What changed in this filing

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Item 1. Business

2022-02-23 compared with 2021-02-23 · 214 added, 141 removed, 493 unchanged (42% of the section changed)

Tactile Systems Technology, Inc.

(“we,” “us,” and “our”) is a medical technology company that develops and provides innovative medical devices for the treatment of chronic diseases.

(“we,” “us,” and “our”) is a medical technology company that develops and provides innovative medical devices for the treatment of underserved chronic diseases.

We were originally incorporated in Minnesota under the name Tactile Systems Technology, Inc.

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Our mission is to help people suffering from chronic diseases live better and care for themselves at home.

We focus our efforts on advancing the standard of care in treating chronic diseases in the home setting to improve patient outcomes and quality of life and help control rising healthcare expenditures.

We possess a unique, scalable platform to deliver at-home healthcare solutions directly to patients throughout the United States.

This evolving home care delivery model is recognized by policy-makers and insurance payers as a key for controlling rising healthcare costs.

We focus our efforts on advancing the standard of care in treating underserved chronic diseases in the home to improve patient outcomes and quality of life and help control rising healthcare expenditures.

Our areas of therapeutic focus are (1) vascular disease, with a goal of advancing the standard of care in treating lymphedema and chronic venous insufficiency, (2) oncology, where lymphedema is a common consequence among cancer survivors and (3) providing airway clearance therapy for those suffering from chronic respiratory conditions.

We possess a unique, scalable platform to deliver at-home healthcare solutions throughout the United States.

This evolving home care delivery model is recognized by policymakers and insurance payers as a key for controlling rising healthcare costs.

Our solutions deliver cost-effective, clinically proven, long-term treatment for people with these chronic diseases.

We believe that our clinically proven, at-home treatment options for lymphedema, phlebolymphedema and chronic venous insufficiency provide a continuity of care, service and support that improves outcomes, reduces costs and gives people their lives back.

We employ a direct-to-patient and -provider model, through which we obtain patient referrals from clinicians, manage insurance claims on behalf of our patients and their clinicians, deliver our solutions directly to patients and train them on the proper use of our solutions in their homes.

This model allows us to directly approach patients and clinicians, whereby we disintermediate the traditional durable medical equipment channel and capture both the manufacturer and distributor margins.

For the year ended December 31, 2020, we generated revenue of $187.1 million and had net loss of $0.6 million.

Our revenue decreased 1% during the year ended December 31, 2020, compared to the year ended December 31, 2019.

We employ a direct-to-patient and -provider model within our lymphedema portfolio, through which we obtain patient referrals from clinicians, manage insurance claims on behalf of our patients and their clinicians, deliver our solutions directly to patients and train them on the proper use of our solutions.

This model allows us to engage directly with patients and clinicians, which are both critical audiences to which we can provide clinical evidence and education.

For our respiratory therapy products, we have a durable medical equipment (“DME”) distribution model, utilizing mature comprehensive respiratory DME providers to service patients.

We sell the AffloVest product to accredited DME providers.

They gather and submit documentation for payer reimbursement, train patients on use of the device, and provide ongoing patient support.

For the year ended December 31, 2021, we generated revenue of $208.1 million and had a net loss of $11.8 million.

Our revenue increased 11% during the year ended December 31, 2021, compared to the year ended December 31, 2020.

Lymphedema is a type of chronic swelling, or edema, which occurs in the arms, legs, neck, trunk or other body parts when the lymphatic vessels are unable to adequately drain protein-rich lymph fluid from these regions.

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Patients with lymphedema or chronic venous insufficiency are typically treated by vascular surgeons, vascular medicine physicians, oncology care teams, wound physicians, nurses and therapists.

Our advanced at-home Flexitouch system provides effective automated, at-home lymphatic drainage therapy.

Our advanced Flexitouch system provides effective automated, at-home lymphatic drainage therapy.

Its patented, curved chambers stimulate the lymphatic system to remove excess fluid and reduce swelling.

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Food and Drug Administration, or the FDA, in July 2002 and our second-generation Flexitouch system received 510(k) clearance from the FDA in October 2006.

In September 2016, we received 510(k) clearance from the FDA for the Flexitouch system in treating lymphedema in the head and neck.

In September 2016, we received 510(k) clearance from the FDA for the Flexitouch system in

treating lymphedema in the head and neck.

In June 2017, we announced that we received 510(k) clearance from the FDA for the Flexitouch Plus, the third-generation version of our Flexitouch system.

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phlebolymphedema and lipedema.

Our Flexitouch system generated $163.9 million, or 88%, of

our revenue in 2020, and $171.3 million, or 90%, of our revenue in 2019.

Our Flexitouch system generated $176.2 million, or 85%, of our revenue in 2021, and $163.9 million, or 88%, of our revenue in 2020.

The Entre system is marketed to patients for whom a basic pump is suitable or who do not yet qualify for insurance reimbursement for an advanced compression device such as our Flexitouch system.

Our Entre system and other products generated $23.2 million, or 12%, of our revenue in 2020, and $18.2 million, or 10%, of our revenue in 2019.

In October 2018, we licensed the intellectual property rights related to the Airwear Gradient Compression Wrap, or the Airwear wrap, in the U.S.

and Canada, for use in all medical applications, including but not limited to swelling/edema and ulcers (including lymphedema and chronic venous insufficiency conditions).

We made the strategic decision to discontinue the Airwear wrap in the second quarter of 2020, and effective July 31, 2020, the licensing party terminated the license agreement with us related to the Airwear wrap.

To support the growth of our business, we invest heavily in our commercial infrastructure, consisting of our direct sales force, patient training resources, contracted trainers, reimbursement capabilities and clinical expertise.

Our Entre system generated $26.7 million, or 13%, of our revenue in 2021, and $23.2 million, or 12%, of our revenue in 2020.

On September 8, 2021, we acquired the assets of the AffloVest respiratory therapy product line from International Biophysics Corporation (“IBC”), a privately-held company which developed and manufactures AffloVest.

AffloVest is a portable, battery-powered wearable vest, that treats patients with chronic respiratory conditions such as chronic obstructive pulmonary disease (“COPD”)-associated breathing conditions like bronchiectasis, or conditions resulting from neuromuscular disorders and cystic fibrosis, by managing airway clearance.

Since patients with chronic pulmonary conditions typically require a host of comprehensive respiratory solutions, such as oxygen, nebulizers and non-invasive ventilation, we use respiratory DME providers as our method of distribution.

These respiratory DME providers provide a full range of solutions for these patients with complex diseases, and represent a large, developed channel.

The AffloVest product line generated $5.1 million, or 2%, of our total revenue from September 9, 2021 through December 31, 2021.

To support the growth of our business, we invest in our commercial infrastructure, consisting of our direct sales force, DME sales team, patient training resources, reimbursement capabilities and clinical expertise.

We are a national, accredited provider of home medical equipment services approved for coverage by private payers, Medicare, the Veterans Administration and certain Medicaid programs in the United States.

