Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this report.
Overview
We are a medical technology company that develops and provides innovative medical devices for the treatment of underserved chronic diseases. Our mission is to help people suffering from chronic diseases live better and care for themselves at home. We focus our efforts on advancing the standard of care in treating underserved chronic diseases in the home setting to improve patient outcomes and quality of life and help control rising healthcare expenditures. Our areas of therapeutic focus are (1) vascular disease, with a goal of advancing the standard of care in treating lymphedema and chronic venous insufficiency, (2) oncology, where lymphedema is a common consequence among cancer survivors and (3) providing airway clearance therapy for those suffering from chronic respiratory conditions. We possess a unique, scalable platform to deliver at-home healthcare solutions throughout the United States. This evolving home care delivery model is recognized by policymakers and insurance payers as a key for controlling rising healthcare costs. Our solutions deliver cost-effective, clinically proven, long-term treatment for people with these chronic diseases.
Our current lymphedema products are the Flexitouch and Entre systems and our airway clearance product is the AffloVest. A predecessor to our Flexitouch system received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) in July 2002, and we introduced the system to address the many limitations of self-administered home-based manual lymphatic drainage therapy. We began selling our more advanced Flexitouch system after receiving 510(k) clearance from the FDA in October 2006. In September 2016, we received 510(k) clearance from the FDA for the Flexitouch system in treating lymphedema of the head and neck. In June 2017, we announced that we received 510(k) clearance from the FDA for the Flexitouch Plus, the third-generation version of our Flexitouch system. In December 2020, we received 510(k) clearance for two new indications for our Flexitouch Plus system: phlebolymphedema and lipedema. We introduced our Entre system in the United States in February 2013 and the second generation, Entre Plus, in March 2023. The Entre system is sold or rented to patients who need a simple pump or who do not yet qualify for insurance reimbursement for an advanced compression device such as our Flexitouch system. Sales and rentals of our lymphedema products represented 86% of our revenue in each of the six months ended June 30, 2023 and 2022.
On September 8, 2021, we acquired the assets of the AffloVest airway clearance product line from IBC, a privately-held company which developed and manufactured AffloVest. AffloVest is a portable, wearable vest that provides airway clearance to treat patients with chronic respiratory conditions such as bronchiectasis or conditions resulting from neuromuscular disorders. For each of the six months ended June 30, 2023 and 2022, sales of AffloVest represented 14% of our revenue.
To support the growth of our business, we continue to invest in our commercial infrastructure, consisting of our direct sales force, training resources, reimbursement capabilities and clinical expertise. We market our lymphedema products in the United States using a direct-to-patient and -provider model. The AffloVest device is sold through respiratory durable medical equipment providers throughout the United States that service patients and bill third-party payers for the product. We also employ a small group of respiratory specialists, who educate DME representatives, provide product demonstrations for targeted clinicians and support technical questions related to the AffloVest. As of June 30, 2023, we employed a field staff of 290, which consisted of 249 field sales representatives and 26 field managers for our lymphedema products, as well as a team of 15 supporting our airway clearance products. This compares to a field staff of 289 as of June 30, 2022, which consisted of approximately 252 field sales representatives and 24 field managers for our lymphedema products, as well as a team of 13 supporting our airway clearance products.
We invest in our reimbursement function to improve operational efficiencies and enhance individual payer expertise, while continuing our strategic focus of payer development. Our payer relations function focuses on payer policy development, education, contract negotiations, and data analysis. Our reimbursement
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operations function is responsible for verifying patient insurance benefits, individual patient case development, prior authorization submissions, case follow-up, and appeals when necessary.
We also have a clinical team, consisting of a scientific advisory board, in-house therapists and nurses, and a Chief Medical Officer, that serves as a resource to clinicians and patients and guides the development of clinical evidence in support of our products. Most clinical studies require observation and interaction with clinicians and patients to monitor results and progress.
We rely on third-party contract manufacturers for the sourcing of parts, the assembly of our controllers and the manufacturing of the garments used with our systems. We conduct final assembly of the garments used with our products, perform quality assurance and ship our products from our facility in Minnesota.
In July 2022, we launched Kylee™ a free mobile app that makes it easier for patients to manage their conditions by tracking treatments and symptoms, as well as having direct access to educational resources.
