What changed in this filing

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Item 1A. Risk Factors

2023-02-21 compared with 2022-02-23 · 205 added, 252 removed, 768 unchanged (37% of the section changed)

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Risks Related to Our Business, Operations and Strategy

The COVID-19 pandemic has adversely affected, and we expect that it will continue to adversely affect, our business, financial condition and results of operations.

The United States economy in general and our business specifically have been negatively affected by the COVID-19 pandemic.

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.

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.

Further, the extent to which the COVID-19 pandemic, including any resurgence or variant strains of the virus, will impact our business, financial condition and results of operations in the future will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on our clinician customers and their patients, our suppliers and our payers, the remedial actions, any vaccine mandates and stimulus measures adopted by governmental authorities, and to what extent normal economic and operating conditions can resume.

Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any related economic recession or depression that has occurred or may occur in the future.

The potential negative impacts of the COVID-19 pandemic on us include, but are not limited to:

● further reduced demand for our products;

● reductions in coverage or reimbursement of our products by payers;

● our inability to effectively conduct patient demonstrations and trainings;

● continued restricted access to clinicians, further reduced patient consultations and treatments, and additional or further closures of healthcare facilities and clinics;

● high absenteeism by our staff, prescribers and/or patients;

● disruptions to our supply chain;

● limitations on the ability of our workforce to perform their duties effectively;

● difficulties recruiting and retaining qualified employees, in part as a result of our vaccine policy;

● disruptions in the timely delivery of our products to patients;

● difficulties complying with the covenants and/or restrictions contained in our debt agreements;

● increased risks of phishing, ransomware and other cybersecurity attacks;

● delayed reviews and approvals by the U.S.

Food and Drug Administration;

● increased unemployment rates in the U.S., which may lead to a reduced number of patients with available insurance coverage, resulting in a reduction in the demand for our products;

● significant stock market volatility, resulting in extreme price and volume fluctuations;

● our inability to focus on or expend resources toward the expansion of our business;

● continued adverse impact on liquidity or sources of capital.

Given the evolving health, economic, social and governmental impacts of the COVID-19 pandemic, the potential impact that the COVID-19 pandemic could have on us remains uncertain, but it could have a material adverse effect on our business, financial condition and results of operations.

Our revenue is primarily generated from our Flexitouch system and we are therefore highly dependent on one product.

Our Flexitouch system accounted for 85% and 88% of our revenue for the years ended December 31, 2021 and 2020, respectively.

We expect that sales of this product will continue to account for the substantial majority of our revenue going forward.

Therefore, our ability to execute our growth strategy will depend not only upon increasing awareness of lymphedema, but also on the adoption of our Flexitouch system to treat this condition.

Many physicians and clinicians may have experience with, and/or invested substantial resources in, developing expertise in traditional or alternative treatments for lymphedema, which may make them less willing to adopt our Flexitouch system.

If our Flexitouch system fails to achieve wide market acceptance for any reason, our business, financial condition and results of operations could be adversely affected.

Our long-term growth depends on awareness and adoption of our products.

A primary growth strategy is to establish our products as the standard of care for the treatment of chronic diseases.

In order to achieve this growth strategy, we must:

● increase clinician and consumer awareness of these diseases, which are often undertreated;

● introduce the clinical and economic benefits of our solutions to physicians, therapists and other clinicians across several specialties and in various clinical settings;

● demonstrate consistent coverage and reimbursement for our solutions by private payers, Medicare, the Veterans Administration and certain Medicaid programs.

Clinicians may not adopt our solutions as the standard of care for lymphedema, chronic venous insufficiency and bronchiectasis or may not prescribe our products for a number of reasons, including:

● our inability to educate a sufficient number of clinicians on these diseases or our products;

● the unavailability or inadequacy of insurance coverage or reimbursement for our products;

● failure of evidence supporting clinical benefits or cost-effectiveness of our products over existing alternatives to convince clinicians to change their treatment methods;

● resistance from clinicians to replace traditional treatments with our solutions.

We believe recommendations and support of our products by key opinion leaders can influence market acceptance and adoption.

If these key opinion leaders choose to not support our products, our ability to achieve broad market acceptance for our products may be impaired.

Current or worsening economic conditions, including inflation, rising interest rates or a recession, could adversely affect our business and financial condition.

General global economic downturns and macroeconomic trends, including heightened inflation, capital market volatility, interest rate fluctuations, and economic slowdown or recession, may result in unfavorable conditions that could negatively affect demand for our products and exacerbate some of the other risks that affect our business, financial condition and results of operations.

Further, current or worsening economic conditions may adversely impact payment terms or rates, and the amount spent on healthcare generally, which could result in decreased demand for our products.

If we are unable to achieve and maintain adequate levels of coverage or reimbursement for our products, our business and results of operations will be adversely affected.

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If we are unable to expand coverage of our products by additional commercial payers, or if third-party payers that currently cover or reimburse for our products reverse or limit their coverage or reimbursement levels in the future, our business and results of operations could be adversely affected.

Further, we believe that future coverage and reimbursement may be subject to increased restrictions, such as additional preauthorization requirements, both in the United States and in international markets.

Further, we believe that future coverage and reimbursement may be subject to increased restrictions, such as additional preauthorization requirements.

If we are unable to satisfy any new preauthorization requirements or adjust to any future new restrictions on our products, third-party coverage and reimbursement may be limited in the future, which could have an adverse impact on our business.

If we are unable to expand, manage and maintain our direct sales and marketing organizations, we may not be able to generate anticipated revenue.

Our operating results are directly dependent upon the sales and marketing efforts of our employees.

If our direct sales force fails to adequately promote, market and sell our products, our sales may suffer.

Our direct sales force has recently experienced increased turnover and difficulty in recruiting qualified replacements.

We cannot assure you that this will not continue or that we will be able to reduce turnover in our direct sales force or recruit and retain quality candidates for our direct sales force.

Our future success will depend largely on our ability to hire, train, retain and motivate skilled sales personnel with significant technical

knowledge of lymphedema and chronic venous insufficiency.

Failure to hire or retain qualified sales personnel would prevent us from building awareness of our solutions, expanding our business and maintaining or generating additional sales.

If we are unable to maintain or expand our sales and marketing capabilities, we may not be able to effectively commercialize our products, which could have an adverse impact on our business.

Physicians and payers may require additional clinical studies prior to prescribing our products or to providing or maintaining coverage and reimbursement for our products.

Any subsequent clinical studies that are conducted and published may not be positive or consistent with our existing data, which would adversely affect the rate of adoption of our products.

Our success depends in large part on the medical and third-party payer community's acceptance of our products as being useful in treating patients with lymphedema, chronic venous insufficiency or bronchiectasis.

While the results of our studies collectively indicate a favorable safety and efficacy profile, the study designs and results may not be viewed as compelling to physicians and insurers.

In particular, payers and physicians may see limitations in the design and results of the studies because certain studies were not specifically based on our products, involved a limited number of total subjects or subjects outside the control group and made "quality of life"

conclusions based upon criteria contained in patient questionnaires that required subjective conclusions.

Certain physicians and insurers may also prefer to see longer-term efficacy data than we have produced or are able to produce.

If physicians or insurers do not find our data compelling or wish to wait for additional or independently-performed studies, they may choose not to prescribe or to provide coverage and reimbursement for our products.

We cannot assure you that any data that we or others generate will be consistent with that observed in the existing studies or that results will be maintained beyond the time points studied.