Our direct sales force is focused on increasing clinician awareness of our solutions and has grown to 255 sales representatives as of December 31, 2020, compared to over 240 representatives as of December 31, 2019.

Additionally, we have a team of approximately 30 Field Support Specialists, bringing our collective field commercial team to 285 employees as of December 31, 2020.

Furthermore, in concert with COVID-19 social distancing requirements and recommendations, we moved to a “no contact” virtual patient training model.

This new model substantially reduced the need for in-person contact and visits to patients’ homes and clinics in order to protect the health and limit the exposure of both our trainers and patients.

Accordingly in the second quarter of 2020, we inactivated our independent healthcare practitioners, who acted as at-home trainers to educate patients on the proper use of our systems, in order to allow these individuals to have access to specific COVID related financial relief.

We have since reactivated a small number of healthcare practitioners in the same capacity as trainers who educate patients on the proper use of our solutions.

Our field commercial team is focused on increasing clinician awareness of our lymphedema solutions.

As of December 31, 2021, this team consists of approximately 220 field sales representatives, 30 field managers and 94 Field Support Specialists.

The AffloVest device is sold through DME providers throughout the United States, supported by a team of 11 sales representatives.

In concert with COVID-19 social distancing requirements and recommendations, beginning in 2020, our patient training model includes both in-person training and virtual patient training options.

This provides additional options for us to connect with patients to ensure they receive the appropriate training, while protecting the health and limiting the exposure of both our trainers and patients.

In 2021, patient training was primarily provided by a team of employee trainers, in addition to a small number of independent healthcare practitioners that act in the same capacity as employee trainers to educate patients on the proper use of our solutions.

Our reimbursement function includes payer relations and reimbursement operations.

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Our reimbursement operations function is responsible for verifying patient insurance benefits, individual patient case development, prior authorization submissions, case follow-up, and appeals when necessary.

Our clinical function, consisting of a scientific advisory board, in-house therapists and nurses, and our Chief Medical Officer (part-time), serves as a resource to clinicians and patients and guides our development of clinical evidence in support of our products.

Our clinical function, consisting of a scientific advisory board, in-house therapists and nurses, and our Chief Medical Officer, serves as a resource to clinicians and patients and guides our development of clinical evidence in support of our products.

We believe these investments are critical to driving payer, clinician and patient adoption of our technologies, and together with our commercial infrastructure, represent a significant competitive advantage.

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More than 77,000 patients have been treated with our Entre system since its launch in 2013, and approximately 20,000 Entre systems were shipped in 2021.

AffloVest also benefits from a relatively mature reimbursement landscape.

Health insurance coverage is in place for High Frequency Chest Wall Oscillation (“HFCWO”) vest therapy with Medicare and most private insurers.

Respiratory DME partners serve the role of receiving prescriptions, verifying coverage criteria, shipping, billing and training the patient.

Coronavirus (COVID-19)

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We have seen adverse impacts as it relates to the decline in the number of patients that healthcare facilities and clinics are able to treat due to enhanced safety protocols.

There are no reliable estimates of how long the pandemic will last or how many people are likely to be affected by it.

While we saw some level of recovery in the second quarter of 2021, the second half of 2021 was negatively impacted by the prolonged recovery from COVID-19 and increased variant cases during the period, which extended and expanded restricted access to clinics and hospitals and disrupted the recovery in patient visits versus the pre-COVID environment.

There are no reliable estimates of how long the pandemic will last, whether any recovery will be sustained or will reverse course, the severity of any resurgence of COVID-19 or variant strains of the virus, the effectiveness of vaccines and attitudes towards receiving them, or what ultimate effects the pandemic will have.

For that reason, we are unable to reasonably estimate the long-term impact of the pandemic on our business at this time.

Our first priority with regard to the COVID-19 pandemic is to ensure the safety and health of our employees, clinicians and patients.

Subject to that, we are focusing our efforts on attempting to continue our business operations in this unprecedented environment.

Part of our strategy includes changing many of our processes and practices in an effort to help mitigate the impact of COVID-19 on our business so that we can support our

clinicians and safely make our at-home therapies available to patients.

Since the onset of COVID-19, we have remained proactive to ensure we continue to adapt to our employees, clinicians and patients needs.

These changes to our business include, but are not limited to:

● Initially, we modified our operations with the primary focus on keeping our employees safe while continuing to serve our clinicians and patients.

As an essential business under federal guidelines, we continued to manufacture product and implemented multiple, smaller rotational shifts and other best practices to help protect the health and safety of our workforce.

More recently, we have migrated closer to our pre-COVID work shifts, however we have implemented more stringent safety measures including mandatory use of face masks, social distancing and temperature checks for our employees.

● We have continued to incorporate remote and flexible work arrangements for employees whenever possible, including real-time, online training of our new sales representatives.

● We have continued to limit employee travel and contact restrictions to reduce exposure.

● We have continued to collaborate with payers to modify coverage requirements by serving patients virtually.

● In concert with COVID-19 social distancing requirements and recommendations, we moved to a “no contact” virtual patient training model.

We have since reactivated a small number of healthcare practitioners in the same capacity as trainers who educate patients on the proper use of our solutions.

● We continue to transition large, in-person medical education programs in favor of conducting virtual meetings whenever possible.

● When in-person visits are required, we are supporting clinicians and patients by using rigorous infection control practices.

Since the onset of COVID-19, we have remained proactive to ensure we continue to adapt to the needs of our employees, clinicians and patients.

For a detailed listing of the changes to our business practices since the onset of the pandemic, refer to previous reports filed with the Securities and Exchange Commission.

Continued modifications to our business include, but are not limited to:

● Incorporating remote and flexible work arrangements for employees whenever possible, including real-time, online training of our new sales representatives.

In addition, we are monitoring pandemic conditions to assess whether our in-office and remote work strategy remains both productive and competitive.

● Eliminating employee travel restrictions in alignment with the opening of healthcare facilities and clinics while also continuing to maintain social distancing contact restrictions to reduce exposure.

● Utilizing employee trainers and a small number of independent healthcare practitioners to educate patients on the proper use of our solutions virtually or in-person.

● Continuing to host large virtual medical education programs, while also beginning to schedule smaller in-person meetings and restoring attendance at key professional congresses.

● Supporting clinicians and patients by using rigorous infection control practices when in-person visits are required.

● Following government guidelines related to vaccinations of our staff in light of customer vaccination requirements and our focus on safe interactions with patients and customers.

We cannot assure you that these changes to our processes and practices will be successful in mitigating the impact of COVID-19 on our business.

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Additional information related to the COVID-19 pandemic is included elsewhere in this report.

Overview of the Lymphedema and Chronic Venous Insufficiency Markets

The lymphatic system, a fundamental part of the cardiovascular system, consists of lymph vessels and lymph organs that protect the body against harmful bacteria and transport lymph fluid from the body’s tissues back to the cardiovascular system.