For the three months ended June 30, 2023, we generated revenue of $68.3 million and had a net loss of $0.1 million, compared to revenue of $59.6 million and a net loss of $4.6 million for the three months ended June 30, 2022. For the six months ended June 30, 2023, we generated revenue of $127.2 million and had a net loss of $2.0 million, compared to revenue of $107.6 million and a net loss of $20.2 million for the six months ended June 30, 2022. Our primary sources of capital since our initial public offering in 2016 have been from operating income, bank financing and our public offering in February 2023.
We operate in one segment for financial reporting purposes.
Current Economic Conditions and the Effects of Coronavirus (COVID-19)
The lingering effects of the COVID-19 pandemic, as well as general global economic downturns and macroeconomic trends, including heightened inflation, capital market volatility, interest rate fluctuations, increased unemployment 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.
The United States economy in general and our business specifically have been negatively affected by the COVID-19 pandemic. From the onset of the pandemic, we have seen declines in the number of patients that healthcare facilities and clinics are able to treat due to enhanced safety protocols, and have also seen staffing challenges, both in our organization and at the clinics we serve. While we saw some level of recovery in 2022 and in the first two quarters of 2023 , there are no reliable estimates of how long the pandemic will last 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.
Since the onset of COVID-19, we have remained proactive to ensure we continue to adapt to the needs of our employees, clinicians and patients. We cannot assure you these changes to our processes and practices will be successful in mitigating the impact of COVID-19 on our business. We continue to evaluate and, if appropriate, will adopt other measures in the future related to the ongoing safety of our employees, clinicians and patients.
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Results of Operations
Comparison of the Three and Six Months Ended June 30, 2023 and 2022
The following table presents our results of operations for the periods indicated:
Three Months Ended
June 30,
Change
(In thousands)
2023
2022
$
%
Condensed Consolidated Statement
% of
% of
of Operations Data:
revenue
revenue
Revenue
Sales revenue
$
59,802
88
%
$
51,265
86
%
$
8,537
17
%
Rental revenue
8,537
12
%
8,380
14
%
157
2
%
Total revenue
68,339
100
%
59,645
100
%
8,694
15
%
Cost of revenue
Cost of sales revenue
16,865
25
%
13,810
23
%
3,055
22
%
Cost of rental revenue
3,175
4
%
2,612
4
%
563
22
%
Total cost of revenue
20,040
29
%
16,422
27
%
3,618
22
%
Gross profit
Gross profit - sales revenue
42,937
63
%
37,455
63
%
5,482
15
%
Gross profit - rental revenue
5,362
8
%
5,768
10
%
(406)
(7)
%
Gross profit
48,299
71
%
43,223
73
%
5,076
12
%
Operating expenses
Sales and marketing
28,206
41
%
28,822
48
%
(616)
(2)
%
Research and development
1,833
3
%
1,849
3
%
(16)
(1)
%
Reimbursement, general and administrative
14,991
22
%
14,894
25
%
97
1
%
Intangible asset amortization and earn-out
1,211
2
%
1,745
3
%
(534)
(31)
%
Total operating expenses
46,241
68
%
47,310
79
%
(1,069)
(2)
%
Income (loss) from operations
2,058
3
%
(4,087)
(6)
%
6,145
(150)
%
Other expense
(838)
(1)
%
(573)
(1)
%
(265)
46
%
Income (loss) before income taxes
1,220
2
%
(4,660)
(7)
%
5,880
(126)
%
Income tax expense (benefit)
1,320
2
%
(20)
—
%
1,340
N.M.
