenses consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ At March 31, 2026 ​ ​ ​ At December 31, 2025 Legal and consulting ​ ​ 2,267 ​ ​ 1,285 Sales and use tax ​ $ 1,646 ​ $ 1,837 Travel ​ ​ 1,471 ​ ​ 1,424 Warranty ​ ​ 1,185 ​ ​ 1,285 In-transit inventory ​ ​ 1,175 ​ ​ 1,931 Clinical studies ​ ​ 15 ​ ​ 64 Other ​ 786 ​ 705 Total ​ $ 8,545 ​ $ 8,531 ​ ​ ​ 11 Table of Contents Note 7. Warranty Reserves The activity in the warranty reserve during and as of the end of the reporting periods presented was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, (In thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 Beginning balance ​ $ 2,330 ​ $ 2,993 Warranty provision ​ 511 ​ 480 Processed warranty claims ​ ( 588 ) ​ ( 699 ) Ending balance ​ $ 2,253 ​ $ 2,774 ​ ​ ​ ​ ​ ​ ​ Accrued warranty reserve, current ​ $ 1,185 ​ $ 1,573 Accrued warranty reserve, non-current ​ ​ 1,068 ​ ​ 1,201 Total accrued warranty reserve ​ $ 2,253 ​ $ 2,774 ​ ​ Note 8. Credit Agreement On July 31, 2025, we entered into an Amended and Restated Credit Agreement with the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrative agent (the “2025 Credit Agreement”), which amended and restated the credit agreement that we had in place prior to that time (the “Prior Credit Agreement”). The 2025 Credit Agreement provides for a $ 40.0 million revolving credit facility with a scheduled maturity date of July 31, 2028. In connection with the entry into the 2025 Credit Agreement, on July 31, 2025, we paid off the full amount outstanding under the term loan that was outstanding under the Prior Credit Agreement, which was $ 24.4 million (inclusive of principal and interest), using cash on hand. The term loan had been reflected on our condensed consolidated financial statements as a note payable. The 2025 Credit Agreement removed the provisions from the Prior Credit Agreement related to a committed term loan, such that the only term loan related provisions in the 2025 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 Credit Agreement in an amount not to exceed $ 25.0 million in the aggregate, subject to the satisfaction of certain conditions. 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 (defined as term Secured Overnight Financing Rate) for a one-month tenor plus 1 % (the “Base Rate”) plus an applicable margin or (b) Adjusted Term SOFR for an interest period of one, three or six months, at our option, plus the applicable margin. The applicable margin is 0.75 % to 1.75 % on loans bearing interest at the Base Rate and 1.75 % to 2.75 % on loans bearing interest at Adjusted Term SOFR, in each case depending on our consolidated total leverage ratio. The 2025 Credit Agreement provides for a commitment fee at a rate per annum ranging from 0.125 % to 0.250 % for the unused portion of the revolving credit facility, depending on our consolidated total leverage ratio. The 2025 Credit Agreement includes financial covenants consisting of a maximum consolidated total leverage ratio covenant and a minimum fixed charge coverage ratio covenant. In addition, the 2025 Credit Agreement includes customary negative covenants, including a restricted payment covenant that 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 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. As of March 31, 2026, we were in compliance with all covenants under the 2025 Credit Agreement. 12 Table of Contents Our obligations under the 2025 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 March 31, 2026, we had no outstanding borrowings under the 2025 Credit Agreement . Note 9. Commitments and Contingencies Lease Obligations We lease property and equipment under operating leases, typically with terms greater than 12 months , and determine if an arrangement contains a lease at inception. In general, an arrangement contains a lease if there is an identified asset and we have the right to direct the use of and obtain substantially all of the economic benefit from the use of the identified asset. We record an operating lease liability at the present value of lease payments over the lease term on the commencement date. The related right of use (“ROU”) operating lease asset reflects rental escalation clauses, as well as renewal options and/or termination options. The exercise of lease renewal and/or termination options are at our discretion and are included in the determination of the lease term and lease payment obligations when it is deemed reasonably certain that the option will be exercised. When available, we use the rate implicit in the lease to discount lease payments to present value; however, certain leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. We classify our leases as buildings, vehicles or computer and office equipment and do not separate lease and non-lease components of contracts for any of the aforementioned classifications. In accordance with applicable guidance, we do not record leases with terms that are less than one year on the Condensed Consolidated Balance Sheets. None of our lease agreements contain material restrictive covenants or residual value guarantees. Buildings We lease certain office and warehouse space at various locations in the United States where we provide services. These leases are typically greater than one year with fixed, escalating rents over the noncancelable terms and, therefore, ROU operating lease assets and operating lease liabilities are recorded on the Condensed Consolidated Balance Sheets, with rent expense recognized on a straight-line basis over the term of the lease. The remaining lease terms vary from approximately one to five years as of March 31, 2026. 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 Condensed 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 March 31, 2026, 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 13 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 March 31, 2026 ​ ​ ​ At December 31, 2025 Right of use operating lease assets ​ $ 13,310 ​ $ 13,798 ​ ​ ​ ​ ​ ​ ​ Operating lease liabilities: ​ ​ ​ ​ ​ ​ Current ​ $ 3,237 ​ $ 3,195 Non-current ​ 11,937 ​ 12,763 Total ​ $ 15,174 ​ $ 15,958 ​ ​ ​ ​ ​ ​ ​ Operating leases: ​ ​ ​ ​ ​ ​ Weighted average remaining lease term ​ 4.7 years ​ ​ 4.9 years Weighted average discount rate ​ ​ 4.3 % ​ ​ 4.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2026 ​ 2025 Supplemental cash flow information for our operating leases: ​ ​ ​ ​ ​ ​ Cash paid for operating lease liabilities ​ $ 951 ​ $ 925 ​ The table below reconciles the undiscounted cash flows for the periods presented to the operating lease liabilities recorded on the Condensed Consolidated Balance Sheet for the periods presented: ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ 2026 (April 1 - December 31) ​ $ 2,857 2027 ​ ​ 3,311 2028 ​ 3,275 2029 ​ 3,310 2030 ​ 3,340 Thereafter ​ 352 Total minimum lease payments ​ ​ 16,445 Less: Amount of lease payments representing interest ​ ​ ( 1,271 ) Present value of future minimum lease payments ​ ​ 15,174 Less: Current obligations under operating lease liabilities ​ ​ ( 3,237 ) Non-current obligations under operating lease liabilities ​ $ 11,937 ​ Operating lease costs were $ 0.9 million for each of the three months ended March 31, 2026 and 2025. Major Vendors We had purchases from one vendor that accounted for 13 % of our total purchases for each of the three months ended March 31, 2026 and 2025. Purchase Commitments We issued purchase orders prior to March 31, 2026, totaling $ 35.6 million for goods that we expect to receive within the next year. 14 Table of Contents Retirement Plan We maintain a 401(k) retirement plan for our employees in which eligible employees can contribute a percentage of their pre-tax compensation. We recorded an expense related to our discretionary contributions to the 401(k) plan of $ 0.8 million and $ 0.7 million for the three months ended March 31, 2026 and 2025, respectively. Legal Proceedings F rom 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 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 matters (hereinafter the “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 stayed the Actions until November 25, 2025. By joint motions of the parties granted by the court, the stay was extended until March 25, 2026, and subsequently until June 23, 2026. On April 14, 2026, the affected parties (government, relators, and the Company) reached an agreement in principle to settle the Actions for an aggregate payment by the Company of approximately $ 0.6 million, plus relators’ attorneys’ fees and costs. In connection with the agreement in principle, the Company recorded an accrual of approximately $ 1.0 million, inclusive of the proposed settlement amount and estimated relators’ attorneys’ fees and related costs, which is reflected in accrued expenses on the Condensed Consolidated Balance Sheet as of March 31, 2026. The accrual amount is based on several factors, conditions, and estimates, and the ultimate resolution of the Actions is subject to negotiation of final terms, approval by the parties and the execution of a definitive settlement agreement. If no settlement is approved, we intend to continue to defend these Actions as they proceed, but we cannot predict with any degree of certainty their ultimate resolution or determine whether, or to what extent, any loss with respect to these Actions may exceed the amount that we have accrued. 