Overview of Lymphedema and Chronic Venous Insufficiency

back to the cardiovascular system.

Lymph vessels are thin-walled capillaries that absorb fluids, bacteria and proteins, and propel them to lymph nodes, small lymph organs that filter and process the lymph fluid by eliminating waste and bacteria.

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Lymph vessels and lymph nodes work together with larger lymph structures to help maintain a normal healthy fluid balance.

breakdown, pain, increased risk of serious infection and marked psychosocial impairment, resulting in significant negative implications for a patient's health.

Lymphedema occurs when there is impairment to the lymphatic system, disrupting normal transport of lymph fluid within the body and causes severe and debilitating symptoms, including swelling, decreased mobility, skin breakdown, pain, increased risk of serious infection and marked psychosocial impairment, resulting in significant negative implications for a patient's health.

When the lymphatic system becomes overwhelmed, damaged, or blocked for an extended period of time, lasting swelling (referred to as chronic edema) occurs.

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The International Society of Lymphology categorizes the progression of lymphedema from Stage 0, the least severe stage, to Stage 3, the most severe stage.

Chronic Venous Insufficiency

Chronic venous insufficiency (“CVI”), otherwise known as phlebolymphedema, occurs when the venous wall and/or valves in the veins are not working effectively, making it difficult for blood to return to the heart.

The disease is prevalent among patients who are obese or pregnant and may also be caused by high blood pressure, trauma, lack of exercise, smoking, deep vein thrombosis and inflammation of the vein walls.

Chronic Venous Insufficiency and Phlebolymphedema

The most common form of lymphedema in the Western world is phelobolymphedema, a mixed etiology swelling due to chronic venous insufficiency (“CVI”) and lymphatic insufficiency.

The inability of the lymphatic system to adequately drain the interstitial fluid that accumulates in severe chronic venous hypertension causes this ‘combined’ condition, phlebolymphedema.

CVI is prevalent among patients who are obese or pregnant and may also be caused by high blood pressure, trauma, lack of exercise, smoking, deep vein thrombosis and inflammation of the vein walls.

As the valves deteriorate, blood is no longer able to effectively travel in the normal direction, leading to increased pressure in the vascular system, stretching and dilating vessels, which exacerbates the problem.

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Based on a study performed by Dr.

Steven Dean et al., it is estimated that more than 16 million people in the United States are living with lymphedema due to CVI.

This, in addition to the estimated five million individuals living in the U.S with cancer-related and primary lymphedema, increases the prevalence estimates four-fold to over 20 million individuals.

In order to more accurately target patients actively looking for a treatment option we have performed an analysis of claims data.

Based on an analysis of claims data commissioned by us, we estimated that there were approximately 1.1 million patients diagnosed with lymphedema during the 12 months ended June 30, 2018.

By comparison, claims-based data estimated that approximately 1.4 million patients were diagnosed with lymphedema in a 12-month period as of the most recent data extraction in December of 2020.

This represents a 10.1% annualized increase in the number of patients diagnosed with lymphedema in a one-year period.

It is important to note that the 2020 time period was impacted by the pandemic.

We estimate that the addressable market opportunity for our Flexitouch system exceeds $5.0

billion in the United States, which is based on the number of patients diagnosed with lymphedema and our average selling price per device.

Steven Dean et al., it is estimated that more than 16

million people in the United States are living with lymphedema due to CVI.

This, in addition to the estimated five million individuals living in the U.S with cancer-related and primary lymphedema, increases the prevalence estimates to over 20 million individuals.

For people with cancer, the build-up of lymph fluid can be caused by surgery, especially when lymph nodes are removed, radiation therapy that can damage lymph nodes and vessels, infections that damage surrounding tissue or cause scarring and other conditions.

In the fourth quarter of 2016 we expanded the indications for use of the Flexitouch system.

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We estimate the market opportunity for our Flexitouch head and neck system is approximately $1 billion in the United States, which is based on 75% of the total number of patients suffering from cancers of the head and neck and our average selling price per device.

In June 2020, a study published in Supportive Care in Cancer recognized the effectiveness of Flexitiouch in treating patients with head and neck related lymphedema.

In June 2020, a study published in Supportive Care in Cancer recognized the effectiveness of Flexitouch in treating patients with head and neck related lymphedema.

The study, led by Vanderbilt University was a pilot randomized clinical trial reflecting statistically significant reductions in swelling, pain and improvements in the ability to swallow.

In addition, in September 2021, we initiated a randomized, controlled clinical trial evaluating the effectiveness of our Flexitouch Plus system for the treatment of head and neck lymphedema.

This study will represent the largest randomized, controlled clinical trial ever conducted for the treatment of head and neck cancer-related lymphedema.

The trial will consist of approximately 250 subjects enrolled at six clinical sites and will span the next two years.

Current Treatment and Limitations

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Enhancing standard of care treatments for CVI with our pneumatic compression systems has been proven to reduce the recurrence of ulcer formations as well as recurrent skin infections (cellulitis) leading to better patient quality of life and lower overall cost of clinical care.

Our goal is to become a leader in the at-home treatment of chronic diseases.

Overview of Bronchiectasis and Cystic Fibrosis

Bronchiectasis is a COPD-associated condition where the lung’s bronchi become inflamed, widened, permanently damaged and scarred.

As more of the bronchial wall thickens, mucus gets trapped, creating a breeding ground for infection.

The inability to fully clear mucus and pathogens from the lungs can result in a chronic cycle of infections and inflammation.

Airway clearance therapies help break this vicious cycle and need to be used regularly to maintain a healthy respiratory system.

Cystic fibrosis is an inherited disease that causes thickened mucus to form in the lungs, pancreas and other organs.

In the lungs, this mucus blocks the airways, creating lung damage and making it hard to breathe.

There is no cure for COPD or cystic fibrosis.

Market Opportunity

Bronchiectasis is one of the most common respiratory diseases with over 500,000 U.S.

adults diagnosed and is estimated to be growing in the high single-digits annually.

More than 16 million people in the U.S.

are living with COPD and it is estimated that over 4 million of them may be affected by bronchiectasis.

High frequency chest wall oscillation is used to treat bronchiectasis and over 40 other International Classification of Disease (“ICD”)-10 diagnosis codes.

Over 30,000 people in the U.S.

struggle with the effects of cystic fibrosis every day.

Cystic fibrosis treatment includes airway clearance therapy, of which HFCWO is the standard of care.

The Cystic Fibrosis Foundation Patient Registry reports 77% of cystic fibrosis patients use HFCWO.

Current Treatment and Limitations

Airway clearance therapy (“ACT”) utilizes physical or mechanical means of percussion or vibration to mobilize mucus and phlegm to facilitate airway clearance by coughing.

ACT options include huff coughing, chest physiotherapy performed by a therapist or caregiver, active cycle breathing, positive expiratory pressure devices and HFCWO vests.