We also cannot assure you that any data that may be collected will be compelling to the medical community because the data may not be scientifically meaningful or may not demonstrate that our products are attractive alternatives to traditional treatments.

If subsequent studies are not positive or consistent with our existing data, adoption of our products may suffer and, accordingly, our business could be adversely impacted.

In addition, payers often conduct routine audits and request customer records and other documents to support our claims submitted for payment.

Recent increases in the frequency and scope of such audits, as well as findings as a result of such audits, could lead to our inability to collect receivables, or require us to repay amounts previously received, which could adversely affect our business and results of operations.

Changes to the level of Medicare coverage or coverage criteria for our products could have an adverse effect on our business and results of operations.

Determinations of which products or services will be reimbursed under Medicare can be developed at the national level through a National Coverage Determination, or NCD, by CMS, or at the local level through a Local Coverage Determination, or LCD, by the four regional Medicare Administrative Contractors, which are private contractors that process and pay claims on behalf of CMS for different regions.

These NCDs and LCDs may be subject to review and revision from time to time, which revisions may not be favorable for coverage of our products.

Additional NCDs or LCDs, or changes in NCDs or LCDs for our products, could have adverse effects on our business.

Further, we believe that a reduction or elimination of coverage or reimbursement of our products by Medicare would likely cause some commercial third-party payers to implement similar reductions in their coverage or reimbursement of our products.

Given the evolving nature of the healthcare industry and ongoing healthcare cost reforms, we are and will continue to be subject to changes in the level of Medicare coverage for our products, and unfavorable coverage determinations at the national or local level could adversely affect our business and results of operations.

We utilize third-party, single-source suppliers for some components and materials used in our products, and the loss of any of these suppliers could have an adverse impact on our business.

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Our ability to obtain components and materials may be affected by matters outside our control, including that our suppliers may cancel our arrangements on short notice, we may be relatively less important as a customer to certain suppliers and our suppliers may have disruptions to their operations.

Further, while so far we have not experienced any significant disruptions in the supply of components and materials to us due to the COVID-19 pandemic, the pandemic may result in such disruptions in the future.

If we are required to establish additional or replacement suppliers for any of our components or materials, it may not be accomplished quickly and our operations could be disrupted.

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In the event of a supply disruption, our product inventories may be insufficient to supply our patients.

If our third-party suppliers fail to deliver the required commercial quantities of materials on a timely basis and at commercially reasonable prices, and we are unable to find one or more replacement suppliers capable of production at a substantially equivalent cost in substantially equivalent volumes and quality on a timely basis, the continued commercialization of our products, the supply of our products to customers and the development of any future products would be delayed, limited or prevented, which could have an adverse impact on our business.

capable of production at a substantially equivalent cost in substantially equivalent volumes and quality on a timely basis, the continued commercialization of our products, the supply of our products to customers and the development of any future products would be delayed, limited or prevented, which could have an adverse impact on our business.

Our revenue is primarily generated from our lymphedema products and we are therefore highly dependent on these products.

Our lymphedema products accounted for 86% and 98% of our revenue for the years ended December 31, 2022 and 2021, respectively.

We expect that sales of our lymphedema products will continue to account for a majority of our revenue going forward.

Therefore, our ability to execute our growth strategy will depend not only upon increasing awareness of lymphedema, but also on the adoption of our products to treat this condition.

If our lymphedema products fail to achieve wide market acceptance for any reason, our business, financial condition and results of operations could be adversely affected.

We are increasingly dependent on sophisticated information technology and if we fail to effectively maintain or protect our information systems or data, including from cyber-attacks or data breaches, our business could be adversely affected.

We are increasingly dependent on sophisticated information technology for our products and infrastructure.

In some cases, we have outsourced elements of our operations to third parties, and, as a result, we manage a number of third-party vendors who may or could have access to our intellectual property, proprietary business information, personal information of patients and employees and other confidential information.

Our information systems, and those of third-party vendors with whom we contract, require an ongoing commitment of significant resources to maintain, protect and enhance existing systems and develop new systems to keep pace with continuing changes in information technology, evolving systems and regulatory standards and the increasing need to protect patient, customer and employee information, including personally-identifiable information.

In addition, given their size and complexity, these systems could be vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees, third-party vendors and/or business partners, or from cyber-attacks by malicious third parties attempting to gain unauthorized access to our products, systems or confidential information (including, but not limited to, intellectual property, proprietary business information and personal information of our patients, customers and employees).

We are subject to cyber-attacks, including state-sponsored cyber-attacks, industrial espionage, insider threats, computer denial-of-service attacks, computer viruses, ransomware and other malware, phishing attacks, payment fraud or other cyber incidents.

Cyber incidents are becoming more sophisticated, frequent and adaptive.

If we fail to maintain or protect our information systems and data integrity effectively, we could:

● lose existing customers;

● have difficulty attracting new customers;

● have problems in determining product cost estimates and establishing appropriate pricing;

● suffer outages or disruptions in our operations or supply chain;

● have difficulty preventing, detecting, and controlling fraud;

● have disputes with customers, physicians, and other healthcare professionals;

● have regulatory sanctions or penalties imposed;

● incur increased operating expenses;

● be subject to issues with product functionality that may result in a loss of data, risk to patient safety, field actions and/or product recalls;

● incur expenses or lose revenue as a result of a data privacy breach;

● suffer other adverse consequences.

We cannot assure you that cyber-attacks or data breaches will not occur or that systems issues will not arise in the future.

Any significant breakdown, intrusion, breach, interruption, corruption or destruction of these systems could have a material adverse effect on our business and reputation.

In addition, we accept payments for many of our sales through credit and debit card transactions, which are handled through a third-party payment processor.

As a result, we are subject to a number of risks related to credit and debit card payments, including that we pay interchange and other fees, which may increase over time and could require us to either increase the prices we charge for our products or experience an increase in our costs and expenses.

In addition, as part of the payment processing process, we transmit our patients' and clinicians' credit and debit card information to our third-party payment processor.

We may in the future become subject to lawsuits or other proceedings for purportedly fraudulent transactions arising out of the actual or alleged theft of our patients' credit or debit card information if the security of our third-party credit card payment processor is breached.

We and our third-party credit card payment processor are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply.

Failure to comply with these rules or requirements may result in fines and higher transaction fees, or we may lose the ability to accept credit and debit card payments from our patients, and there may be an adverse impact on our business.

Consolidation in the healthcare industry could lead to demands for price concessions, which may impact our ability to sell our products at prices necessary to support our current business strategies.

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We expect that market demand, government regulation, third-party coverage and reimbursement policies and societal pressures will continue to change the healthcare industry worldwide, resulting in further business consolidations and alliances among our payers, which may exert increasing downward pressure on the prices of our products in the future.

Changes to the level of Medicare coverage or coverage criteria for our products could have an adverse effect on our business and results of operations.

These NCDs and LCDs may be subject to review and revision from time to time, which revisions may not be favorable for coverage of our products.

Additional NCDs or LCDs, or changes in NCDs or LCDs for our products, could have adverse effects on our business.

Our long-term growth depends on awareness and adoption of our products.

A primary growth strategy is to establish our products as the standard of care for the treatment of chronic diseases.

In order to achieve this growth strategy, we must:

● increase clinician and consumer awareness of these diseases, which are often underserved;

● introduce the clinical and economic benefits of our solutions to physicians, therapists and other clinicians across several specialties and in various clinical settings;

● demonstrate consistent coverage and reimbursement for our solutions by private payers, Medicare, the Veterans Administration and certain Medicaid programs.