%
Net loss
$
(100)
—
%
$
(4,640)
(7)
%
$
4,540
(98)
%
“N.M.” Not Meaningful
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Six Months Ended
June 30,
Change
(In thousands)
2023
2022
$
%
Consolidated Statement
% of
% of
of Operations Data:
revenue
revenue
Revenue
Sales revenue
$
112,593
89
%
$
92,435
86
%
$
20,158
22
%
Rental revenue
14,592
11
%
15,188
14
%
(596)
(4)
%
Total revenue
127,185
100
%
107,623
100
%
19,562
18
%
Cost of revenue
Cost of sales revenue
31,507
25
%
25,890
24
%
5,617
22
%
Cost of rental revenue
5,911
4
%
4,648
4
%
1,263
27
%
Total cost of revenue
37,418
29
%
30,538
28
%
6,880
23
%
Gross profit
Gross profit - sales revenue
81,086
64
%
66,545
62
%
14,541
22
%
Gross profit - rental revenue
8,681
7
%
10,540
10
%
(1,859)
(18)
%
Gross profit
89,767
71
%
77,085
72
%
12,682
16
%
Operating expenses
Sales and marketing
54,508
43
%
52,752
49
%
1,756
3
%
Research and development
4,066
3
%
3,369
3
%
697
21
%
Reimbursement, general and administrative
30,425
24
%
31,111
29
%
(686)
(2)
%
Intangible asset amortization and earn-out
2,516
2
%
8,841
8
%
(6,325)
(72)
%
Total operating expenses
91,515
72
%
96,073
89
%
(4,558)
(5)
%
Loss from operations
(1,748)
(1)
%
(18,988)
(17)
%
17,240
(91)
%
Other expense
(1,831)
(2)
%
(1,029)
(1)
%
(802)
78
%
Loss before income taxes
(3,579)
(3)
%
(20,017)
(18)
%
16,438
(82)
%
Income tax (benefit) expense
(1,593)
(1)
%
191
—
%
(1,784)
N.M.
%
Net loss
$
(1,986)
(2)
%
$
(20,208)
(18)
%
$
18,222
(90)
%
Revenue
Revenue increased $8.7 million, or 15%, to $68.3 million in the three months ended June 30, 2023, compared to $59.6 million in the three months ended June 30, 2022. The increase in total revenue was attributable to an increase of $8.4 million, or 16%, in sales and rentals of the lymphedema product line and an increase of $0.3 million, or 4%, in sales of the airway clearance product line in the quarter ended June 30, 2023, compared to the quarter ended June 30, 2022.
Revenue increased $19.6 million, or 18%, to $127.2 million in the six months ended June 30, 2023, compared to $107.6 million in the six months ended June 30, 2022. The increase in total revenue was attributable to an increase of $17.5 million, or 19%, in sales and rentals of the lymphedema product line and an increase of $2.1 million, or 14%, in sales of the airway clearance product line in the six months ended June 30, 2023, compared to the six months ended June 30, 2022.
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The following table summarizes our revenue by product line for the three and six months ended June 30, 2023 and 2022, both in dollars and percentage of total revenue:
Three Months Ended
June 30,
Change
(In thousands)
2023
2022
$
%
Revenue
Lymphedema products
$
59,999
$
51,634
$
8,365
16%
Airway clearance products
8,340
8,011
329
4%
Total
$
68,339
$
59,645
$
8,694
15%
Percentage of total revenue
Lymphedema products
88%
87%
Airway clearance products
12%
13%
Total
100%
100%
“N.M.” Not Meaningful
Six Months Ended
June 30,
Change
(In thousands)
2023
2022
$
%
Revenue
Lymphedema products
$
109,751
$
92,288
$
17,463
19%
Airway clearance products
17,434
15,335
2,099
14%
Total
$
127,185
$
107,623
$
19,562
18%
Percentage of total revenues
Lymphedema products
86%
86%
Airway clearance products
14%
14%
Total
100%
100%
Our business is affected by seasonality. In the first quarter of each year, when most patients have started a new insurance year and have not yet met their annual out-of-pocket payment obligations, we experience substantially reduced demand for our products. We typically experience higher revenue in the third and fourth quarters of the year when patients have met their annual insurance deductibles, thereby reducing their out-of-pocket costs for our products, and have an increasing desire to exhaust their flexible spending accounts at year end. This seasonality applies only to purchases and rentals of our products by patients covered by commercial insurance and is not relevant to Medicare, Medicaid or the Veterans Administration, as those payers either do not have plans that have declining deductibles over the course of the plan year and/or do not have plans that include patient deductibles for purchases or rentals of our products.
Cost of Revenue and Gross Margin
Cost of revenue increased $3.6 million, or 22%, to $20.0 million in the three months ended June 30, 2023, compared to $16.4 million in the three months ended June 30, 2022. Cost of revenue increased $6.9 million, or 23%, to $37.4 million in the six months ended June 30, 2023, compared to $30.5 million in the six months ended June 30, 2022. The increase in cost of revenue was primarily attributable to the additional contribution of AffloVest sales and an increase in inbound freight costs.