These treatments need to be performed daily to support bronchial hygiene for at-risk respiratory patients.

Adherence to treatments and effectiveness of treatments are a significant challenge for patients with these chronic conditions.

AffloVest is a HFCWO therapy vest that has eight anatomically positioned oscillating motors that create individual pressure waveforms to target all lobes of the lungs to loosen, thin and mobilize lung secretions.

Our goal is to become a leader in the at-home treatment of underserved chronic diseases.

We intend to leverage our established product, service and fulfillment platforms to be a global provider of clinically proven easy-to-use and cost-effective solutions.

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● Increase awareness of our solutions and establish them as the standards of care.

We believe that many patients with lymphedema and chronic venous insufficiency are undiagnosed or undertreated, and we intend to further educate physicians, nurses, therapists, patients and payers to raise awareness of these diseases, the associated health burdens of such diseases on patients and society, and the clinical and economic benefits of using our products.

We intend to continue promoting this awareness through training and educating clinicians, advertising campaigns, exhibiting at tradeshows and physician meetings and publishing additional clinical and economic outcome data demonstrating the benefits of our solutions.

Our ongoing marketing initiatives focus on increasing referrals from physicians trained in venous and lymphatic diseases as well as oncology.

We believe that many patients with lymphedema, chronic venous insufficiency and bronchiectasis remain undiagnosed or undertreated.

We intend to further educate physicians, nurses, therapists, patients, payers and DME providers to raise awareness of these diseases, the associated health burdens of such diseases on patients and society, and the clinical and economic benefits of using our products.

Further, we intend to continue promoting this awareness through training and educating clinicians, advertising campaigns, exhibiting at tradeshows and physician meetings and publishing additional clinical and economic outcome data demonstrating the benefits of our solutions.

Our ongoing marketing initiatives focus on increasing referrals from physicians trained in the diagnosis and treatment of venous and lymphatic diseases, oncology and chronic respiratory conditions.

In addition, we plan to launch more extensive direct-to-provider and patient marketing programs that we believe will further increase awareness of our solutions.

● Expand our direct sales and customer support teams.

We plan to expand our direct sales and marketing organization to drive greater product adoption by patients and their clinicians.

● Expand our sales and customer support teams.

We plan to expand our direct sales and marketing organization to drive greater product adoption by patients suffering from lymphedema and CVI and their clinicians.

We also intend to expand and support our respiratory DME channels, in an effort to help demonstrate HFCWO as a staple among the host of treatments they bring to chronic respiratory patients.

We intend to strengthen our distribution network by continuing to recruit, train and retain talented sales representatives.

With an expanded sales force, our goal is to expand the existing prescriber base.

● Introduce new features and products to grow our technology platform.

● Demonstrate ongoing innovation to grow our technology platform and expand adoption of our therapies.

We are actively developing new products and features for our portfolio in order to expand the number of patients using our products and allow us to enter new clinical adjacencies.

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We intend to continue this strategic approach to further expand coverage for our solutions, as well as to meet payer-specific requirements on behalf of patients.

● Introduce our solutions outside the United States.

We currently market our products almost exclusively within the United States.

While our current plan is to continue to focus our direct sales efforts on penetrating the U.S.

market, we may explore expansion outside of the United States in the future.

We market our Flexitouch and Entre systems as at-home therapies for the treatment of lymphedema and chronic venous insufficiency.

We market Flexitouch and Entre systems as at-home therapies for the treatment of lymphedema and chronic venous insufficiency.

We market AffloVest as an at-home therapy intended to promote airway clearance.

These products have received 510(k) clearance from the FDA to be marketed in the United States.

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The system can be programmed to a variety of pressures delivering a prescribed treatment customized to meet the patient's needs.

We acquired the AffloVest business in September 2021.

The AffloVest is the first truly portable high-frequency chest wall oscillation (HFCWO) vest.

The device is battery-powered and affords patients the ability to ambulate while receiving treatment, as well as increases the likelihood that their treatment will travel with them.

The AffloVest treats patients with retained pulmonary secretions resulting from bronchiectasis, cystic fibrosis and a host of neuromuscular disorders.

The AffloVest offers various treatment modes and intensities.

The user can set and store their personalized default treatment settings.

Our AffloVest system has received 510(k) clearance as a HFCWO device and is intended for promoting airway clearance and improvement of bronchial drainage by enhancing mobilization of bronchial secretions where manipulation of the thorax is the physician’s choice of treatment.

Clinical Results and Studies

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We have developed a significant body of clinical data supporting the efficacy and safety of our products.

We intend to continue to invest in additional studies to support peer-reviewed, published articles that evidence the clinical and economic

benefits of our solutions as compared to traditional treatments.

We intend to continue to invest in additional studies to support peer-reviewed, published articles that evidence the clinical and economic benefits of our solutions as compared to traditional treatments.

To date, more than 25 studies regarding the safety and efficacy of our products have been completed, in which over 2,100 subjects have been included.

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The greatest contributor to this change was a 54% reduction in outpatient hospital costs from $1,517 to $694 (p<0.001).

Total costs per non-cancer-related lymphedema patients, excluding durable medical equipment costs, were reduced by 36%

from $2,937 to $1,883 (p=0.007).

Total costs per non-cancer-related lymphedema patient, excluding durable medical equipment costs, were reduced by 36% from $2,937 to $1,883 (p=0.007).

Outpatient hospital costs for the non-cancer patients declined by 65% from $1,726 to $606 (p<0.001).

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An open label, randomized wait-list controlled trial published in the Supportive Care in Cancer journal supported the safety and feasibility of the Flexitouch system APCD for the treatment of secondary lymphedema in head and neck cancer, or HNC, patients.

This study was conducted in the United States and included 49 head and neck cancer patients.

This study was conducted in the United States and included 49

head and neck cancer patients.

Eligible patients had completed treatment for HNC, were disease free, and had lymphedema at enrollment.

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Relative to patients in the control group, patients using the Flexitouch system had statistically significant improvement in swallowing solids (p=0.016) and mucous related symptoms (p=0.050, d=−0.80 and −0.57 respectively) on the Vanderbilt Head and Neck Symptom Survey plus General Symptom Survey.

AffloVest Clinical Evidence

The use of the AffloVest in patients with cystic fibrosis (“CF”) has been studied and reported on in non-peer reviewed journals.

In 2016, a prospective study was conducted of 25 patients who were asked to augment their current airway treatment regimen with the AffloVest.

These patients ranged from 11 to 18 years old and used AffloVest for periods of one month to almost a full year.

Twelve patients demonstrated measurable improvement in multiple lung function tests:

Forced Vital Capacity (“FVC”) increased 15.22%, Forced Expiratory Volume 1 (“FEV1”) increased 17.41% and Forced Expiratory Flow (“FEF”) 25-75% increased 11.21% respectively.

Eleven of the 12 patients who demonstrated positive improvement in their lung scores, and in whom those scores were maintained for nearly one year, had been using air bladder style vests previously.

