What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-10 compared with 2026-05-04 · 104 added, 47 removed, 141 unchanged (52% of the section changed)

27 unchanged sentences

Nimbl has replaced most orders for our Entre system and we expect will continue to do so.

Sales and rentals of our lymphedema products represented 83% of our revenue in each of the three months ended March 31, 2026 and 2025.

Sales and rentals of our lymphedema products represented 84% and 83% of our revenue in the six months ended June 30, 2026 and 2025, respectively.

On April 24, 2026, we entered into a 3-year exclusive distribution agreement with ElastiMed, Inc.

to bring MyoSleeve, a discreet, wearable non-pneumatic compression device for the lower leg, to Department of Veterans Affairs (“VA”) and Department of Defense (“DoD”) patients across the United States.

Under the agreement, we received exclusive rights to distribute MyoSleeve through the VA and DoD channels and limited non-exclusive distribution rights in the broader U.S.

commercial market, subject to certain contractual conditions.

In exchange for these rights, we made a $3.0 million upfront payment in the second quarter of 2026, which was recorded as an intangible asset and will be amortized on a straight-line basis beginning on the date the product is commercially available for sale, which is expected to be in the second half of 2026.

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.

On September 8, 2021, we acquired the assets of the AffloVest airway clearance product line.

AffloVest is a portable, wearable vest that provides airway clearance to treat patients with chronic respiratory conditions such as bronchiectasis or conditions resulting from neuromuscular disorders.

For each of the three months ended March 31, 2026 and 2025, sales of AffloVest represented 17% of our revenue.

In April 2026, we received FDA 510(k) clearance for our AffloVest Gen 6 and it was commercially launched in June 2026.

For the six months ended June 30, 2026 and 2025, sales of AffloVest represented 16% and 17% of our revenue, respectively.

To support the growth of our business, we continue to invest in our commercial infrastructure, consisting of a lymphedema and respiratory sales force, marketing team including clinical education programs, patient education team, reimbursement capabilities and clinical expertise.

We market our lymphedema products using

a direct-to-patient and -clinician model.

We market our lymphedema products using a direct-to-patient and -clinician model.

The AffloVest device is sold through respiratory durable medical equipment providers throughout the United States that service patients and bill third-party payers for the product.

We employ a small group of respiratory specialists, who educate DME representatives, provide product demonstrations for targeted clinicians and support technical questions related to the AffloVest.

As of March 31, 2026, we employed 172 account managers and 163 specialists for our lymphedema products and a team of 18 specialists supporting our airway clearance products.

This compares to 161 account managers and 103 specialists for our lymphedema products and a team of 19 specialists supporting our airway clearance products as of March 31, 2025.

As of June 30, 2026, we employed 169 account managers and 163 specialists for our lymphedema products and a team of 19 specialists supporting our airway clearance products.

This compares to 161 account managers and 132 specialists for our lymphedema products and a team of 19 specialists supporting our airway clearance products as of June 30, 2025.

We invest in our reimbursement function to improve operational efficiencies and enhance individual payer expertise, while continuing our strategic focus of payer development.

8 unchanged sentences

Flexitouch Plus and Nimbl devices include Bluetooth technology, which is viewable using Kylee.

For the three months ended March 31, 2026, we generated revenue of $75.3 million and had a net loss of $1.8 million, compared to revenue of $61.3 million and net loss of $3.0 million for the three months ended March 31, 2025.

For the three months ended June 30, 2026, we generated revenue of $85.7 million and had net income of $7.8 million, compared to revenue of $78.9 million and net income of $3.2 million for the three months ended June 30, 2025.

For the six months ended June 30, 2026, we generated revenue of $161.0 million and had net income of $6.0 million, compared to revenue of $140.2 million and net income of $0.2 million for the six months ended June 30, 2025.

Our primary sources of capital since our initial public offering in 2016 have been from operating income, bank financing and our public offering in February 2023.

1 unchanged sentence

Results of Operations

Comparison of the Three Months Ended March 31, 2026 and 2025

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

The following table presents our results of operations for the periods indicated:

18 unchanged sentences

Total operating expenses

Loss from operations

Income from operations

Interest income

Interest expense

Loss before income taxes

Income tax expense (benefit)

Revenue increased $14.0 million, or 23%, to $75.3 million in the three months ended March 31, 2026, compared to $61.3 million in the three months ended March 31, 2025.