Clinicians may not adopt our solutions as the standard of care for lymphedema, chronic venous insufficiency and chronic respiratory conditions or may not prescribe our products for a number of reasons, including:

● our inability to educate a sufficient number of clinicians on these diseases or our products;

● the unavailability or inadequacy of insurance coverage or reimbursement for our products;

● failure of evidence supporting clinical benefits or cost-effectiveness of our products over existing alternatives to convince clinicians to change their treatment methods;

● resistance from clinicians to replace traditional treatments with our solutions.

We believe recommendations and support of our products by key opinion leaders can influence market acceptance and adoption.

If these key opinion leaders choose to not support our products, our ability to achieve broad market acceptance for our products may be impaired.

If we are unable to expand, manage and maintain our direct sales and marketing organizations, as well as our relationships with distributors, we may not be able to generate anticipated revenue.

Our operating results are directly dependent upon the sales and marketing efforts of our employees and upon our relationships with our distributors and their sales and marketing efforts.

If our direct sales force or our distributors fail to adequately promote, market and sell our products, our sales may suffer.

During most of 2020, 2021 and the first quarter of 2022, our direct sales force for our lymphedema product line experienced increased turnover and difficulty in recruiting qualified replacements.

Although we saw some level of recovery in 2022 after the first quarter, we cannot assure you that this recovery will continue or that we will be able to recruit and retain quality candidates for our direct sales force.

For our respiratory therapy products, we rely on DME providers for all aspects of sales, reimbursement, training and support.

Our ability to continue to market, distribute, and sell our airway clearance products may be at risk if key or multiple of the DME providers choose to stop selling our products or if we are unable to enter into relationships with new distributors.

Our future success will depend largely on our ability to hire, train, retain and motivate skilled sales personnel with significant technical knowledge of lymphedema and chronic venous insufficiency, and our ability to maintain and expand relationships with our current, and enter into relationships with new, distributors of our airway clearance products.

Failure to do so would prevent us from building awareness of our solutions, expanding our business and maintaining or generating additional sales.

If we are unable to maintain or expand our sales and marketing capabilities and our distributor relationships, we may not be able to effectively commercialize our products, which could have an adverse impact on our business.

Physicians and payers may require additional clinical studies prior to prescribing our products or prior to providing or maintaining coverage and reimbursement for our products.

Any subsequent clinical studies that are conducted and published may not be positive or consistent with our existing data, which would adversely affect the rate of adoption of our products.

While the results of our studies collectively indicate a favorable safety and efficacy profile, the study designs and results may not be viewed as compelling to physicians and insurers.

conclusions based upon criteria contained in patient questionnaires that required subjective conclusions.

Certain physicians and insurers may also prefer to see longer-term efficacy data than we have produced or are able to produce.

We cannot assure you that any data that we or others generate will be consistent with that observed in the existing studies or that results will be maintained beyond the time points studied.

If subsequent studies are not positive or consistent with our existing data, adoption of our products may suffer and, accordingly, our business could be adversely impacted.

The COVID-19 pandemic has had, and may continue to have, an adverse effect on our business, financial condition and results of operations.

The United States economy in general and our business specifically have been negatively affected by the COVID-19 pandemic.

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 particularly during most of 2020 and 2021, and during the first quarter of 2022.

We have also seen staffing challenges, both in our organization and at the clinics we serve, as another lingering consequence of the COVID-19 pandemic.

While we saw some level of recovery in 2022 after the first quarter, ongoing consequences of the pandemic remain uncertain.

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

patent protection covering various aspects of our Flexitouch system expired in 2017, and thus may subject us to increased competition and reduce or eliminate our opportunity to generate product revenue.

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Changes in government trade policies, including additional tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations.

It has also initiated or is considering the imposition of tariffs on certain foreign goods, including certain raw materials that are included in our products, or on our products directly.

The United States government from time to time has adopted new approaches to trade policy, including in some cases renegotiating or terminating certain existing bilateral or multi-lateral trade agreements, or imposing tariffs on certain foreign goods, including certain raw materials that are included in our products.

Changes in U.S.

trade policy has and could continue to result in one or more of its trading partners adopting responsive or retaliatory trade policies, making it more difficult or costly for us to export our products to those countries in the future or import our products or raw materials utilized in making our products.

These measures could result in increased costs for goods imported into the United States.

trade policy have and could continue to result in one or more of its trading partners adopting responsive or retaliatory trade policies, making it more difficult or costly for us to export our products to those countries in the future or import our products or raw materials utilized in making our products.

These measures have resulted in, and in the future could result in, increased costs for our goods imported into the United States.

Since our prices are often fixed due to the reimbursement policies of, and arrangements with, third-party payers, this could result in lower margins on our products.

There is also a concern that the imposition of additional tariffs by the United States could result in the adoption of tariffs by other countries.

The resulting trade war could have a significant adverse effect on world trade and the world economy.

To the extent that trade tariffs and other restrictions imposed by the United States increase the price of, or limit the amount of, the raw materials and products we import into the United States, the costs of our raw materials may be adversely affected and the demand from our customers for products and

services may be diminished, which could adversely affect our revenue and profitability.

The resulting trade war could have a significant adverse effect on world

trade and the world economy.

In addition, our margins could be significantly impacted.

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Increases in our operating costs could have an adverse effect on our financial condition and results of operations.

Reimbursement rates are established by fee schedules mandated by private payers, Medicare, the Veterans Administration and certain Medicaid programs and are likely to remain constant or decrease due, in part, to federal and state government budgetary constraints.

As a result, with respect to Medicare and Medicaid related revenue, we may not be able to offset the effects of general inflation on our operating costs through increases in prices for our products.

Reimbursement rates are established by fee schedules mandated by private payers, Medicare, the Veterans Administration, and certain Medicaid programs.

Although Medicare and certain private payers index their reimbursement rate off of a subset of cost of living, the Veterans Administration, certain Medicaid programs and other private payers are more likely to remain constant or slightly decrease their reimbursement rates.

As a result, we may not be able to offset the effects of general inflation on our operating costs through increases in prices for our products.

In particular, labor and related costs account for a significant portion of our operating costs and we compete with other healthcare providers to attract and retain qualified or skilled personnel and with various industries for administrative and service employees.

This competitive environment could result in increased labor costs.

As such, we must control our operating costs, particularly labor and related costs, and failing to do so could adversely affect our financial conditions and results of operations.

Failure to control our operating costs, particularly labor and related costs, could adversely affect our financial conditions and results of operations.

Our operating costs may fluctuate significantly in the future as a result of a variety of factors, many of which are outside of our control.

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● increased sales and marketing costs to increase awareness of our products;

● additional expenditures and costs relates to changes in operations in response to the COVID-19 pandemic;

● costs to develop new and enhanced features for current products and research and development costs for new products;

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The medical device industry is highly competitive.

Our success depends, in part, upon our ability to maintain a competitive position in the development of technologies and solutions for the at-home treatment of lymphedema, chronic venous insufficiency and bronchiectasis or for market adjacencies.

Any product we develop will have to compete for market acceptance and market share.

We face significant competition in the United States, and we expect the intensity of competition will increase over time.

We face significant competition, and we expect the intensity of competition will increase over time.