The remaining 13 patients saw no significant increase, and no decrease, in lung function.

A prospective, single-site study was published in Respiratory Therapy in 2018 and compared the impact of traditional compressor/bladder-style HFCWO vests with that of the mobile, battery-powered AffloVest on lung function measures in 32 healthy patients.

The results showed no significant difference between the technologies in increased airflow in the lungs during treatment.

AffloVest performed favorably to traditional vests in that it produced no significant decline in forced vital capacity or forced expiratory volume, while the traditional vests did show statistically significant declines in these measures.

In 2020, a chart review study of 30 patients compared the need for antibiotic therapy due to exacerbation, based on the number of prescriptions, emergency room visits and hospitalizations in the period approximately six months before each patient started AffloVest HFCWO therapy compared to the period six months after initiating AffloVest HFCWO therapy.

The results showed a 96.2% reduction in hospitalizations, 82.4% reduction in emergency room visits, and 87.3% reduction in antibiotic usage for the post-AffloVest group.

The AffloVest has a history of clinical evidence, and Tactile Medical is committed to supporting additional studies to further support the benefits of this differentiated HFCWO technology.

Sales and Marketing

Unlike many of our competitors, we utilize a direct-to-patient and -provider model to market our solutions directly to patients and clinics, whereby we disintermediate the traditional durable medical equipment channel, providing high-quality customer service and capturing both the manufacturer and distributor margins.

The below chart shows this disintermediation:

Our direct-to-patient and -provider model is composed of a direct sales force, patient training and support, reimbursement capabilities and medical expertise to expand awareness, garner referrals and obtain payment for our products.

As of December 31, 2020, we employed a field staff of 255 Tactile employees, made up of sales and service representatives, as well as managers, who provide coverage throughout the United States.

Furthermore, we have a team of approximately 30 Field Support Specialists, who assist our field staff by conducting patient demonstrations and collecting necessary medical records and documentation.

The Field Support Specialists’ role provides more time for our direct field staff to focus on engaging with clinicians and growing our prescriber base.

Unlike many of our competitors, we utilize a direct-to-patient and -provider model to market our pneumatic compression portfolio solutions directly to patients and clinics, providing high-quality customer service and capturing both the manufacturer and distributor margins.

The direct channel allows us to focus on two of our primary call points, vascular and oncology.

For AffloVest, we utilize the respiratory DME channel as our go-to-market method.

Our utilization of the thousands of respiratory DME representatives gives us access to a larger channel than competitors that market and sell directly.

The respiratory DME channel also already serves the chronic respiratory community, enabling them to identify candidates who are regularly on other

respiratory therapies (such as oxygen, nebulizers, non-invasive ventilators, etc.) and who might benefit from the use of our AffloVest.

The below chart reflects these models:

Our direct-to-patient and -provider lymphedema business is composed of a direct sales force, patient training and support, reimbursement capabilities and medical expertise to educate, expand awareness, coordinate referrals and obtain payment for our products.

The chart below describes our U.S.

direct-to-patient and -provider model.

Our marketing team leads our efforts in brand development, product messaging, tradeshow attendance, educational forums, website development, social media and advertising.

direct-to-patient and -provider model for our lymphedema business.

We sell the AffloVest to DME providers in the U.S.

that service patients and bill third party payers for the product.

The DME providers obtain the prescription and coordinate with patients and payers to determine insurance eligibility and payment.

These DME providers are staffed by trained respiratory therapists who are required in some states to set up patients on at-home prescription respiratory therapies like AffloVest.

We market and educate DME providers and clinicians about the AffloVest advantages.

As of December 31, 2021, we also employed a small group of respiratory specialists, who educate DME provider representatives, provide product demonstrations for targeted clinicians and support technical questions related to the AffloVest.

The chart below describes our DME model.

As of December 31, 2021, we employed a field staff of 252 Tactile employees, made up of sales and service representatives, as well as managers, who provide support throughout the United States for our lymphedema and respiratory therapies.

Our marketing team leads our efforts in brand development, product messaging, tradeshow attendance, medical educational forums, website development, social media and advertising.

Reimbursement, Payer Relations and Customer Support Process

Private insurers and other payers represented approximately 71% and 72% of our revenue in 2020 and 2019, respectively, while Medicare represented approximately 16% and 11% of our revenue in 2020 and 2019, respectively, and Veterans Administration hospitals represented approximately 13% and 17% of our revenue in 2020 and 2019, respectively.

Private insurers and other payers represented approximately 68% and 71% of our revenue in 2021 and 2020, respectively, while Medicare represented approximately 17% and 16% of our revenue in 2021 and 2020, respectively, Veterans Administration hospitals represented approximately 13% of our revenue in both 2021 and 2020, and DME distributors represented approximately 2% of our revenue in 2021.

When we sell our solutions directly to patients, we generally bill third-party payers, such as commercial insurance or Medicare, on behalf of our patients and bill the patient for their copayment obligations and deductibles.

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Our reimbursement function includes payer relations and reimbursement operations.

Our payer relations function focuses on payer policy development, education, contract negotiations, and data analysis.

Our payer relations function focuses on payer policy development and education for our entire portfolio, as well as contract negotiations for our direct business, and data analysis.

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These contracts allow us to be an in-network provider for patients, enabling them to access our systems at a competitive rate and copay comparable to other suppliers and easing our administrative burden in processing authorizations and claims.

We have enjoyed a consistent commercial payer approval rate of greater than 80% for the last ten years, and a greater than 90% Medicare claims submitted approval rate (post-arbitration and based on the number of claims, not dollar amount of claims, submitted across all our products) since we began doing business with Medicare in 2007.

We have enjoyed a consistent commercial payer approval rate of greater than 80% for the last ten years, and a greater than 90% Medicare claims submitted

approval rate (post-arbitration and based on the number of claims, not dollar amount of claims, submitted across all our products) since we began doing business with Medicare in 2007.

We have an in-depth understanding of specific payer coverage criteria, and our submission materials are tailored to address an individual payer's distinct requirements.

Our dedicated customer service team is available to answer patient questions regarding reimbursement, account status, device operation and troubleshooting during normal business hours.

We receive no additional reimbursement for patient support, but provide high-quality customer service and continuity of care to enhance patient comfort, satisfaction, compliance and safety with our products.

We receive no additional reimbursement for patient support, but provide high-quality customer service and continuity to enhance patient comfort, satisfaction, compliance and safety with our products.

Our Flexitouch Plus system controller is reimbursed under HCPCS code E0652, and our Entre system controller is reimbursed under HCPCS code E0651.

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To date, over 1,100 payers have paid for our products.

Our respiratory DME partners contract directly with commercial payers and regularly serve as a consolidated source for various respiratory-related therapies.

The DME distributor obtains the prescription and, in coordination with the patient and payer, determines insurance eligibility and payment.

The AffloVest is reimbursed under HCPCS code E0483, high frequency chest wall oscillation for bronchiectasis, and over 40 other ICD-10 diagnosis codes.

Research and Clinical Operations

We are committed to ongoing research and development as part of our efforts to be at the forefront of physician and patient preference in the area of chronic disease, especially lymphedema and chronic venous insufficiency.

Our research and development and clinical operations functions include scientists, clinical monitors and project managers with expertise in pneumatics, electronics, garment design, embedded software, mechanical design, sensors, manufacturing technologies and clinical trial management.

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Our quality management system has been certified to ISO 13485:2003 in 2012, 2014 and 2017, and to ISO 13485:2016 in 2019, 2020 and 2021.

In 2021, we also received our Medical Device Single Audit Program (“MDSAP”) certification.

An MDSAP allows an MDSAP-recognized Auditing Organization to conduct a single regulatory audit of a medical device manufacturer that satisfies the relevant requirements of the regulatory authorities participating in the program.

Many of our manufacturers’ quality management systems also have been certified to ISO.

Order Fulfillment and Patient Education

Once we have a complete patient order and appropriate documentation from the payer, we package and ship a system, configured to their physician's prescription, directly to the patient.

With respect to our Flexitouch and Entre systems, once we have a complete patient order and appropriate documentation from the payer, we package and ship the system, configured to their physician's prescription, directly to the patient.

We utilize third-party carriers for delivery and pick up of our devices.

After delivery and when requested by our patient, we coordinate a virtual or at-home visit from one of our licensed, contract trainers to provide education, clinical support or customer service.

After delivery and when requested by our patient, we coordinate a virtual or at-home visit from one of our licensed trainers to provide education, clinical support or customer service.

These trainers are healthcare professionals, licensed in their state of residence, instructed on proper use of our products.

Patient visits are coordinated from our offices in Minneapolis and training sessions are assigned by our staff.

Our AffloVest product is packaged and shipped to the DME provider or drop-shipped directly to a patient, as directed.

We utilize third-party carriers for delivery and pick up of our AffloVest products.

In situations in which the product is shipped to the DME provider, they are responsible for completing the delivery to the patient.

Upon receipt of the product, patients are able to utilize materials included with the product to complete self-training or engage with the DME provider for additional support.

The pneumatic compression pump market is composed of a number of manufacturers and distributors of pneumatic compression pumps.

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and NormaTec Industries.

If we expand internationally, we expect that Arjo AB would become a competitor, in addition to other potential international competitors.

Given the growth of the pneumatic compression pump market, we expect that the industry will become increasingly competitive in the future.

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market position supported by a direct sales force.

We believe our manufacturing competitors' complete reliance on durable medical equipment (DME) distribution intermediaries compresses their margins and limits their ability to invest in clinical evidence and product features that address consumer preferences.

We believe our manufacturing competitors' complete reliance on DME distribution intermediaries compresses their margins and limits their ability to invest in clinical evidence and product features that address consumer preferences.

To pursue a direct-to-patient and -provider sales model, our manufacturing competitors would need to meet national accreditation and state-by-state licensing requirements, secure Medicare billing privileges, as well as compete directly with the home medical equipment providers that many rely on across their entire home care businesses.

We anticipate that, given the size of the available market, we will face increased competition in the future as existing companies and competitors develop new or improved products and distribution strategies and as new companies enter the market with new technologies and distribution strategies.

and as new companies enter the market with new technologies and distribution strategies.

Our ability to compete successfully and to increase our market share is dependent upon our reputation for providing responsive, professional and high-quality products and services and achieving strong customer satisfaction.

Competitors within the airway clearance market consist largely of three other HFCWO vest manufacturers:

Hill-Rom, Philips Medical and Electromed.

While we believe AffloVest’s portability and our use of DME distributors are differentiators, we anticipate that given the size of the airway clearance market, we will continue to see vigorous competition.

We intend to further expand and support our respiratory DME relationships, as well as invest in product development to better support this still-underserved area.

Government Regulation

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The type of marketing authorization is generally linked to the classification of the device, which is based on the degree of risk the FDA determines to be associated with a device and the level of regulatory control deemed necessary to ensure the device's safety and effectiveness.

Our Flexitouch and Entre systems (all models) are Class II devices under the FDA classification system requiring 510(k) clearance.

Our Flexitouch, Entre and AffloVest systems (all models) are Class II devices under the FDA classification system requiring 510(k) clearance.

We obtained 510(k) clearance for our Flexitouch system in October 2006 and for a discontinued predecessor system in July 2002.

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We obtained 510(k) clearance for our Entre system in May 2015.

510(k) clearance for the AffloVest system was obtained in 2013.

All of our Class II devices have obtained 510(k) clearance and that status remains current as of the date of this filing.

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Centers for Medicare and Medicaid Services, or CMS, requires providers of products or services to attain and maintain accreditation in order to participate in federally funded healthcare programs.

To attain and maintain accreditation, companies are required to institute policies and procedures that, among other things, formalize the interaction of the company with patients.

To attain and maintain accreditation, companies are required to institute policies and procedures that, among other things,

formalize the interaction of the company with patients.

Accrediting bodies that are approved (“deemed”) by CMS will perform audits of these policies and procedures every three years.

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The statute is very broad, but includes statutory safe harbors (such as a discount safe harbor) to ensure that if a company tailors its conduct in accordance with a safe harbor, it will not violate the statute.

The Health and Human Services Office of Inspector General made significant changes to the Anti-Kickback Statute’s regulatory safe harbors in November 2020 by modifying certain safe harbors and creating new safe harbors.

The changes were published as part of the Trump Administration’s Regulatory Sprint to Coordinated Care.

The new and expanded safe harbors will not have a material impact on our overall duty to comply with the Anti-Kickback Statute.

Noncompliance with the Federal Anti-Kickback Statute can result in civil, administrative and criminal penalties, restrictions on our ability to operate in certain jurisdictions, and exclusion from participation in

Medicare, Medicaid or other federal healthcare programs.

In addition, to the extent we are found to not be in compliance, we may be required to curtail or restructure our operations.

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The federal government may also seek civil monetary penalties for a wide variety of other conduct, including offering remuneration to influence a Medicare or Medicaid beneficiary's selection of providers and violations of the Federal Anti-Kickback Statute.

Although we believe that we are in compliance with the Federal False Claims Act as well as the Civil Monetary Penalties laws, if we are found in violation of the same, penalties include fines for each false claim violation of the Federal False Claims Act and varying amounts based on the type of violation of the Civil Monetary Penalties Law, plus up to three times the amount of damages that the federal government sustained because of the act of that person.

If we are found to be in violation of the Federal False Claims Act or the Civil Monetary Penalties laws, penalties include fines for each false claim violation of the Federal False Claims Act and varying amounts based on the type of violation of the Civil Monetary Penalties Law, plus up to three times the amount of damages that the federal government sustained because of the act of that person.