The increase in total revenue was attributable to an increase of $11.7 million, or 23%, in sales and rentals of the lymphedema product line and an increase of $2.3 million, or 22%, in sales of the airway clearance product line in the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

The increase in the lymphedema product line revenue in the three months ended March 31, 2026, was driven by accelerating commercial momentum from our strong partnerships, execution of our go-to-market commercial strategy and disciplined focus on sales force productivity.

The increase in the airway clearance product line revenue was primarily driven by strong partnerships and prioritized placement agreements with our top 10 respiratory DME providers.

The following table summarizes our revenue by product line for the three months ended March 31, 2026 and 2025, both in dollars and percentage of total revenue:

Income before income taxes

Income tax (benefit) expense

Six Months Ended

(In thousands)

Condensed Consolidated Statement

of Operations Data:

Sales revenue

Rental revenue

Total revenue

Cost of revenue

Cost of sales revenue

Cost of rental revenue

Total cost of revenue

Gross profit - sales revenue

Gross profit - rental revenue

Operating expenses

Sales and marketing

Research and development

Reimbursement, general and administrative

Intangible asset amortization

Total operating expenses

Income (loss) from operations

Interest income

Interest expense

Income before income taxes

Income tax expense

Revenue increased $6.8 million, or 9%, to $85.7 million in the three months ended June 30, 2026, compared to $78.9 million in the three months ended June 30, 2025.

The increase in total revenue was attributable to an increase of $7.7 million, or 12%, in sales and rentals of the lymphedema product line in the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

The increase was partially offset by a decrease of $0.9 million, or 7%, in sales of the airway clearance product line in the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

Revenue increased $20.8 million, or 15%, to $161.0 million in the six months ended June 30, 2026, compared to $140.2 million in the six months ended June 30, 2025.

The increase in total revenue was attributable to an increase of $19.3 million, or 17%, in sales and rentals of the lymphedema product line and an increase of $1.5 million, or 6%, in sales of the airway clearance product line in the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

The increase in the lymphedema product line revenue in the three and six months ended June 30, 2026, was driven by accelerating commercial momentum from our strong partnerships, execution of our go-to-market commercial strategy and disciplined focus on sales force productivity.

The decrease in the airway clearance product line revenue for the three months ended June 30, 2026 was primarily driven by inventory timing dynamics among a few large DME providers.

The increase in the airway clearance product line revenue for the six months ended June 30, 2026 was primarily driven by strong partnerships and prioritized placement agreements with our top 10 respiratory DME providers.

The following tables summarize our revenue by product line for the three and six months ended June 30, 2026 and 2025, both in dollars and percentage of total revenue:

Three Months Ended

5 unchanged sentences

Airway clearance products

Six Months Ended

(In thousands)

Lymphedema products

Airway clearance products

Percentage of total revenues

Lymphedema products

Airway clearance products

Our business is affected by seasonality.

3 unchanged sentences

Cost of Revenue and Gross Margin

Cost of revenue increased $1.7 million, or 11%, to $17.7 million in the three months ended March 31, 2026, compared to $15.9 million in the three months ended March 31, 2025.

The increase in cost of revenue was primarily attributable to the increase in revenue.

Gross margin was 77% and 74% in the three months ended March 31, 2026 and 2025, respectively.

Cost of revenue increased $0.2 million, or 1%, to $20.3 million in the three months ended June 30, 2026, compared to $20.1 million in the three months ended June 30, 2025.

Cost of revenue increased $2.0 million, or 5%, to $38.0 million in the six months ended June 30, 2026, compared to $36.0 million in the six months ended June 30, 2025.

The increase in cost of revenue in both periods was primarily attributable to the increase in revenue.

Gross margin was 76% and 75% in the three months ended June 30, 2026 and 2025, respectively, and 76% and 75% in the six months ended June 30, 2026 and 2025, respectively.

Sales and Marketing Expenses

Sales and marketing expenses increased $5.2 million, or 19%, to $32.7 million in the three months ended March 31, 2026, compared to $27.5 million in the three months ended March 31, 2025.

The increase was primarily attributable to a $4.1 million increase in personnel-related compensation expenses, a $1.3 million increase in expenses related to meetings and seminars and a $0.1 million increase in expenses for demo units, partially offset by a $0.3 million decrease in travel and entertainment expenses.