Gross margin was 70.7% and 72.5% in the three months ended June 30, 2023 and 2022, respectively, and 70.6% and 71.6% in the six months ended June 30, 2023 and 2022, respectively.
Sales and Marketing Expenses
Sales and marketing expenses decreased $0.6 million, or 2%, to $28.2 million in the three months ended June 30, 2023, compared to $28.8 million in the three months ended June 30, 2022. The decrease was
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primarily attributable to a $0.4 million decrease in travel and entertainment expenses and a $0.2 million decrease in personnel-related compensation expenses.
Sales and marketing expenses increased $1.8 million, or 3%, to $54.5 million in the six months ended June 30, 2023, compared to $52.8 million in the six months ended June 30, 2022. The increase was primarily attributable to a $2.4 million increase in personnel-related compensation expense as a result of the increased headcount in the collective field commercial team and a $0.2 million increase in demo units expense for new product introduction. This increase was partially offset by a $0.6 million decrease in travel and entertainment expenses.
Research and Development Expenses
Research and development (“R&D”) expenses were $1.8 million for each of the three months ended June 30, 2023 and 2022.
R&D expenses increased $0.7 million, or 21%, to $4.1 million in the six months ended June 30, 2023, compared to $3.4 million in the six months ended June 30, 2022, which was primarily attributable to an increase in personnel-related compensation expense and third-party consulting.
Reimbursement, General and Administrative Expenses
Reimbursement, general and administrative expenses increased $0.1 million, or 1%, to $15.0 million in the three months ended June 30, 2023, compared to $14.9 million in the three months ended June 30, 2022. This increase was primarily attributable to a $0.5 million increase in personnel-related compensation expense as a result of increased headcount in our reimbursement operations, partially offset by a $0.4 million decrease in occupancy costs and legal and professional fees.
Reimbursement, general and administrative expenses decreased $0.7 million, or 2%, to $30.4 million in the six months ended June 30, 2023, compared to $31.1 million in the six months ended June 30, 2022. This decrease was primarily attributable to a $1.8 million decrease in occupancy costs, depreciation expense, and legal and professional fees, partially offset by a $1.1 million increase in personnel-related compensation expense as a result of increased headcount in our reimbursement operations, payer relations and corporate functions.
Intangible Asset Amortization and Earn-out Expense
Intangible asset amortization and earn-out expense decreased $0.5 million to $1.2 million in the three months ended June 30, 2023, compared to $1.7 million in the three months ended June 30, 2022. The decrease in intangible asset amortization and earn-out expense was mainly attributable to a $0.6 million adjustment to the fair value of the earn-out liability for the three months ended June 30, 2023, compared to a $1.1 million adjustment for the three months ended June 30, 2022.
Intangible asset amortization and earn-out expense decreased $6.3 million to $2.5 million in the six months ended June 30, 2023, compared to $8.8 million in the six months ended June 30, 2022. The decrease in intangible asset amortization and earn-out expense was mainly attributable to a $1.2 million adjustment to the fair value of the earn-out liability for the six months ended June 30, 2023, compared to a $7.6 million adjustment for the six months ended June 30, 2022.
Other Expense, Net
Other expense, net was $0.8 million and $0.6 million for the three months ended June 30, 2023 and 2022, respectively, and was $1.8 million and $1.0 million for the six months ended June 30, 2023 and 2022, respectively. The increase in each period was primarily attributable to an increase in interest expense .
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Income Taxes
We recorded an income tax expense of $1.3 million and an income tax benefit of $20 thousand for the three months ended June 30, 2023 and 2022, respectively. The difference relates to the fact that we expect to have current taxes payable for 2023, despite having a full valuation allowance. Additionally, there are significant permanent adjustments for nondeductible meals expense and nondeductible stock issuance costs which were not relevant to the prior year period. We recorded an income tax benefit of $1.6 million and an income tax expense of $0.2 million for the six months ended June 30, 2023 and 2022, respectively. The benefit for the current year period reflects the tax effects of year-to-date losses that we expect to realize, whereas tax benefits from losses in the prior year period were not expected to be realized.