In addition, the federal government may also seek exclusion from participation in all federal health care programs.

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Physicians and other clinicians, who are responsible for prescribing our products for patients, are expected to create and maintain the medical records that form the basis for the claims we submit to Medicare and other insurers.

Any failure by physicians and other clinicians to properly document the medical records for patients using our products could invalidate claims, impair our ability to collect submitted claims and subject us to overpayment liabilities, Federal False Claims Act liabilities and other penalties including exclusion from the Medicare, Medicaid or private insurance programs.

Any failure to properly document the medical records for patients using our products could invalidate claims, impair our ability to collect submitted claims and subject us to overpayment liabilities, Federal False Claims Act liabilities and other penalties including exclusion from the Medicare, Medicaid or private insurance programs.

State fraud and abuse provisions.

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Travel Act (which in some instances addresses private-sector or commercial bribery both within and outside the United States).

Also, a number of other countries have their own domestic and international anti-corruption laws, such as the UK Bribery Act 2010.

Also, a number of

other countries have their own domestic and international anti-corruption laws, such as the UK Bribery Act 2010.

We could be held liable under the FCPA and other anti-corruption laws for the illegal activities of our employees, representatives, contractors, collaborators, agents, subsidiaries, or affiliates, even if we did not explicitly authorize such activity.

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Department of Health and Human Services, or HHS, information related to payments and other transfers of value provided to physicians and teaching hospitals (“covered recipients”) and certain ownership and investment interests held by physicians and their immediate family members.

In 2021, this information expands to include tracking and reporting for additional covered recipients, namely physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and certified nurse-midwives.

Beginning in 2021, tracking and reporting was expanded to include additional covered recipients, namely physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and certified nurse-midwives.

Failure to submit timely, accurate and complete information may result in civil monetary penalties of up to an aggregate of $150,000 per year and up to an aggregate of $1.0 million per year for "knowing failures to report."

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Environmental Regulation

Our research and development and manufacturing processes and operations involve the controlled use of hazardous materials, including flammables, toxics and corrosives and produce hazardous chemical waste products.

of-life handling or disposition of products, and environmental protection, including those governing the generation, storage, handling, use, transportation and disposal of hazardous or potentially hazardous materials.

Our research and development and manufacturing processes and operations may involve the controlled use of hazardous materials, including flammables, toxics and corrosives and produce hazardous chemical waste products.

We are subject to numerous foreign, federal, state, and local environmental, health and safety laws and regulations relating to, among other matters, safe working conditions, product stewardship and end-of-life handling or disposition of products, and environmental protection, including those governing the generation, storage, handling, use, transportation and disposal of hazardous or potentially hazardous materials.

Some of these laws and regulations require us to obtain licenses or permits to conduct our operations.

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Failure to comply with applicable foreign regulatory requirements may subject a company to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, criminal prosecution or other consequences.

The European Union is the primary regulator in Europe, which has adopted numerous directives and has promulgated voluntary standards regulating the design, manufacture, clinical trials, labeling and adverse event reporting for medical devices.

Medical devices that comply with the requirements of applicable directives will be entitled to bear the CE conformity marking, indicating that the device conforms with the essential requirements of the applicable directives and, accordingly, can be commercially distributed throughout the member states of the European Union, and other countries that comply with or mirror these directives.

The European Union is the primary regulator in Europe, which has adopted numerous directives/regulations and has promulgated standards regulating the design, manufacture, clinical trials,

labeling and adverse event reporting for medical devices.

Medical devices that comply with the requirements of applicable directives/regulations will be entitled to bear the CE conformity marking, indicating that the device conforms with the essential requirements of the applicable directives/regulations and, accordingly, can be commercially distributed throughout the member states of the European Union, and other countries that comply with or mirror these directives.

We have the authorization to affix the CE Mark to our Flexitouch (classic) system to commercialize these devices in the European Union.

The notified body who inspected us issued our ISO 13485 certification in October 2014 and our EC-Certificate in December 2014.

In March 2012, we received our Medical Device License in Canada for our Flexitouch (classic) system and that license remains current as of the date of this filing.

The notified body who inspected us issued our initial ISO 13485 certification in October 2014 and our EC-Certificate in December 2014.

In March 2012, we received our Medical Device License in Canada for our Flexitouch (classic) system and in June 2021 for our Flexitouch (Plus) system.

In October 2021, we discontinued our Flexitouch (classic) system Medical Device License in Canada, but our Flexitouch (Plus) system License remains current as of the date of this filing.

Third-Party Reimbursement

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Obtaining a coverage determination, whether an NCD or LCD, is a time-consuming, expensive and highly uncertain endeavor, especially for a new device.

Under a NCD that has been effective

since January 14, 2002, pneumatic compression devices, or PCDs, including our products, are covered for the treatment of lymphedema or for the treatment of chronic venous insufficiency with venous stasis ulcers.

Under a NCD that has been effective since January 14, 2002, pneumatic compression devices, or PCDs, including our products, are covered for the treatment of lymphedema or for the treatment of chronic venous insufficiency with venous stasis ulcers.

A LCD, administered by the four Medicare Administrative Contractors responsible for processing durable medical equipment claims, sets forth additional coverage criteria that impacts Medicare coverage for our products.

Our Medicare business has increased to 16% of revenue in 2020 compared to 11% in 2019.

Our Medicare business was 17% of revenue in 2021 compared to 16% in 2020.

Because Medicare criteria is extensive, we have a team dedicated to educating prescribers to help them understand how Medicare policy affects their patients and the medical record documentation needed to meet both NCD and LCD requirements.

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Commercial payers that reimburse for our products do so in a variety of ways, depending on the insurance plan's policies, employer and benefit manager input, and contracts with their provider network.

Moreover, Medicaid programs and some commercial insurance plans, especially Medicare Advantage plans (commercial insurers that are administering Medicare benefits to certain beneficiaries), are frequently influenced by Medicare coverage determinations.

Moreover, Medicaid programs and some commercial insurance plans, especially Medicare Advantage plans

(commercial insurers that are administering Medicare benefits to certain beneficiaries), are frequently influenced by Medicare coverage determinations.

In working with payers who follow Medicare criteria, we have focused on clear communications with insurers to ensure mutual understanding of criteria interpretation, which differs significantly among the plans from very restrictive to quite lenient, and we then work closely with prescribers to educate them accordingly.

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Our patent portfolio consists of three sets of patents, including patents relating to our Flexitouch system and other wearable compression-related technologies.

As of December 31, 2020, we owned more than 165 issued patents globally, of which 41 were issued U.S.

As of December 31, 2020, we owned 57 patent applications pending globally, of which 19 were patent applications pending in the United States.

As of December 31, 2021, we owned about 190 issued patents globally, of which 57 were issued U.S.