Sales and marketing expenses increased $2.0 million, or 7%, to $32.0 million in the three months ended June 30, 2026, compared to $30.0 million in the three months ended June 30, 2025.

The increase was primarily attributable to a $2.9 million increase in personnel-related compensation expenses (including travel and

entertainment expenses) and a $0.2 million increase in expenses for professional services, partially offset by a $1.4 million decrease in expenses related to meetings and seminars.

Sales and marketing expenses increased $7.2 million, or 12%, to $64.7 million in the six months ended June 30, 2026, compared to $57.6 million in the six months ended June 30, 2025.

The increase was primarily attributable to a $6.8 million increase in personnel-related compensation expenses, a $0.2 million increase in expenses for demo units and a $0.1 million increase in educational grants.

Research and Development Expenses

Research and development (“R&D”) expenses increased $1.0 million, or 59%, to $2.8 million in the three months ended March 31, 2026, compared to $1.7 million in the three months ended March 31, 2025.

The increase was primarily attributable to a $0.6 million increase in IT and other professional fees related expenses and a $0.5 million increase in personnel-related compensation expenses.

IT-related expenses reflected in both R&D expenses and Reimbursement, general and administrative expenses primarily relate to the ongoing implementation of new technology across the entire order process, replacing legacy systems, which we expect to continue through the remainder of 2026.

Research and development (“R&D”) expenses increased $0.5 million, or 24%, to $2.5 million in the three months ended June 30, 2026, compared to $2.0 million in the three months ended June 30, 2025.

The increase was primarily attributable to a $0.2 million increase in IT-related expenses and a $0.2 million increase in personnel-related compensation expenses.

R&D expenses increased $1.5 million, or 40%, to $5.3 million in the six months ended June 30, 2026, compared to $3.8 million in the six months ended June 30, 2025.

The increase was primarily attributable to a $0.8 million increase in personnel-related compensation expenses and $0.6 million increase in IT and other professional fees related expenses.

IT-related expenses reflected in both R&D expenses and Reimbursement, general and administrative expenses in both periods primarily related to the ongoing implementation of new technology across the entire order process, replacing legacy systems, which we expect to continue through the remainder of 2026.

Reimbursement, General and Administrative Expenses

Reimbursement, general and administrative expenses increased $3.0 million, or 15%, to $23.0 million in the three months ended March 31, 2026, compared to $20.0 million in the three months ended March 31, 2025.

This increase was primarily attributable to a $1.2 million increase in personnel-related compensation expenses, a $0.8 million increase in acquisition and integration costs related to the LymphaTech acquisition, a $0.6 million increase in occupancy costs, depreciation expense and professional fees and a $0.4 million increase in IT-related expenses.

Reimbursement, general and administrative expenses increased $1.3 million, or 6%, to $23.4 million in the three months ended June 30, 2026, compared to $22.0 million in the three months ended June 30, 2025.

This increase was primarily attributable to a $2.2 million increase in personnel-related compensation expenses, a $0.3 million increase in IT-related expenses and a $0.2 million increase in acquisition and integration costs related to the LymphaTech acquisition, partially offset by a $1.6 million decrease in occupancy costs.

Reimbursement, general and administrative expenses increased $4.4 million, or 10%, to $46.4 million in the six months ended June 30, 2026, compared to $42.0 million in the six months ended June 30, 2025.

This increase was primarily attributable to a $3.3 million increase in personnel-related compensation expenses, a $1.0 million increase in acquisition and integration costs related to the LymphaTech acquisition and a $0.7 million increase in IT-related expenses, partially offset by a $0.7 million decrease in occupancy costs, depreciation expense and professional fees.

Intangible Asset Amortization

Intangible asset amortization remained consistent at $0.6 million for each of the three months ended March 31, 2026 and 2025.

Intangible asset amortization was $0.7 and $0.6 million for the three months ended June 30, 2026 and 2025, respectively.

Intangible asset amortization was $1.2 and $1.3 million for the six months ended June 30, 2026 and 2025, respectively.

Interest Income and Interest Expense

Interest income decreased $0.2 million, or 26%, to $0.7 million in the three months ended March 31, 2026, compared to $0.9 million in the three months ended March 31, 2025, primarily due to a lower cash balance in an Institutional Insured Liquid Deposit demand account due to funds being utilized for the LymphaTech acquisition.