15 Table of Contents Note 10. Stockholders' Equity Share Repurchase Program On October 16, 2025, our Board of Directors authorized a new program to repurchase up to $ 25.0 million of our common stock, following the prior repurchase authorization that had been fully utilized. Under the new 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 applicable share repurchase program in the following periods, which include the market price of the shares, commissions and excise tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, (In thousands, except share and per share data) ​ ​ 2026 ​ ​ 2025 Number of shares repurchased ​ ​ 40,250 ​ ​ 635,603 Total shares repurchased cost ​ $ 1,073 ​ $ 10,068 Average total cost per repurchased share ​ $ 26.67 ​ $ 15.76 ​ As of March 31, 2026, approximately $ 23.9 million of authorized share repurchases were remaining under the share repurchase program. We expect that repurchases will be funded through available cash balances and ongoing business operating cash generation. Shares of common stock repurchased under the program are 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. 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 March 31, 2026, 1,503,952 shares were available for future grant pursuant to the 2025 Plan. Following our stockholders’ approval of the 2025 Plan on May 7, 2025, no additional grants will be made under the 2016 Plan. However, outstanding awards under the 2016 Plan will continue to be governed by their respective original terms. We recorded stock-based compensation expense of $ 1.8 million and $ 2.1 million for the three months ended March 31, 2026 and 2025, respectively. This expense was allocated as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, (In thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 Cost of revenue ​ $ 90 ​ $ 99 Sales and marketing expenses ​ ​ 447 ​ ​ 503 Research and development expenses ​ ​ 44 ​ ​ 33 Reimbursement, general and administrative expenses ​ ​ 1,199 ​ ​ 1,431 Total stock-based compensation expense ​ $ 1,780 ​ $ 2,066 ​ 16 Table of Contents 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 . No stock-based compensation expense was included in the Condensed Consolidated Statements of Operations for stock options for each of the three months ended March 31, 2026 and 2025. As of March 31, 2026, there was no unrecognized pre-tax stock option expense under our equity compensation plans. Our stock option activity for the three months ended March 31, 2026, 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, 2025 ​ 225,448 ​ $ 43.87 ​ 1.8 years ​ $ 316 Exercised ​ ( 2,127 ) ​ ​ 10.00 ​ ​ ​ $ ​ Cancelled/Expired ​ ( 7,453 ) ​ ​ 59.43 ​ ​ ​ ​ ​ Balance at March 31, 2026 ​ 215,868 ​ $ 43.67 ​ 1.6 years ​ $ 161 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options exercisable at March 31, 2026 ​ 215,868 ​ $ 43.87 ​ 1.6 years ​ $ 161 ​ (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 366,517 as of March 31, 2025, had a weighted-average exercise price of $ 41.49 per share. Time-Based Restricted Stock Units We have granted time-based restricted stock units to certain participants under the 2016 Plan and the 2025 Plan that are stock-settled with common shares. Time-based restricted stock units vest over one to three years . Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for time-based restricted stock units was $ 1.3 million and $ 1.5 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, there was approximately $ 10.4 million of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 2.3 years. Our time-based restricted stock unit activity for the three months ended March 31, 2026, 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, 2025 ​ 718,621 ​ $ 13.92 ​ $ 20,840 Granted ​ 212,336 ​ ​ 28.25 ​ ​ ​ Vested ​ ( 213,980 ) ​ ​ 14.68 ​ ​ ​ Cancelled ​ ( 26,302 ) ​ ​ 14.60 ​ ​ ​ Balance at March 31, 2026 ​ 690,675 ​ $ 18.07 ​ $ 18,047 ​ (1) The aggregate intrinsic value of restricted stock units outstanding was based on our closing stock price on the last trading day of the period. 17 Table of Contents 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 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 (ranging from 25 % to 175 % of target), one-third will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA change are achieved in 2026 (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 are achieved in 2027 (ranging from 25 % to 175 % of target). The PSUs granted in 2026 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 2026 (ranging from 25 % to 175 % of target), one-third will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA change are achieved in 2027 (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 are achieved in 2028 (ranging from 25 % to 175 % of target). All earned and vested PSUs will be settled in shares of common stock. Stock-based compensation expense recognized for PSUs was $ 0.3 million and $ 0.4 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, there was approximately $ 4.0 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.5 years. Our PSU activity for the three months ended March 31, 2026, 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, 2025 ​ 310,296 ​ $ 14.76 ​ $ 8,999 Granted ​ 108,846 ​ ​ 28.25 ​ ​ ​ Adjusted ​ 12,705 ​ ​ ​ ​ ​ ​ Vested ​ ( 95,377 ) ​ ​ ​ ​ ​ ​ Balance at March 31, 2026 ​ 336,470 ​ $ 19.33 ​ $ 8,792 ​ (1) The aggregate intrinsic value of PSUs outstanding was based on our closing stock price on the last trading day of the period. Employee Stock Purchase Plan Our employee stock purchase plan (“ESPP”), which was approved by our Board of Directors on April 27, 2016, and by our stockholders on June 20, 2016, allows participating employees to purchase shares of our common stock at a discount through payroll deductions. The ESPP is available to all of our employees and employees of participating subsidiaries. Participating employees may purchase common stock, on a voluntary after-tax basis, at a price equal to 85 % of the lower of the closing market price per share of our common stock on the first or last trading day of each stock purchase period. The ESPP provides for six-month purchase periods, beginning on May 16 and November 16 of each calendar year. A total of 1,600,000 shares of common stock was initially reserved for issuance under the ESPP. This share reserve was automatically 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 and 240,780 shares were added as available for issuance thereunder on January 1, 2025. As of March 31, 2026, 1,745,124 shares were available for future issuance under the ESPP. We recognized stock-based compensation expense associated with the ESPP of $ 0.2 million for each of the three months ended March 31, 2026 and 2025. 18 Table of Contents Note 11. Revenue We derive our revenue from the sale and rental of our products to our customers in the United States. The following table presents our revenue, inclusive of sales and rental revenue, disaggregated by product line : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, (In thousands) ​ ​ ​ 2026 ​ 2025 Revenue ​ ​ ​ ​ ​ ​ Lymphedema products ​ $ 62,221 ​ $ 50,554 Airway clearance products ​ ​ 13,046 ​ ​ 10,714 Total ​ $ 75,267 ​ $ 61,268 ​ ​ ​ ​ ​ ​ ​ Percentage of total revenue ​ ​ ​ ​ ​ ​ Lymphedema products ​ 83 % ​ 83 % Airway clearance products ​ ​ 17 % ​ ​ 17 % Total ​ 100 % ​ 100 % ​ Our revenue by channel, inclusive of sales and rental revenue, for the three months ended March 31, 2026 and 2025, are summarized in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, (In thousands) ​ ​ ​ 2026 ​ 2025 Private insurers and other payers ​ $ 34,974 ​ $ 28,943 Veterans Administration ​ ​ 6,203 ​ ​ 6,537 Medicare ​ ​ 21,044 ​ ​ 15,074 Durable medical equipment distributors ​ ​ 13,046 ​ ​ 10,714 Total ​ $ 75,267 ​ $ 61,268 ​ Our rental revenue is derived from rent-to-purchase arrangements that typically range from three to ten months . As title transfers to the patient, with whom we have the contract, upon the termination of the lease term and because collectability is probable, under ASC 842, these are recognized as sales-type leases. Each rental agreement contains two components, the controller and related garments, both of which are interdependent and recognized as one lease component. The revenue and associated cost of revenue of sales-type leases are recognized on the lease commencement date and a net investment in leases is recorded on the Condensed Consolidated Balance Sheets. We bill the patients’ insurance payers monthly over the duration of the rental term. We record the net investment in leases and recognize revenue upon commencement of the lease in the amount of the expected consideration to be received through the monthly payments. Similar to our sales revenue, the transaction price is impacted by multiple factors, including the terms and conditions contracted by third-party payers. As the rental contract resides with the patients, we have elected the portfolio approach, at the payer level, to determine the expected consideration, which considers the impact of early terminations. While the contract is with the patient, in certain circumstances, the third-party payer elects an initial rental period with an option to extend. We assess the likelihood of extending the lease at the onset of the lease to determine if the option is reasonably certain to be exercised. As the lease is short-term in nature, we anticipate collection of substantially all of the net investment within the first year of the lease agreement. Completion of these payments represents the fair market value of the equipment, and as such, interest income is not applicable. 19 Table of Contents Rental revenue for each of the three months ended March 31, 2026 and 2025, was primarily from private insurers and Medicare. Sales-type lease revenue and the associated cost of revenue for the three months ended March 31, 2026 and 2025, was: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ (In thousands) ​ 2026 ​ 2025 ​ Sales-type lease revenue ​ $ 8,301 ​ $ 8,799 ​ Cost of sales-type lease revenue ​ 2,394 ​ 2,031 ​ Gross profit ​ $ 5,907 ​ $ 6,768 ​ ​ Note 12. Income Taxes We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjusting for discrete tax items recorded in the period. Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. These differences relate primarily to different methods used for income tax reporting purposes, including for depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable and inventory reserves. Our provision for income taxes included current federal and state income tax expense, as well as deferred federal and state income tax expense. The effective tax rate for the three months ended March 31, 2026 was an expense of 96.8 % , compared to a benefit of 26.9 % for the three months ended March 31, 2025. The primary driver of the change in the Company’s effective tax rate was attributable to the Company recording more expense related to stock-based compensation discrete items when compared to the prior year period. We recorded an income tax expense of $ 0.9 million and an income tax benefit of $ 1.1 million for the three months ended March 31, 2026 and 2025, respectively. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority is more-likely-than-not to sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the condensed consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company currently is not under income tax examination in any jurisdictions. Note 13. Net Loss Per Share The following table sets forth the computation of our basic and diluted net loss per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, (In thousands, except share and per share data) ​ ​ ​ 2026 ​ ​ ​ 2025 Net loss ​ $ ( 1,763 ) ​ $ ( 2,974 ) Weighted-average shares outstanding ​ ​ 22,561,053 ​ ​ 23,710,643 Weighted-average shares used to compute diluted net loss per share ​ ​ 22,561,053 ​ ​ 23,710,643 Net loss per share - Basic ​ $ ( 0.08 ) ​ $ ( 0.13 ) Net loss per share - Diluted ​ $ ( 0.08 ) ​ $ ( 0.13 ) ​ 20 Table of Contents The following common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Restricted stock units ​ 690,675 ​ 811,503 Common stock options ​ 215,868 ​ 374,398 Performance stock units ​ 336,470 ​ 286,821 Employee stock purchase plan ​ 43,450 ​ 72,280 Total ​ 1,286,463 ​ 1,545,002 ​ Note 14. 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). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The carrying amounts of financial instruments such as accounts receivable, other current assets, accounts payable, accrued expenses and other current liabilities approximate their related fair values due to the short-term maturities of these items. Non-financial assets, such as equipment and leasehold improvements, and intangible assets are subject to non-recurring fair value measurements if they are deemed impaired. The following table provides information regarding the fair value measurement of our contingent consideration liability as of March 31, 2026, according to the three-level fair value hierarchy: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At March 31, 2026 ​ ​ ​ ​ Quoted Prices ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ in Active ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ Markets for ​ Other ​ Significant ​ ​ ​ ​ Identical ​ Observable ​ Unobservable ​ ​ ​ ​ Assets ​ Inputs ​ Inputs ​ ​ (In thousands) ​ (Level 1) ​ (Level 2) ​ (Level 3) ​ Total Recurring Fair Value Measurements: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingent Consideration ​ $ — ​ — ​ $ 4,863 ​ $ 4,863 Total ​ $ — ​ $ — ​ $ 4,863 ​ $ 4,863 ​ See Note 15 – “Business Combination” for additional information regarding this contingent consideration liability. 21 Table of Contents Note 15. Business Combination On February 17, 2026, we acquired all outstanding equity interests of LymphaTech pursuant to the Stock Purchase Agreement, dated as of February 17, 2026. LymphaTech is a medical technology company pioneering a digital, three-dimensional (the “3D”) full body measurement and monitoring platform designed specifically for lymphedema. We acquired LymphaTech to further expand our position as a leader in treating lymphedema by extending our solutions across the care continuum, including earlier identification, assessment, and long ‑ term monitoring. The total purchase consideration for LymphaTech payable at closing, on a cash-free, debt-free basis, was approximately $ 7.2 million. Each holder of issued and outstanding shares of LymphaTech capital stock received their pro rata portion (based on their relative ownership percentage) of the consideration paid at closing, less $ 0.2 million, which was utilized to pay the sellers’ transaction expenses. The other component of purchase consideration is contingent consideration based on the achievement of non-financial milestones after closing, which contingent consideration had an estimated fair value of approximately $ 4.9 million as of the acquisition date. The acquisition date fair value of contingent consideration was measured using the income approach, specifically the probability weighted expected return method for the milestone payments. We will remeasure the fair value of the contingent liability on a quarterly basis. Estimates and assumptions used in the valuation include the probability of achieving these non-financial milestones, the expected timing of achieving these milestones, and a discount rate. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. Changes in the fair value subsequent to the acquisition date will be recognized in our consolidated statements of operations. The acquisition of LymphaTech was funded by cash on hand. We recognized transaction costs of $ 0.8 million in the three months ended March 31, 2026. These costs are reported in Reimbursement, general and administrative expenses in our Condensed Consolidated Statements of Operations. Transaction costs include, but are not limited to, investment banker, advisory, legal, and other professional fees. The following table reflects the allocation of the purchase consideration between the amount paid at closing and the contingent consideration: ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ Purchase Consideration Cash consideration payments to LymphaTech stockholders ​ $ 7,230 Estimated fair value of contingent consideration ​ ​ 4,863 Total purchase consideration ​ $ 12,093 ​ Fair Value of Assets Acquired and Liabilities Assumed The acquisition of LymphaTech has been accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations, with the Company treated as the accounting acquirer, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair value on the acquisition date. Acquisition accounting is dependent upon certain valuations and other studies that have yet to commence or progress to a stage where there is sufficient information for a definitive measurement. The process for estimating the fair values of identifiable intangible assets and certain tangible assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates. The table below presents the preliminary estimated fair values of assets acquired and liabilities assumed on the acquisition date based on valuations and management estimates. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations. We are still finalizing the allocation of the purchase price, therefore, the fair value estimates assigned to intangible 22 Table of Contents assets, goodwill and the related tax impacts of the acquisition, among other items, are subject to change as additional information is received to complete our analysis and certain tax returns are finalized. As a result, the preliminary estimates may be revised during the measurement period, which is 12 months following the acquisition date. These differences could change the value of the intangible assets acquired, the contingent liabilities assumed, and the tax impacts related to the acquisition and could have a material impact on our results of operations and financial position. ​ ​ ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ Estimated Fair Value Assets ​ ​ Current assets ​ ​ Cash and cash equivalents ​ $ 1,004 Accounts receivable, net ​ ​ 19 Total current assets ​ ​ 1,023 Non-current assets ​ ​ Intangible assets ​ ​ 4,110 Goodwill (1) ​ ​ 8,491 Total non-current assets ​ ​ 12,601 Total assets acquired ​ $ 13,624 Liabilities and stockholders' equity ​ ​ ​ Current liabilities ​ ​ Accrued expenses and other current liabilities ​ $ 180 Unearned revenue ​ ​ 313 Total current liabilities ​ ​ 493 Non-current liabilities ​ ​ Deferred income taxes ​ ​ 1,038 Total long term liabilities ​ ​ 1,038 Total liabilities assumed ​ $ 1,531 ​ ​ ​ ​ Net assets acquired ​ $ 12,093 ​ (1) Of the $ 8.5 million of goodwill from the acquisition, none is expected to be tax deductible. Goodwill is comprised of expected synergies for the combined operations and the assembled workforce acquired in the acquisition. Identifiable Intangible Assets The identifiable intangible assets acquired consist of a developed technology asset, customer relationship assets and a tradename asset. The estimated fair value of the developed technology asset was prepared using the relief from royalty method which calculates the value of the developed technology based on royalties that would be paid if licensed by a third party. The estimated fair value of customer relationship assets was prepared using the multi-period excess earnings method which calculates the present value of the incremental after-tax cash flows attributable solely to each customer relationship. The estimated fair value of the tradename asset was prepared using the relief from royalty method which calculates the value of the tradename based on royalties that would be paid if licensed by a third party. The estimated useful lives are based on forecasted periods of benefit for each intangible asset. Estimated useful lives and estimated preliminary fair values are presented in the table below. ​ ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ Estimated Fair Value (1) ​ Estimated Useful Life Developed technology ​ $ 3,200 ​ 10 years Customer relationships ​ ​ 540 ​ 5 years Tradename ​ ​ 370 ​ 10 years Estimated fair value of intangible assets acquired ​ $ 4,110 ​ ​ ​ (1) The preliminary acquisition accounting, including the valuation of identifiable intangible assets, is subject to change during the measurement period. 23 Table of Contents