As of December 31, 2021, we owned about 39 pending patent applications pending globally, of which 15 were pending patent applications in the United States.

issued patents have varying patent terms, expiring between 2022 and through at least 2040, subject to payment of required maintenance fees, annuities and other charges.

patents covering various aspects of our Flexitouch system expired in 2017.

We have registered the trademarks Flexitouch and the Flexitouch logo design with the United States Patent and Trademark Office on the Principal Register.

We rely in the United States on common law rights to the Entre, Tactile Medical and Tactile Medical design trademarks and have applied to register the Tactile Medical trademark in the United States, Australia, China, the European Union and Japan.

We have registered the trademarks Tactile Medical, Flexitouch, the Flexitouch logo design, AffloVest, and AffloVest Pro with the United States Patent and Trademark Office on the Principal Register.

We rely in the United States on common law rights to the Entre and Tactile Medical design trademarks and have applied to register the Tactile Medical trademark in Australia, China, the European Union and Japan.

Our business is affected by seasonality.

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Human Capital Resources

As a company, Tactile’s mission is to develop and sell solutions that help increase clinical efficacy, reduce overall healthcare costs and improve the quality of life for patients with chronic conditions by treating them at home.

As a company, our focus is on developing and selling solutions that help increase clinical efficacy, reduce overall healthcare costs and improve the quality of life for patients with chronic conditions by treating

them at home.

We believe the strength of our employees is the cornerstone to achieving these goals.

As of December 31, 2020, we had 707 employees, a 12% increase over 2019.

We have 285 employees who are based throughout the United States and 422 who are primarily based in our corporate/manufacturing locations in the Minneapolis metropolitan area.

Our employees are our most important assets and they set the foundation for our ability to achieve our strategic objectives.

The success and growth of Tactile’s business depends, in large part, on our ability to attract, retain and develop a diverse population of talented and high-performing employees at all levels of our organization, including the individuals who comprise our domestic workforce as well as executive officers and other key personnel.

To succeed in a competitive labor market, Tactile has developed key recruitment and retention strategies, objectives and measures that we focus on as part of the overall management of our business.

As of December 31, 2021, we had 988 employees.

We have 537 employees who are based throughout the United States, as well as 451 employees who are primarily based in our corporate/manufacturing locations in the Minneapolis metropolitan area.

Our employees are our most important resource and they set the foundation for our ability to achieve our strategic objectives.

The success and growth of our business depends, in large part, on our ability to attract, retain and develop a diverse population of talented and high-performing employees at all levels of our organization, including the individuals who comprise our workforce as well as executive officers and other key personnel.

To succeed in a competitive labor market, we have developed key recruitment and retention strategies, objectives and measures that we focus on as part of the overall management of our business.

These strategies, objectives and measures form the pillars of our human capital management framework and are advanced through the following programs, policies and initiatives:

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Rewarding and supporting our employees is essential to Company morale.

To ensure we maintain a competitive salary and benefits package, we utilize an independent third party to evaluate employee wages.

To maintain a competitive salary and benefits package, we utilize an independent third party to evaluate employee compensation.

We continue to explore and utilize benefits options in line with our growing and diverse workforce to attract and retain top talent.

These benefits include but are not limited to retirement savings, employee stock purchase plans, a variety of health insurance options, including dental and vision, discounts on healthy foods and fitness memberships, disability insurance, and paid maternity/paternity leave.

These benefits include but are not limited to retirement savings, an employee stock purchase plan, a variety of health insurance options, including dental and vision, discounts on healthy foods and fitness memberships, disability insurance, and paid maternity/paternity leave.

Our Remote Work Policy also allows for a flexible work schedule and location, depending on business needs and the specific role.

Diversity, Equity, and Inclusion :

Tactile considers diversity, equity, inclusion, and employee engagement as cornerstones to the future growth of the business.

We consider diversity, equity, inclusion, and employee engagement as cornerstones to the future growth of the business.

Our diverse and inclusive workplace encourages different perspectives and ideas, which we believe enables better business decisions and rapid innovation.

We are committed to constructive and critical self-evaluation that leads to concrete steps that continually enhance and strengthen our corporate culture.

In 2020, we conducted an anonymous employee survey to identify areas of improvement, which included:

Based on employee feedback, we have assessed our company practices and developed goals to guide our diversity, equity, and inclusion initiatives including:

● Increased diversity awareness programs for all areas of our organization;

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We seek fair labor practices throughout our business, including from our partners and key suppliers who share our values for human rights, dignity, and respect.

We have implemented a Supplier Code of Conduct requiring the same commitment to human rights, fair labor practices, and anticorruption that we value at Tactile Medical.

We have implemented a Supplier Code of Conduct, requiring from our suppliers the same commitment to human rights, fair labor practices, and anticorruption that we value here at Tactile Medical.

Health and Safety :

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We provide all employees training on workplace safety and require employees to follow standards and practices supporting a safe and healthy work environment.

Our commitment to the health, safety, and

wellness of employees, patients, and business partners alike can be demonstrated by our expedient Covid-19 response.

Our commitment to the health, safety, and wellness of employees, patients, and business partners alike can be demonstrated by our expedient COVID-19 response.

We revamped our business processes to allow for social distancing, limited face-to-face interactions by operating virtually when able, and provided additional PPE for applicable employees while serving over 65,000 patients and avoiding employee lay-offs.

Talent and Retention:

In 2020, Tactile focused on recruitment, hiring, and retention to ensure the highest quality talent and best fit for specific roles and the Company.

Our recruitment efforts are expanding by assuring strong recruiting and hiring processes, and implementing an applicant tracking system.

This applicant tracking system will support continuous improvement in our hiring process and will be leveraged to coaching and employee growth.

We have also implemented a company intranet to facilitate employee inclusion, provide resources, and further transparent communication efforts.

In 2021, we focused on recruitment, hiring, and retention to ensure the highest quality talent and best fit for specific roles and the Company.

Our recruitment efforts are expanding through strong recruiting and hiring processes and implementing an applicant tracking system.

This applicant tracking system will support continuous improvement in our hiring process and will be leveraged for coaching and employee growth.

We have also implemented a company intranet to facilitate employee inclusion, provide resources, and advance transparent communication efforts.

The result of the culmination of the above is measured by our employee engagement.

We annually participate in survey conducted by a third-party resource in conjunction with the Top Workplace Award programs.

In 2020, our employees once again selected Tactile Medical as a Top Workplace in Minnesota for the 11 th year in a row.

We annually participate in a survey conducted by a third party in conjunction with the Top Workplaces employer recognition award program.

In 2021, our employees’ responses qualified Tactile Medical as a Top Workplace in Minnesota for the 12 th year in a row.

Available Information

We file annual, quarterly and current reports, proxy statements and other information with the SEC.

The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

We also make financial information, news releases and other information available on our corporate website at www.tactilemedical.com.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on this website as soon as reasonably practicable after we electronically file these reports and amendments with, or furnish them to, the SEC.

The information contained on or connected to our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this or any other report filed with the SEC.

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-K

Item 1. Business