Interest expense decreased $0.4 million, or 93%, to $28,000 in the three months ended March 31, 2026, compared to $0.4 million in the three months ended March 31, 2025, primarily due to the repayment of debt.

We recorded an income tax expense of $0.9 million compared to an income tax benefit of $1.1 million for the three months ended March 31, 2026 and 2025, respectively.

Interest income decreased $0.3 million, or 34%, to $0.6 million in the three months ended June 30, 2026, compared to $0.9 million in the three months ended June 30, 2025, primarily due to a lower cash balance in an Institutional Insured Liquid Deposit demand account due to funds being utilized for the LymphaTech acquisition.

Interest expense decreased $0.4 million, or 95%, to $19,000 in the three months ended June 30, 2026, compared to $0.4 million in the three months ended June 30, 2025, primarily due to the repayment of debt.

Interest income decreased $0.5 million, or 30%, to $1.2 million in the six months ended June 30, 2026, compared to $1.7 million in the six months ended June 30, 2025, primarily due to a lower cash balance in an Institutional Insured Liquid Deposit demand account due to funds being utilized for the LymphaTech acquisition.

Interest expense decreased $0.8 million, or 94%, to $47,000 in the six months ended June 30, 2026, compared to $0.8 million in the six months ended June 30, 2025, primarily due to the repayment of debt.

We recorded an income tax benefit of $0.4 million and an income tax expense of $1.3 million for the three months ended June 30, 2026 and 2025, respectively.

The primary driver of the change in our effective tax rate was attributable to the Company recording stock-based compensation discrete items when compared to the prior year period.

We recorded an income tax expense of $0.5 million and an income tax expense of $0.2 million for the six months ended June 30, 2026 and 2025, respectively.

The primary driver of the change in our effective tax rate was attributable to the Company recording stock-based compensation discrete items when compared to the prior year period.

Liquidity and Capital Resources

On March 31, 2026, we had cash of $ 75.0 million and net accounts receivable of $ 38.2 million.

This compares to cash of $83.6 million and net accounts receivable of $35.7 million at March 31, 2025.

On June 30, 2026, we had cash of $ 69.9 million and net accounts receivable of $ 43.1 million.

This compares to cash of $81.5 million and net accounts receivable of $33.1 million at June 30, 2025.

The following table summarizes our cash flows for the periods indicated:

Three Months Ended

Six Months Ended

(In thousands)

Net cash (used in) provided by:

Net cash provided by (used in):

Operating activities

3 unchanged sentences

Operating Activities

Net cash used in operating activities during the three months ended March 31, 2026 was $0.3 million, resulting from non-cash net income adjustments of $3.5 million, a net loss of $1.8 million and a net decrease in operating assets and liabilities of $1.8 million.

The positive non-cash net income adjustments consisted primarily of $1.8 million of stock-based compensation expense, $1.6 million of depreciation, and a loss on disposal of property and equipment and intangibles of $0.1 million.

Cash used relating to the change in operating assets and liabilities primarily consisted of a decrease in net accounts receivable of $5.7 million, a $2.2 million increase in accounts payable, a $0.8 million decrease in income taxes payable and a $0.6 million decrease in net investment in leases, partially offset by a decrease in accrued payroll and related taxes of $8.3 million, an increase in inventories of $2.6 million, an increase in right of use operating lease assets of $0.3 million and an increase in prepaid expenses and other assets of $0.1 million.

Net cash provided by operating activities during the three months ended March 31, 2025 was $0.4 million, resulting from non-cash net income adjustments of $4.0 million, a net loss of $3.0 million and a net decrease in operating assets and liabilities of $0.7 million.

The positive non-cash net income adjustments consisted primarily of $2.1 million of stock-based compensation expense and $1.7 million of depreciation.

Cash used relating to the change in operating assets and liabilities primarily consisted of a decrease in net accounts receivable of $9.2 million, a $1.4 million increase in accounts payable and a $0.3 million increase in accrued expenses and other liabilities, partially offset by a decrease in accrued payroll and related taxes of $7.0 million, an increase in prepaid expenses and other assets of $2.5 million, a decrease in income taxes payable of $1.3 million, an increase in right of use operating lease assets of $0.3 million, an increase in net investment in leases of $0.3 million and an increase in inventories of $0.2 million.