Our primary competitors are Bio Compression Systems, Inc., Lympha Press USA, Hill-Rom, Philips Medical and Electromed.

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We may not be successful in developing new products or enhancements to existing products.

Further, as occurred with the Airwear wrap product that we licensed in October 2018 and terminated in July 2020, we may expend financial, management and operational resources on products that we are not able to successfully commercialize.

Further, we may expend financial, management and operational resources on products that we are not able to successfully commercialize.

Our ability to develop and commercialize additional products or enhancements to existing products will depend on several factors, including our ability to:

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● secure adequate coverage and reimbursement for our products;

● develop an effective and dedicated sales and marketing team.

● develop and maintain an effective and dedicated sales and marketing team, as well as relationships with distributors.

If we are unsuccessful in developing and commercializing new products, our ability to increase our revenue may be impaired.

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To the extent that the prevalence of high deductible insurance plans and higher copay and coinsurance plans continue to grow in the private payer market, the seasonal variations in our revenue could become even more pronounced.

Further, seasonality trends have been, and may continue to be, significantly different than historical trends as a result of the COVID-19 pandemic and related impacts.

Other factors that may cause fluctuation in our quarterly results or variations from our forecasts include:

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● the hiring, retention and continued productivity of our sales representatives;

● our ability to expand the geographic reach of our sales and marketing efforts;

● our ability to expand the geographic reach of our distribution, sales and marketing efforts;

● our ability to obtain regulatory clearance or approval for our products in development or for our current products outside the United States;

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If physicians fail to properly document medical records for patients using our products, our business could be adversely impacted.

We bill Medicare Part B and other insurers directly for each sale to patients.

We bill Medicare Part B and other insurers directly for sales and rentals of lymphedema products.

As a result, we must comply with all laws, rules and regulations associated with filing claims with the Medicare program, including the Social Security Act, Medicare regulations, the Federal False Claims Act and the Civil Monetary Penalties Law, as well as a variety of additional federal and state laws.

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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, False Claims Act liabilities and other penalties including exclusion from the Medicare, Medicaid or private insurance programs.

Our payer relations group is responsible for verifying and managing patient claims.

Our reimbursement operations group is responsible for verifying and managing patient claims for our lymphedema products.

This group works with physicians and other clinicians to educate physicians and other clinicians on their record keeping responsibilities.

From time to time our payer relations group identifies situations where the documentation could be questioned by Medicare or other insurers, and revises its procedures to strengthen our compliance systems based on our experience with Medicare contractors, Medicaid, insurers, physicians and other clinicians.

From time to time our reimbursement operations group identifies situations where the documentation is missing, incomplete or could be questioned by Medicare or other insurers, and revises its procedures to strengthen our controls, audits and oversight compliance systems based on our experience with Medicare contractors, Medicaid, insurers, physicians and other clinicians.

If our procedures are not sufficient to detect deficiencies in the medical records of patients or such procedures are not updated in a timely manner before claims are submitted to Medicare or other insurers, or if the Medicare program or other insurer disagrees with the way the medical necessity support for prescribing our products has been documented, we could face potential liabilities for submitting claims based on inadequate records.

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Our estimate of the total addressable market for our products is based on a number of internal and third-party estimates.

In addition, our internal estimates are based in large part on current trends in diagnosing lymphedema, chronic venous insufficiency and bronchiectasis.

While we believe these factors have historically provided and may continue to provide us with effective tools in estimating the total market for lymphedema, chronic venous insufficiency, bronchiectasis and our products, these estimates may not be correct and the conditions supporting our estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors.

In addition, our internal estimates are based in large part on current trends in diagnosing lymphedema, chronic venous insufficiency and chronic respiratory conditions.

While we believe these factors have historically provided and may continue to provide us with effective tools in estimating the total market for lymphedema, chronic venous insufficiency, chronic respiratory conditions and our products, these estimates may not be correct and the conditions supporting our estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors.

As a result, our estimates of the total addressable market for our products may prove to be incorrect.

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Changes in reimbursement coding could impair our ability to receive reimbursement for our products.

Our Flexitouch Plus system controller is reimbursed under HCPCS code E0652, our Entre system controller is reimbursed under HCPCS code E0651 and our AffloVest device is reimbursed under HCPCS code E0483.

Garments that cover various parts of the body are used with these systems and billed using HCPCS codes E0667, E0668, E0656 and E0669, other than our head and neck garments, which do not currently have billing codes assigned.

HCPCS is a standardized system used by all U.S.

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There can be no assurance that our internal procedures to minimize risks that may arise from quality issues will be able to eliminate or mitigate occurrences of these issues and associated liabilities.

If the quality of our products does not meet the expectations of physicians or patients, then our brand and reputation could suffer with those physicians or patients and our business could be adversely impacted.

If the quality of our products does not meet the expectations of physicians or patients, then our brand and reputation could suffer and our business could be adversely impacted.

If our facilities are damaged or become inoperable, we will be unable to continue to research, develop, manufacture and commercialize our products and, as a result, there will be an adverse impact on our business until we are able to secure a new facility.

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The facilities may be harmed or rendered inoperable by natural or man-made disasters (such as tornadoes, flooding, fire and power outages), vulnerabilities in our technology or cyber-attacks against our information systems (such as ransomware), which may render it difficult or impossible for us to perform our research, development, manufacturing and commercialization activities for some period of time.

The inability to perform those activities, combined with our limited inventory of reserve raw materials and finished product, may

result in the inability to continue manufacturing our products during such periods and the loss of customers or harm to our reputation.

The inability to perform those activities, combined with our limited inventory of reserve raw materials and finished product, may result in the inability to continue manufacturing our products during such periods and the loss of customers or harm to our reputation.

Our insurance for damage to our property and the disruption of our business may not be sufficient to cover all of our potential losses, and this insurance may not continue to be available to us on acceptable terms, or at all.

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In the event of a natural disaster, including a major earthquake, blizzard or hurricane, or a catastrophic event such as a fire, power loss, or telecommunications failure, we may be unable to continue our operations for a period of time in the affected area, which could have an adverse effect on our future operating results.

Our potential inability to successfully integrate newly acquired companies or businesses could adversely affect our financial results.

In September 2021, we acquired the assets of the AffloVest respiratory therapy business (the “AffloVest Acquisition”).

We may pursue acquisitions of other companies or their businesses in the future.

In the AffloVest Acquisition and in any other acquisitions we may complete, we face many risks commonly encountered with growth through acquisitions.

These risks include:

Acquisition activity involves substantial risks, and we may not be able to successfully integrate newly acquired companies or businesses.

We have acquired, and may in the future acquire, companies, businesses, products, services and technologies.

Acquisitions involve significant risks and uncertainties, including:

● incurring significantly higher than anticipated capital expenditures and operating expenses;

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To the extent we do not successfully avoid or overcome the risks or problems related to any acquisitions, our results of operations and financial condition could be adversely affected.

Future acquisitions also could impact our financial position and capital needs, and could cause substantial fluctuations

in our quarterly and yearly results of operations.

Future acquisitions also could impact our financial position and capital needs, and could cause substantial fluctuations in our quarterly and yearly results of operations.

Acquisitions could include significant goodwill and intangible assets, which may result in future impairment charges that would reduce our stated earnings.

We are increasingly dependent on sophisticated information technology and if we fail to effectively maintain or protect our information systems or data, including from data breaches, our business could be adversely affected.

We are increasingly dependent on sophisticated information technology for our products and infrastructure.

Cyber incidents are becoming more sophisticated, frequent and adaptive.

If we fail to maintain or protect our information systems and data integrity effectively, we could:

● lose existing customers;

● have difficulty attracting new customers;

● have problems in determining product cost estimates and establishing appropriate pricing;

● suffer outages or disruptions in our operations or supply chain;

● have difficulty preventing, detecting, and controlling fraud;

● have disputes with customers, physicians, and other healthcare professionals;

● have regulatory sanctions or penalties imposed;

● incur increased operating expenses;

● be subject to issues with product functionality that may result in a loss of data, risk to patient safety, field actions and/or product recalls;

● incur expenses or lose revenue as a result of a data privacy breach;

● suffer other adverse consequences.

We cannot assure you that cyber-attacks or data breaches will not occur or that systems issues will not arise in the future.

Any significant breakdown, intrusion, breach, interruption, corruption or destruction of these systems could have a material adverse effect on our business and reputation.

In addition, we accept payments for many of our sales through credit and debit card transactions, which are handled through a third-party payment processor.

In addition, as part of the payment processing process, we transmit our patients' and clinicians' credit and debit card information to our third-party payment processor.

We may in the future become

subject to lawsuits or other proceedings for purportedly fraudulent transactions arising out of the actual or alleged theft of our patients' credit or debit card information if the security of our third-party credit card payment processor is breached.

If we or our third-party credit card payment processor fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our patients, and there may be an adverse impact on our business.

We have nominal experience selling our products outside of the United States and cannot predict if we will be successful in achieving adoption of our products and revenue growth outside of the United States in a timely manner or at all.

If we commercialize any products outside of the United States, a variety of risks associated with international operations could impact our strategy and adversely affect our future growth.

We expect that we would be subject to additional risks related to entering into international markets, including:

If we expand internationally, we would be subject to additional risks related to entering into international markets, including:

● difficulty obtaining approvals under foreign regulatory requirements, such as more stringent requirements for regulatory clearance of products;

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● business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.

If we experience any of these risks, our strategy to expand internationally could be impacted and our future growth could be adversely affected.

Government Regulation, Compliance and Legal Risks

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The federal government and all states in which we currently operate regulate various aspects of our business.

Our operations also are subject to state laws governing, among other things, distribution of medical equipment and certain types of home health activities, and we are required to obtain and maintain licenses in each state to act as a durable medical equipment supplier.

Our operations also are subject to state laws governing, among other things, distribution of medical equipment and certain types of home health activities, and we are required to obtain and maintain licenses in many states to act as a durable medical equipment supplier.

As a healthcare provider participating in governmental healthcare programs, we are subject to complex laws and regulations directed at preventing fraud and abuse, which subject our marketing, billing, documentation and other practices to government scrutiny.

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The disadvantage is that it may require more data than a 510(k) and most often will include human clinical data.

The FDA is increasingly moving devices with slightly different proposed indication

statements or different technological features off the 510(k) path and on to the de novo path resulting in more time and expense for the company.

The FDA is increasingly moving devices with slightly different proposed indication statements or different technological features off the 510(k) path and on to the de novo path resulting in more time and expense for the company.

Both the 510(k) and premarket approval processes can be expensive and lengthy and require the payment of significant fees, unless an exemption applies.

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If the FDA requires us to go through a lengthier, more rigorous examination for future products or modifications to existing products than we had expected, our product introductions or modifications could be delayed or canceled, which could cause our sales to decline.

In addition, the FDA may determine that future products will require the more costly, lengthy and uncertain premarket approval process.

In addition, the FDA may determine that future products will require the more costly,

lengthy and uncertain premarket approval process.

Although we do not currently market any devices under a premarket approval, the FDA may demand that we obtain a premarket approval prior to marketing certain of our future products.

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If we fail to obtain and maintain regulatory clearances or approvals, our ability to sell our products and generate revenue will be materially harmed.

In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently approved or cleared products on a timely basis.

products under development or impact our ability to modify our currently approved or cleared products on a timely basis.

For example, in response to industry and healthcare provider concerns regarding the predictability, consistency and rigor of the 510(k) regulatory pathway, the FDA published new guidance on the 510(k) regulatory pathway in 2014, which altered the manner in which the 510(k) regulatory pathway is administered and interpreted.

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If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as contractually required or expected, we may not be able to obtain regulatory clearance or approval for or commercialize our products.

We often must rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories, to conduct our clinical trials.

We often must rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories, to conduct our clinical trials and to assist us with pre-clinical development.

If these third parties do not successfully carry out their contractual duties or regulatory obligations, have difficulty recruiting sufficient subjects for clinical studies or fail to meet expected deadlines, if these third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, our products on a timely basis, if at all, and our business, operating results and prospects may be adversely affected.

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Our practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback liability.

Federal false claims laws prohibit, in part, any person from knowingly presenting or causing to be presented a false claim for payment to the federal government, or knowingly making or causing to be made a false statement to get a false claim paid.

The majority of states also have statutes or regulations similar to the Federal Anti-Kickback Statute and Federal False Claims Act, which apply to items or services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of payer.

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Failure to submit required 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"), for all payments, transfers of value or ownership or investment interests not reported in an annual submission.

Manufacturers are required to collect data and are

required to submit their data reports to CMS for each calendar year by the 90th day of the subsequent calendar year.

Manufacturers are required to collect data and are required to submit their data reports to CMS for each calendar year by the 90th day of the subsequent calendar year.

Certain states mandate implementation of compliance programs and/or the tracking and reporting of gifts, compensation and other remuneration to physicians or other healthcare professionals.

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While it is our intent to comply with all applicable laws, the government may find that our marketing activities violate the Civil Monetary Penalties Law.

If we are found to be in noncompliance, we could be subject to civil money penalties of up to $20,000 for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from the Federal healthcare programs.

If we are found to be in noncompliance, we could be subject

to civil money penalties of up to $20,000 for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from the Federal healthcare programs.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations.

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The products we currently market have been cleared by the FDA for specific treatments.

We train our employees in appropriate and lawful promotion of our products, within our approved indications and to be truthful and not misleading.

We train our employees and distributors in appropriate and lawful promotion of our products, within our approved indications and to be truthful and not misleading.

We cannot, however, prevent a physician from using our products off-label, when in the physician's independent professional medical judgment, he or she deems it appropriate.

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Any of these sanctions could adversely affect our business, financial condition and results of operations.

For any products that we sell outside the United States, those products and our operations would also be required to comply with standards set by foreign law, treaties and industrial standards bodies, such as the International Organization for Standardization, or ISO, and domestic regulatory authorities within foreign countries.

International Organization for Standardization, or ISO, and domestic regulatory authorities within foreign countries.

Foreign regulatory bodies may evaluate our products or the testing that our products undergo against these or other standards.

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Additional state and federal health care reform measures that may be adopted in the future could have a material adverse effect on our industry generally and on our customers.

Any changes in, or uncertainty with respect to future

reimbursement rates, or changes in hospital admission rates could impact our customers' demand for our products and services, which in turn could impact our ability to successfully commercialize our products, or could limit or eliminate our spending on certain development projects.

Any changes in, or uncertainty with respect to future reimbursement rates, or changes in hospital admission rates could impact our customers' demand for our products and services, which in turn could impact our ability to successfully commercialize our products, or could limit or eliminate our spending on certain development projects.

These changes could adversely affect our business and results of operations.

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or (ii) the purchase, lease or order of, or the arrangement or recommendation of the purchasing, leasing or ordering of, of an item or service reimbursable under a federal healthcare program.

A person or entity does not need to have actual knowledge of this statute or specific intent to violate it to have committed a violation;

Courts have ruled that a person or entity does not need to have actual knowledge of this statute or specific intent to violate it to have committed a violation;

● federal civil and criminal false claims laws and civil monetary penalty laws, including civil whistleblower or qui tam actions that prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government, knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the federal government or knowingly offering remuneration to influence a Medicare or Medicaid beneficiary's selection of health care providers.

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● federal Open Payments (the Physician Payments Sunshine Act) requirements imposed by the ACA on device manufacturers regarding certain "transfers of value"

made or distributed to physicians and teaching hospitals.

made or distributed to physicians, certain other healthcare providers, and teaching hospitals.

Failure to submit required information may result in civil monetary penalties of up to an aggregate of $150,000 per year (or up to an aggregate of $1.0 million per year for "knowing failures"), for all payments, transfers of value or ownership or investment interests that are not timely, accurately and completely reported in an annual submission.

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Responding to any action or threat of action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management's attention from the operation of our business.

If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from governmental healthcare programs, disgorgement, contractual damages, reputational harm, diminished profits and future

earnings, and the curtailment or restructuring of our operations, any of which could adversely impact our business.

Failure to comply with regulations affecting the transmission, security and privacy of health information could result in significant penalties.

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The Privacy Standards and Security Standards under HIPAA establish a set of basic national privacy and security standards for the protection of individually identifiable health information by health plans, healthcare clearinghouses and certain healthcare providers, referred to as covered entities, and the business associates with whom such covered entities contract for services.

Notably, whereas HIPAA previously directly regulated only these covered entities, the HITECH Act, which was signed into law as part of the stimulus package in February 2009, makes certain of HIPAA's privacy and security standards also directly applicable to covered entities' business associates.

Notably, whereas HIPAA previously directly regulated only these covered entities, the HITECH Act, which was signed into law as part of the stimulus package in February 2009, makes certain

of HIPAA's privacy and security standards also directly applicable to covered entities' business associates.

As a result, both covered entities and business associates are subject to significant civil and criminal penalties for failure to comply with Privacy Standards and Security Standards.

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For example, several U.S.

territories and all 50 states now have data breach laws that require timely notification to individual victims, and at times regulators, if a company has experienced the unauthorized access or acquisition of sensitive personal data.

territories and all 50 states now

have data breach laws that require timely notification to individual victims, and at times regulators, if a company has experienced the unauthorized access or acquisition of sensitive personal data.

Other state laws contain additional disclosure obligations for businesses that collect personal information about residents and afford those individuals additional rights relating to their personal information that may affect our ability to use personal information or share it with our business partners.

For example, California has laws that g ive California residents certain privacy rights in the collection and disclosure of their personal information and requires businesses to make certain disclosures and take certain other acts in furtherance of those rights, and has recently created a new agency, the California Privacy Protection Agency, authorized to implement and enforce California’s privacy laws, which could result in increased privacy and information security regulatory actions.

states, such as Virginia, Utah, Connecticut, and Colorado, have passed consumer privacy laws that become effective in 2023.

We will continue to monitor and assess the impact of these state laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.

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● loss of revenue.

While we may attempt to manage our product liability exposure by proactively recalling or withdrawing from the market any defective products, any recall or market withdrawal of our products would delay the supply of those products to our clinicians and patients and may impact our reputation.

We can provide no assurance that we will be successful in initiating appropriate market recall or market withdrawal efforts that may be required in the future or that these efforts will have the intended effect of preventing product malfunctions and the accompanying product liability that may result.

While we may attempt to manage our product liability exposure by proactively recalling or withdrawing from the market any defective products, any recall or market withdrawal of our products would delay the supply of those products to our distributors, clinicians and patients and may impact our reputation.

We can provide no assurance that we will be successful in initiating appropriate market recall or market withdrawal efforts that may

be required in the future or that these efforts will have the intended effect of preventing product malfunctions and the accompanying product liability that may result.

Such recalls and withdrawals may also be used by our competitors to harm our reputation for safety or be perceived by patients as a safety risk when considering the use of our products, either of which could have an adverse impact on our business.

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A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could have an adverse impact on our business.

Our employees, independent contractors, consultants, collaborators and suppliers may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.

We are exposed to the risk that our employees and other third parties, in spite of our compliance training and programs, may engage in fraudulent conduct or other illegal activity.

Misconduct by employees and other third parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA, manufacturing standards, federal and state healthcare fraud and abuse laws and regulations, or laws that require the reporting of financial information or data accurately.

Our employees, distributors, independent contractors, consultants, collaborators and suppliers may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.

We are exposed to the risk that our employees, distributors and other third parties, in spite of our compliance training and programs, may engage in fraudulent conduct or other illegal activity.

Misconduct by employees, distributors and other third parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA, manufacturing standards, federal and state healthcare fraud and abuse laws and regulations, or laws that require the reporting of financial information or data accurately.

In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws intended to prevent fraud, kickbacks, self-dealing and other abusive practices.

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In certain countries we intend to rely upon third-party distributors to obtain all required regulatory registrations and approvals, and these distributors may be unable to obtain or maintain such registrations or approvals.

Our distributors in these countries may also incur significant costs in

attempting to obtain and in maintaining foreign regulatory approvals or registrations, which could increase the difficulty of attracting and retaining qualified distributors.

If these distributors experience delays in receiving necessary registrations or approvals to market our products outside the United States, or if they fail to receive those registrations or approvals, we may be unable to market our products or enhancements in certain international markets effectively, or at all.

Our distributors in these countries may also incur significant costs in attempting to obtain and in maintaining foreign regulatory approvals or registrations, which could increase the difficulty of attracting and retaining qualified distributors.

If we are unable to obtain or maintain international registrations or approvals, or if distributors experience delays in receiving, or fail to receive, necessary registrations or approvals to market our products outside the United States, we may be unable to market our products or enhancements in certain international markets effectively, or at all.

Our operations involve the use of hazardous and toxic materials, and we must comply with environmental, health and safety laws and regulations, which can be expensive, and could have an adverse impact on our business.

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Although we cannot predict the ultimate impact of any such new laws and regulations, they will likely result in additional costs, and may require us to change how we manufacture our products, which could have an adverse impact on our business.

Rules, regulations and policies concerning mandatory COVID-19 vaccination could materially and adversely affect our business, financial condition and results of operations.

While proposed federal orders and standards related to mandatory vaccination and/or testing for employees and contractors have been stayed, we cannot predict the eventual outcome or impact on us, our suppliers, our contractors or our customers.

Additional vaccine and testing mandates may be announced in jurisdictions in which we operate or by healthcare facilities and clinics.

While it is not currently possible to predict with any certainty the exact impact new regulations would have on us, our suppliers, our contractors and our customers, the implementation of such government mandated vaccination or testing mandates may impact our ability to retain current employees and attract new employees and result in labor disruptions.

Further, our suppliers may be subject to, or voluntarily impose, vaccine mandates, which could result in disruptions in our business and supply chain.

In addition, we currently have a mandatory vaccination requirement for all employees and independent contractor trainers, which has negatively impacted our ability to retain and recruit employees and contractors and could continue to have this negative impact.

Our maintenance of this requirement and the implementation of other requirements may result in further employee attrition, including attrition of critically skilled workforce, and difficulty securing future workforce needs, which could have a material adverse effect on our business, financial condition, and results of operations.

Financial Condition, Credit and Tax Risks

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The rules governing the standards that must be met for our management and our independent registered public accounting firm to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.

In connection with our and our independent registered public accounting firm’s evaluations of our internal control over financial reporting, we may need to upgrade our systems, including

information technology;

In connection with our and our independent registered public accounting firm’s evaluations of our internal control over financial reporting, we may need to upgrade our systems, including information technology;

implement additional financial and management controls, reporting systems and procedures;

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We could become subject to stockholder or other third-party litigation, as well as investigations by the SEC, the stock exchange on which our securities are listed, or other regulatory authorities, which could require additional financial and management resources and could result in fines, trading suspensions, payment of damages or other remedies.

The level of our indebtedness under our credit facility may adversely impact us, and the phase-out, replacement or unavailability of LIBOR and/or other interest rate benchmarks could adversely affect our indebtedness.

Our level of debt under our credit facility could, among other things:

● require us to dedicate a large portion of our cash flow from operations to the servicing and repayment of our debt, thereby reducing funds available for working capital, capital expenditures, research and development expenditures and other general corporate requirements;

● limit our ability to obtain additional financing to fund future working capital, capital expenditures, research and development expenditures and other general corporate requirements;

● limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

● restrict our ability to make strategic acquisitions or dispositions or to exploit business opportunities;

● place us at a competitive disadvantage compared to our competitors that have less debt;

● adversely affect the market price of our common stock.

Further, our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.

In addition, our financial condition, results of operations and cash flows could be affected by changes in interest rates and actions taken by the Federal Reserve or changes in the London Interbank Offered Rate ("LIBOR") or its replacement.

Future increases in market interest rates would increase our interest expense.

Alternative, successor, or replacement rates following the planned phase-out of LIBOR in June 2023 may not be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as did, LIBOR (the current benchmark rate under our Credit Agreement), which may increase our overall interest expense.

In addition, the credit spread adjustments on any benchmark replacement to LIBOR under our credit facility may not produce substantially the same rate as current LIBOR based loans.

The potential effect of the phase-out or replacement of LIBOR on our cost of capital cannot yet be determined and any increase in the interest we pay and a corresponding increase in our costs of capital or otherwise could have a material adverse impact on our financial condition, results of operations or cash flows.

Our credit facility contains covenants that restrict our business and financing activities, and the property that secures our obligations under the credit facility may be subject to foreclosure.

Our credit facility contains a number of restrictions and covenants, which, among other things, restrict our ability to acquire or merge with another entity, dispose of our assets, make investments, loans or guarantees, incur additional indebtedness, create liens or other encumbrances, or pay dividends or make other distributions.

The credit facility also requires us to maintain compliance with a maximum leverage ratio, a minimum fixed charge coverage ratio, a minimum EBITDA covenant and a minimum liquidity covenant.

These provisions impose significant operating and financial restrictions on us and may limit our ability to compete effectively, take advantage of new business opportunities or take other actions that may be in our best interests.

Our ability to obtain additional or other financing or to dispose of certain assets could also be negatively impacted because we have pledged substantially all of our assets as collateral in connection with the credit facility.

Our ability to comply with the provisions under the Credit Agreement may be affected by events beyond our control and our inability to comply with any of these provisions could result in a default under the Credit Agreement.

If such a default occurs, the lenders may elect to declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable, and they would have the right to terminate any commitments they have to provide further borrowings.

If we are unable to repay outstanding borrowings when due, the lenders under the Credit Agreement also have the right to proceed against the collateral, including substantially all of our assets, granted to them to secure the indebtedness under the facility.

If our indebtedness under the Credit Agreement were to be accelerated, we cannot assure you that our assets would be sufficient to repay in full that indebtedness.

The occurrence of any of these events could have a material adverse effect on our business, financial condition, results of operations and liquidity.

We may need substantial additional funding and may be unable to raise capital when needed, which could force us to delay or reduce our commercialization efforts or product development programs.

We believe our cash, cash equivalents and cash flows from operations will be sufficient to meet our working capital, capital expenditure and debt repayment and related interest payment requirements for at least the next twelve months.

However, we have based these estimates on assumptions that may prove to be incorrect, and we could spend our available financial resources much faster than we currently expect.

However, we have based these estimates on assumptions that may prove to be

incorrect, and we could spend our available financial resources much faster than we currently expect.

Any future funding requirements will depend on many factors, including:

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● costs associated with any product recall that may occur;

● additional expenditures and costs related to changes in operations in response to the COVID-19 pandemic;

● the effect of competing technological and market developments;

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Any future debt financing into which we enter may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions.

Any debt financing

or additional equity that we raise may contain terms that are not favorable to us or our stockholders.

Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.

If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us.

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Any of these factors could harm our operating results.

We incurred additional indebtedness in connection with the AffloVest acquisition and may not be able to meet all of our debt obligations, and the phase-out, replacement or unavailability of LIBOR and/or other interest rate benchmarks could adversely affect our indebtedness.

We incurred additional indebtedness in connection with the AffloVest acquisition.

As a result of the increase in our debt, demands on our cash resources have increased.

The increased level of debt could, among other things:

● limit our ability to obtain additional financing to fund future working capital, capital expenditures, research and development expenditures and other general corporate requirements;

● limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

● restrict our ability to make strategic acquisitions or dispositions or to exploit business opportunities;

● place us at a competitive disadvantage compared to our competitors that have less debt;

● adversely affect the market price of our common stock.

In addition, our financial condition, results of operations and cash flows could be significantly affected by changes in interest rates and actions taken by the Federal Reserve or changes in the London Interbank Offered Rate ("LIBOR") or its replacement.

Future increases in market interest rates would increase our interest expense.

Borrowings under our Credit Agreement currently bear interest at variable rates based on either a base rate or a fluctuating rate of interest determined by reference to LIBOR, plus, in each case, an applicable margin.

LIBOR is subject to a phase-out period that currently extends to June 30, 2023 for most tenors.

While our Credit Agreement provides a hardwired mechanism for determining an alternative rate of interest when no tenors of LIBOR are available, any such alternative, successor, or replacement rate may not be similar to, or produce the same value or economic equivalence of, LIBOR or have the same volume or liquidity as did LIBOR prior to its discontinuance or unavailability, which may increase our overall interest expense.

We will continue to monitor the situation and address the potential reference rate changes in future debt obligations that we may incur, but the potential effect of the phase-out or replacement of LIBOR on our cost of capital cannot yet be determined and any increase in the interest we pay and a corresponding increase in our costs of capital or otherwise could have a material adverse impact on our financial condition, results of operations or cash flows.

Our credit facility contains covenants that restrict our business and financing activities, and the property that secures our obligations under the credit facility may be subject to foreclosure.

The credit facility also requires us to maintain compliance with a maximum leverage ratio, a minimum fixed charge coverage ratio, a minimum EBITDA covenant and a minimum liquidity covenant.

Our ability to comply with the provisions under the Credit Agreement may be affected by events beyond our control, including as a result of the negative impacts of COVID-19, and our inability to comply with any of these provisions could result in a default under the Credit Agreement.

If our indebtedness under the Credit Agreement were to be accelerated, we cannot assure you that our assets would be sufficient to repay in full that indebtedness.

The occurrence of any of these events could have a material adverse effect on our business, financial condition, results of operations and liquidity.

A reclassification of our independent contractor trainers could require us to pay retroactive taxes and penalties, which could have a material adverse effect on our business, financial condition and operating results.

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The classification of healthcare practitioners as independent contractors depends on the facts and circumstances of the relationship.

Recently, there has been increased focus on the tests and standards related to classifying individuals as employees or independent contractors, including through judicial decisions, legislative proposals and private lawsuits in certain jurisdictions.

Recently, there has been increased focus on the tests and standards related to classifying

individuals as employees or independent contractors, including through judicial decisions, legislative proposals and private lawsuits in certain jurisdictions.

For example, California enacted a law (AB 5), which took effect January 1, 2020.

AB 5 significantly limits the types of workers who may be able to be classified as independent contractors under California law, including requiring the worker to perform work that is outside the usual course of the hiring company’s business in order to be classified as an independent contractor.

In addition, in October 2022, the U.S.

Department of Labor published a Notice of Proposed Rulemaking that would rescind the current federal independent contractor rule (adopted by the Trump administration in 2021) and would apply a non-exhaustive six factor totality-of-the-circumstances analysis, and could, if enacted in its current form, result in the need to reclassify certain types of workers.

Other state legislatures and Congress are considering, and may enact, laws or regulations narrowing the scope of workers who may be classified as independent contractors.

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In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States.

For example, many foreign countries have compulsory licensing laws, under which a patent owner must grant licenses to third parties.

For example, many foreign countries have compulsory licensing laws, under which a patent owner must grant licenses to third

Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.

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To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming.

In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or is

unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.

In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.

An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.

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and foreign issued patents and pending patent applications owned by third parties exist in the fields in which we are developing and may develop our products.

As the medical device industry expands and more patents are issued, the risk increases that our products may be subject to claims of infringement of the patent rights of third parties.

As the medical device industry expands and more patents are issued, the risk increases

that our products may be subject to claims of infringement of the patent rights of third parties.

If a third-party claims that we infringe on their intellectual property or technology, we could face a number of issues, including:

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● if a license is available from a patent holder, we may have to pay substantial royalties or grant cross licenses to our patents;

● redesigning our processes so they do not infringe, which may not be possible or could require substantial funds and time.

● redesigning our products and processes so they do not infringe, which may not be possible or could require substantial funds and time.

Third parties may assert that we are employing their proprietary technology without authorization.

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Therefore, patent applications covering our technology or our products could have been filed by others without our knowledge.

Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that

could cover our technologies, our products or the use or manufacture of our products.

Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our technologies, our products or the use or manufacture of our products.

We may also face a claim of misappropriation, if a third party believes that we inappropriately obtained and used trade secrets of such third parties.

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In addition, litigation or threatened litigation could result in significant demands on the time and attention of our management team, distracting them from the pursuit of other company business.

In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys' fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development collaborations that would help us bring our products to market.

In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys' fees for willful infringement, pay royalties, redesign our infringing products and processes or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

In addition, the uncertainties associated with

litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development collaborations that would help us bring our products to market.

Changes in U.S.

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Obtaining and enforcing patents in the medical device industry involves both technological and legal complexity, and therefore is costly, time-consuming and inherently uncertain.

In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation.

Further, several recent judicial rulings have either narrowed the scope of patent protection available in certain circumstances or weakened the rights of patent owners in certain situations.

In addition, the United States has enacted and is currently implementing wide-ranging patent reform legislation.

Further, several judicial rulings have either narrowed the scope of patent protection available in certain circumstances or weakened the rights of patent owners in certain situations.

In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.

patent applications containing a claim not entitled to priority before March 16, 2013, there is a greater level of uncertainty in the patent law.

In September 2011, the Leahy-Smith America Invents Act, or the American Invents Act, or AIA, was signed into law.

The AIA includes a number of significant changes to U.S.

patent law, including provisions that affect the way patent applications will be prosecuted, reviewed after issuance, and may also affect patent litigation.

The AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.

An important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned to a "first-inventor-to-file"

system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention.

A third party that files a patent application

in the USPTO after that date but before us could therefore be awarded a patent covering an invention of ours, even if we had made the invention before it was made by the third party.

This will require us to be cognizant, going forward, of the time from invention to filing of a patent application, but early filing of patent applications may not always be possible.

Furthermore, our ability to obtain and maintain valid and enforceable patents depends on whether the differences between our technology and the prior art allow our technology to be patentable over the prior art.

Since patent applications in the United States and most other countries are confidential for a period of time after filing, we cannot be certain that we were the first to either (a) file any patent application related to our products or (b) invent any of the inventions claimed in our patents or patent applications.

Among some of the other changes introduced by the AIA are changes that limit where a patentee may file a patent infringement suit and provide opportunities for third parties to challenge any issued patent in the USPTO.

This applies to all of our U.S.

patents, even those issued before March 16, 2013.

Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal court necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid as unpatentable, even though the same evidence may be insufficient to invalidate the claim if first presented in a district court action.

Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action.

Depending on decisions by the U.S.

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● issued patents that we own may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors;

● our competitors might conduct research and development activities in countries where we do not have patent rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

the information learned from such activities to develop competitive products for sale in our major commercial markets;

● ownership of our patents or patent applications may be challenged by third parties;

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We may also be subject to claims that former employees, consultants, independent contractors, collaborators or other third parties have an ownership interest in our patents or other intellectual property.

Litigation may be necessary to defend against these and other claims challenging our right to and use

of confidential and proprietary information.

Litigation may be necessary to defend against these and other claims challenging our right to and use of confidential and proprietary information.

If we fail in defending any such claims, in addition to paying monetary damages, we may lose our rights therein.

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We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential collaborators or customers in our markets of interest.

At times, competitors may adopt trade

names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion.

At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion.

Further, there could be potential trade name or trademark infringement claims brought by owners of other trademarks or trade names that incorporate variations of our trademarks or trade names.

In addition, we have not registered our trademarks internationally, and the laws of certain foreign countries may not protect proprietary rights to the same extent as do the laws of the United States.

Over the long term, if we are unable to successfully register our trademarks and trade names and/or establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.

Over the long term, if we

are unable to successfully register our trademarks and trade names and/or establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.

Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely impact our financial condition or results of operations.

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As we operate in a single industry, we are especially vulnerable to these factors to the extent that they affect our industry or our products, or to a lesser extent our markets.

Following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against that company, as has been the case with us.

Such litigation can result in substantial costs and diversion of management attention and resources, which could significantly harm

our profitability and reputation and could expose us to liability or impact negatively our business, financial condition, operating results, and prospects.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

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● eliminating the ability of stockholders to call a special meeting of stockholders;

● establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings.

● establishing advance notice and compliance requirements for nominations for election to the board of directors, for soliciting proxies in support of nominations or for proposing matters that can be acted upon at stockholder meetings.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, who are responsible for appointing the members of our management.

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Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law.

In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws and our indemnification agreements with our directors and officers provide that:

● we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law;

● we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law;

● we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification;

● we will not be obligated pursuant to our amended and restated bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnitees, except with respect to proceedings authorized by our board of directors or brought to enforce a right to indemnification;

● the rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons;

● we may not retroactively amend our bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.

In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws and our indemnification agreements with our directors and officers provide that we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law;

Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe such person's conduct was unlawful and that we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification.

Unresolved Staff Comments.

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 1A. Risk Factors