Liquidity and Capital Resources
Cash Flows
At June 30, 2023, our principal sources of liquidity were cash and cash equivalents of $ 63.2 million and net accounts receivable of $ 62.0 million. This compares to cash and cash equivalents of $23.4 million and net accounts receivable of $64.5 million at June 30, 2022.
The following table summarizes our cash flows for the periods indicated:
Six Months Ended
June 30,
(In thousands)
2023
2022
Net cash provided by (used in):
Operating activities
$
13,407
$
(900)
Investing activities
(1,142)
(416)
Financing activities
29,018
(3,563)
Net increase (decrease) in cash and cash equivalents
$
41,283
$
(4,879)
Operating Activities
Net cash provided by operating activities during the six months ended June 30, 2023 was $13.4 million, resulting from a net increase in operating assets and liabilities of $7.1 million and non-cash net loss adjustments of $8.3 million, which were partially offset by a net loss of $2.0 million. Cash provided relating to the change in operating assets and liabilities primarily consisted of a decrease in accounts receivable of $15.9 million, a decrease in net investment in leases of $2.9 million and a decrease in inventories of $2.8 million, partially offset by a decrease in accrued expenses of $6.0 million, a decrease in accrued payroll and related taxes and income taxes payable of $4.0 million, a decrease in income taxes payable of $3.3 million, an increase in prepaid expenses of $0.7 million and a decrease in accounts payable of $0.7 million. The non-cash net loss adjustments consisted primarily of $3.8 million of stock-based compensation expense, $3.3 million of depreciation and amortization expense and a $1.2 million change in fair value of earn-out liability.
Net cash used in operating activities during the six months ended June 30, 2022, was $0.9 million, resulting from a net loss of $20.2 million, which was partially offset by a net increase in operating assets and liabilities of $3.5 million and non-cash net (loss) income adjustments of $15.8 million. The non-cash net (loss) income adjustments consisted primarily of $7.6 million related to a change in fair value of earn-out liability, $5.1 million of stock-based compensation expense, $3.0 million of depreciation and amortization expense and $0.1 million of deferred income tax expense. The uses of cash related to changes in operating assets primarily consisted of increases in accounts receivable of $2.2 million, net investment in leases of $0.9 million and inventories of $0.7 million, partially offset by decreases in prepaid expenses and other assets of $1.9 million. The changes in operating liabilities consisted of increases in accounts payable of $4.1 million and accrued expenses and other liabilities of $1.2 million.
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Investing Activities
Net cash used in investing activities during the six months ended June 30, 2023, was $1.1 million, consisting of purchases of property and equipment, and patent costs.
Net cash used in investing activities during the six months ended June 30, 2022, was $0.4 million, consisting of purchases of property and equipment, and patent costs.
Financing Activities
Net cash provided by financing activities during the six months ended June 30, 2023, was $29.0 million, primarily consisting of net proceeds from the offering of our common stock of $34.6 million and $1.0 million in proceeds from the issuance of common stock under the ESPP. The increase was partially offset by a payment of $5.0 million on the AffloVest earn-out and a $1.5 million payment made on our term loan.
Net cash used by financing activities during the six months ended June 30, 2022, was $3.6 million, primarily consisting of payments of $4.5 million made on our term loan, slightly offset by $1.0 million in proceeds from exercise of common stock options and the issuance of common stock under the ESPP.
Credit Agreement
On April 30, 2021, we entered into an Amended and Restated Credit Agreement (the “Restated Credit Agreement”) with the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative Agent. The Restated Credit Agreement amended and restated in its entirety our prior credit agreement.
On September 8, 2021, we entered into a First Amendment Agreement (the “Amendment”), which amended the Restated Credit Agreement (as amended by the Amendment, the “Credit Agreement”) with the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent. The Amendment, among other things, added a $30.0 million incremental term loan to the $25.0 million revolving credit facility provided by the Restated Credit Agreement. The term loan is reflected on our condensed consolidated financial statements as a note payable. The Credit Agreement provides that, subject to satisfaction of certain conditions, we may increase the amount of the revolving loans available under the Credit Agreement and/or add one or more term loan facilities in an amount not to exceed $25.0 million in the aggregate, such that the total aggregate principal amount of loans available under the Credit Agreement (including under the revolving credit facility) does not exceed $80.0 million.
On September 8, 2021, in connection with the closing of the acquisition of the AffloVest business, we borrowed the $30.0 million term loan and utilized that borrowing, together with a draw of $25.0 million under the revolving credit facility and cash on hand, to fund the purchase price. The principal of the term loan is required to be repaid in quarterly installments of $750,000.
On February 22, 2022, we entered into a Second Amendment Agreement (the “Second Amendment”), which further amends the Credit Agreement. The Second Amendment modified the maximum leverage ratio, the minimum fixed charge coverage ratio and the minimum consolidated EBITDA covenants under the Credit Agreement, and added a minimum liquidity covenant, through the quarter ended June 30, 2023. The Second Amendment also increased the applicable margin for LIBOR rate loans under the Credit Agreement during the period commencing on the date of the Second Amendment and ending on the last day of the fiscal quarter ending June 30, 2023.
Pursuant to the Second Amendment, we made a mandatory principal prepayment of the term loan of $3.0 million on February 22, 2022.
On June 21, 2023, we entered into a Third Amendment Agreement (the “Third Amendment”) that replaced the interest rate benchmark under the Credit Agreement from LIBOR to the term Secured Overnight Financing Rate (“SOFR”). All tenors of term SOFR are subject to a credit spread adjustment of 0.10% (“Adjusted Term SOFR”).
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As of June 30, 2023, we had outstanding borrowings of $47.5 million under the Credit Agreement, comprised of $22.5 million under the term loan and $25.0 million under the revolving credit facility.
On August 1, 2023, we entered into a Fourth Amendment Agreement (the “Fourth Amendment”), which further amends the Credit Agreement. The Fourth Amendment, among other things, decreases the commitment fees payable under the revolving credit facility and eliminates the language providing that the applicable margin for Adjusted Term SOFR loans was 3.50%. The Fourth Amendment also eliminates the liquidity financial covenant and modifies the remaining financial covenants to reflect the termination of the temporary covenant relief period that was in place until June 30, 2023 pursuant to the Second Amendment. In addition, the Fourth Amendment provides for an additional term loan in the amount of $8.25 million, which we used for a paydown of the revolving credit facility. Following such payment, as of August 1, 2023, we had outstanding borrowings of $47.75 million under the Credit Agreement, comprised of $30.0 million under the term loan and $16.75 million under the revolving credit facility. The Fourth Amendment also extends the maturity date of the term loans and revolving credit facility under the Credit Agreement from September 8, 2024 to August 1, 2026.
For additional information regarding the Credit Agreement, including interest rates, fees and maturities, see Note 9 – “Credit Agreement” of the condensed consolidated financial statements contained in this report.
Future Cash Requirements
For a discussion of our material estimated future cash requirements under our contractual obligations and commercial commitments, in total and disaggregated into current and long-term , see “Future Cash Requirements” included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes since December 31, 2022.
Adequacy of Resources
Our future cash requirements may vary significantly from those now planned and will depend on many factors, including:
● the impacts of inflation, rising interest rates or a recession on our business;
● sales and marketing resources needed to further penetrate our market;
● expansion of our operations;
● response of competitors to our solutions and applications;
● costs associated with clinical research activities;
● increases in interest rates;
● labor shortages and wage inflation;
● component price inflation;
● costs to develop and implement new products; and
● use of capital for acquisitions or licenses, if any.
Historically, we have experienced increases in our expenditures consistent with the growth in our revenue, operations and personnel, and we anticipate that our expenditures will continue to increase as we expand our business.
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Although the impact of the COVID-19 pandemic and other factors such as inflation and rising interest rates are difficult to predict, we believe our cash, cash equivalents and cash flows from operations will be sufficient to meet our working capital, capital expenditure, debt repayment and related interest, and other cash requirements for at least the next twelve months.
Recent Accounting Pronouncements
Refer to Note 3 – “Summary of Significant Accounting Policies” of the condensed consolidated financial statements contained in this report for a description of recently issued accounting pronouncements that are applicable to our business.
Critical Accounting Estimates
Critical accounting estimates are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. For additional information, please see the discussion of our most critical accounting estimates under “Critical Accounting Estimates ” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For a discussion on our market risks, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” included in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes since December 31, 2022.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.