Net cash provided in operating activities during the six months ended June 30, 2026 was $2.9 million, resulting from non-cash net income adjustments of $7.6 million, net income of $6.0 million and a net decrease in operating assets and liabilities of $10.7 million.

The positive non-cash net income adjustments consisted primarily of $4.0 million of stock-based compensation expense, $3.5 million of depreciation and amortization, and a loss on disposal of property and equipment and intangibles of $0.1 million.

Cash provided relating to the change in operating assets and liabilities primarily consisted of an increase in prepaid expenses and other assets of $5.2 million, a decrease in accrued payroll and related taxes of $3.8 million, an increase in inventories of $2.8 million, a $2.2 million decrease in income taxes payable, a $0.8 million decrease in accrued expenses and other liabilities and an increase in right of use operating lease assets of $0.4 million, partially offset by a $2.9 million increase in accounts payable , a decrease of $0.8 million in net investment in leases and a decrease in net accounts receivable of $0.8 million.

Net cash provided by operating activities during the six months ended June 30, 2025 was $15.2 million, resulting from a net increase in operating assets and liabilities of $7.5 million, non-cash net income adjustments of $7.4 million, and net income of $0.2 million.

Cash provided relating to the change in operating assets and liabilities primarily consisted of a decrease in net accounts receivable of $11.9 million, a $2.6 million increase in accrued expenses and other liabilities, a $2.3 million increase in accounts payable, a decrease in inventories of $1.5 million, and a decrease in net investment in leases of $0.1 million, partially offset by a decrease in accrued payroll and related taxes of $5.2 million, an increase in prepaid expenses and other assets of $4.7 million, a decrease in income taxes payable of $0.6 million and an increase in right of use operating lease assets of $0.3 million.

The positive non-cash net income adjustments consisted primarily of $4.0 million of stock-based compensation expense, $3.4 million of depreciation and amortization, and $0.1 million of loss on disposals.

Investing Activities

Net cash used in investing activities during the three months ended March 31, 2026, was $7.1 million, primarily consisting of $6.2 million of net payments related to the acquisition of LymphaTech and $0.8 million of purchases of property and equipment and patent costs.

Net cash used in investing activities during the three months ended March 31, 2025, was $0.4 million, consisting of purchases of property and equipment and patent costs.

Net cash used in investing activities during the six months ended June 30, 2026, was $11.4 million, primarily consisting of $6.2 million of net payments related to the acquisition of LymphaTech, a $3.0 million payment for the exclusive distribution agreement for MyoSleeve, $2.1 million of purchases of property and equipment and $0.1 million of patent costs.

Net cash used in investing activities during the six months ended June 30, 2025, was $0.8 million, consisting of purchases of property and equipment and patent costs.

Financing Activities

Net cash used in financing activities during the three months ended March 31, 2026, was $1.1 million, primarily consisting of payments of $1.1 million for the repurchase of our common stock.

Net cash used in financing activities during the three months ended March 31, 2025, was $10.8 million, primarily consisting of payments of $10.0 million for the repurchase of our common stock and a payment of $0.8 million made on our term loan.

Net cash used in financing activities during the six months ended June 30, 2026, was $5.1 million, primarily consisting of payments of $6.4 million for the repurchase of our common stock, partially offset by $1.0 million in proceeds from the issuance of common stock under the ESPP and $0.2 million in proceeds from the exercise of common stock options .

Net cash used in financing activities during the six months ended June 30, 2025, was $27.2 million, primarily consisting of payments of $26.6 million for the repurchase of our common stock and a payment of $1.5 million made on our term loan, partially offset by $0.8 million in proceeds from the issuance of common stock under the ESPP.

Credit Agreement

9 unchanged sentences

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.

As of June 30, 2026, we were in compliance with all covenants under the 2025 Credit Agreement.

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.

As of June 30, 2026, we had no outstanding borrowings under the 2025 Credit Agreement.

Share Repurchase Program

4 unchanged sentences

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.

During the three months ended March 31, 2026, we repurchased 40,250 shares for approximately $1.1 million.

During the six months ended June 30, 2026, we repurchased 249,150 shares for approximately $6.4 million.

We used cash on hand to fund these repurchases.

26 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis