What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-06 compared with 2023-08-07 · 82 added, 75 removed, 157 unchanged (50% of the section changed)

8 unchanged sentences

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.

Our current lymphedema products are the Flexitouch Plus and Entre Plus systems and our airway clearance product is the AffloVest.

A predecessor to our Flexitouch system received 510(k) clearance from the U.S.

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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.

The Entre Plus 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 Plus system.

Sales and rentals of our lymphedema products represented 88% and 85% of our revenue in the nine months ended September 30, 2023 and 2022, respectively.

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.

For the nine months ended September 30, 2023 and 2022, sales of AffloVest represented 12% and 15% of our revenue, respectively.

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.

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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.

As of September 30, 2023, we employed 246 (245 at June 30, 2023) field sales representatives for our lymphedema products and a team of 13 (10 at June 30, 2023) supporting our airway clearance products.

This compares to 251 field sales representatives for our lymphedema products and a team of 10 supporting our airway clearance products as of September 30, 2022.

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

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

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

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.

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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.

For the three months ended September 30, 2023, we generated revenue of $69.6 million and had net income of $22.3 million, compared to revenue of $65.3 million and a net loss of $2.3 million for the three months ended September 30, 2022.

For the nine months ended September 30, 2023, we generated revenue of $196.8 million and had net income of $20.3 million, compared to revenue of $172.9 million and a net loss of $22.5 million for the nine months ended September 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.

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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.

While we saw some level of recovery in 2022 and in the first nine months of 2023 , consequences of the pandemic remain uncertain.

Although the effects of the COVID-19 pandemic on our operating results continue to subside, the pandemic could still have an unfavorable effect on our financial position, results of operations and cash flows.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2023 and 2022

Comparison of the Three and Nine Months Ended September 30, 2023 and 2022

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

Three Months Ended

September 30,

(In thousands)

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Income (loss) before income taxes

Income tax expense (benefit)

Income tax benefit

Net income (loss)

“N.M.” Not Meaningful

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

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Total operating expenses

Loss from operations

Income (loss) from operations

Other expense

Loss before income taxes

Income (loss) before income taxes

Income tax (benefit) expense

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.

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:

Net income (loss)

Revenue increased $4.3 million, or 7%, to $69.6 million in the three months ended September 30, 2023, compared to $65.3 million in the three months ended September 30, 2022.

The increase in total revenue was attributable to an increase of $8.3 million, or 15%, in sales and rentals of the lymphedema product line, partially offset by a decrease of $4.0 million, or 36%, in sales of the airway clearance product line in the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022.

Revenue increased $23.9 million, or 14%, to $196.8 million in the nine months ended September 30, 2023, compared to $172.9 million in the nine months ended September 30, 2022.

The increase in total revenue was attributable to an increase of $25.8 million, or 18%, in sales and rentals of the lymphedema product line, partially offset by a decrease of $1.9 million, or 7%, in sales of the airway clearance product line in the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

The increase in the lymphedema product line revenue in the three and nine months ended September 30, 2023, was attributable to increasing productivity of our field sales team and enhancing our portfolio through the development and introduction of new products.

The decrease in the airway clearance product line revenue in the three and nine months ended September 30, 2023, was attributable to one large DME provider experiencing slowed placements of our AffloVest system due to the expiration of the COVID-19 Public Health Emergency waiver and a return to “pre-public health emergency’ eligibility requirements.

The following table summarizes our revenue by product line for the three and nine months ended September 30, 2023 and 2022, both in dollars and percentage of total revenue:

Three Months Ended

September 30,

(In thousands)

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“N.M.” Not Meaningful

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

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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.

Cost of revenue increased $1.8 million, or 10%, to $20.2 million in the three months ended September 30, 2023, compared to $18.5 million in the three months ended September 30, 2022.

Cost of revenue increased $8.6 million, or 18%, to $57.6 million in the nine months ended September 30, 2023, compared to $49.0 million in the nine months ended September 30, 2022.

The increase in cost of revenue was primarily attributable to the increase in sales and rentals of the lymphedema product line in both periods.

Gross margin was 70.9% and 71.7% in the three months ended September 30, 2023 and 2022, respectively, and 70.7% and 71.7% in the nine months ended September 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

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.

Sales and marketing expenses decreased $0.6 million, or 2%, to $26.0 million in the three months ended September 30, 2023, compared to $26.6 million in the three months ended September 30, 2022.

decrease was primarily attributable a $0.6 million decrease in personnel-related compensation expenses and a $0.4 million decrease in travel and entertainment expenses.

These decreases were partially offset by a $0.3 million increase in expenses for new product introduction and a $0.1 million increase in subscription fee expenses.

Sales and marketing expenses increased $1.2 million, or 2%, to $80.5 million in the nine months ended September 30, 2023, compared to $79.3 million in the nine months ended September 30, 2022.

The increase was primarily attributable to a $1.4 million increase in personnel-related compensation expenses, a $0.3 million increase in subscription fee expenses and a $0.2 million increase in expenses for new product introduction.

These increases were partially offset by a $0.5 million decrease in travel and entertainment expenses and a $0.2 million decrease in expenses related to sales meetings and tradeshows.

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.

Research and development (“R&D”) expenses increased $0.4 million, or 24%, to $2.0 million in the three months ended September 30, 2023, compared to $1.6 million in the three months ended September 30, 2022.

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

R&D expenses increased $1.1 million, or 22%, to $6.0 million in the nine months ended September 30, 2023, compared to $4.9 million in the nine months ended September 30, 2022.

The increase was primarily attributable to a $0.8 million increase in personnel-related compensation expenses and a $0.3 million increase in clinical study related expenses.

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.

Reimbursement, general and administrative expenses increased $0.2 million, or 1%, to $16.5 million in the three months ended September 30, 2023, compared to $16.3 million in the three months ended September 30, 2022.

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

Reimbursement, general and administrative expenses decreased $0.5 million, or 1%, to $46.9 million in the nine months ended September 30, 2023, compared to $47.4 million in the nine months ended September 30, 2022.

This decrease was primarily attributable to a $2.0 million decrease in occupancy costs, depreciation expense, and legal and professional fees, partially offset by a $1.5 million increase in personnel-related compensation expenses.

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.

Intangible asset amortization and earn-out expense decreased $7.1 million to a benefit of $3.1 million in the three months ended September 30, 2023, compared to an expense of $4.0 million in the three months ended September 30, 2022.

The benefit primarily related to a decrease in the fair value of the earn-out expense of $3.7 million for the three months ended September 30, 2023, due to the lower than expected airway clearance product revenue, compared to an increase in the fair value of the earn-out expense of $3.4 million for the three months ended September 30, 2022.

Intangible asset amortization and earn-out expense decreased $13.4 million to a benefit of $0.6 million in the nine months ended September 30, 2023, compared to an expense of $12.8 million in the nine months ended September 30, 2022.

The benefit primarily related to a decrease in the fair value of the earn-out expense of $2.5 million for the nine months ended September 30, 2023, due to the lower than expected airway clearance product revenue, compared to an increase in the fair value of the earn-out expense of $10.9 million for the nine months ended September 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 .

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.

Other expense, net was $0.4 million and $0.7 million for the three months ended September 30, 2023 and 2022, respectively.

The decrease was primarily due to an increase in interest income.

Other expense, net was $2.2 million and $1.8 million for the nine months ended September 30, 2023 and 2022, respectively.

The increase was due to an increase in interest expense, partially offset by an increase in interest income.

We recorded an income tax benefit of $14.7 million and an income tax benefit of $0.1 million for the three months ended September 30, 2023 and 2022, respectively.

The primary driver of the change was attributable to the release of the valuation allowance related to the future realization of deferred tax assets.

We recorded an income tax benefit of $16.3 million and an income tax expense of $0.1 million for the nine months ended September 30, 2023 and 2022, respectively.

The primary driver of the change was attributable to the release of the valuation allowance related to the future realization of deferred tax assets.

Liquidity and Capital Resources

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.

At September 30, 2023, our principal sources of liquidity were cash and cash equivalents of $ 66.0 million and net accounts receivable of $ 58.5 million.

This compares to cash and cash equivalents of $23.4 million and net accounts receivable of $69.5 million at September 30, 2022.

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

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

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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.

Net cash provided by operating activities during the nine months ended September 30, 2023 was $17.5 million, resulting from net income of $20.3 million and a net increase in operating assets and liabilities of $9.9 million, which were partially offset by non-cash net income adjustments of $12.7 million.

Cash provided relating to the change in operating assets and liabilities primarily consisted of a decrease in accounts receivable of $19.3 million and a decrease in net investment in leases of $2.5 million, partially offset by a decrease in accrued expenses of $5.5 million, a decrease in accounts payable of $3.6 million, a decrease in accrued payroll and related taxes of $2.3 million, and an increase in prepaid expenses and inventories of $0.7 million.

The negative non-cash net loss adjustments consisted primarily of $20.7 million of deferred income taxes and a $2.5 million change in the fair value of earn-out liability, offset by $5.6 million of stock-based compensation expense and $4.9 million of depreciation and amortization expense.

Net cash provided by operating activities during the nine months ended September 30, 2022 was $1.4 million, primarily resulting from non-cash net (loss) income adjustments of $23.3 million and a net increase in operating assets and liabilities of $0.6 million, partially offset by a net loss of $22.5 million.

The non-cash net (loss) income adjustments consisted primarily of $10.9 million related to a change in fair value of earn-out liability, $7.7 million of stock-based compensation expense and $4.7 million of depreciation and amortization expense.

The uses of cash related to changes in operating assets primarily consisted of increases in net investment in leases of $2.6 million, accounts receivable of $2.3 million, inventories of $3.8 million, and prepaid expenses and other assets of $0.3 million.

The changes in operating liabilities consisted of increases in accrued

expenses and other liabilities of $6.8 million, accounts payable of $6.1 million, and accrued payroll and related taxes of $1.4 million.

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.

Net cash used in investing activities during the nine months ended September 30, 2023, was $1.5 million, consisting of purchases of property and equipment, and patent costs.

Net cash used in investing activities during the nine months ended September 30, 2022, was $1.8 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.

Net cash provided by financing activities during the nine months ended September 30, 2023, was $28.1 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, partially offset by a payment of $5.0 million on the AffloVest earn-out and a $2.3 million payment made on our term loan.

Net cash used in financing activities during the nine months ended September 30, 2022, was $4.3 million, primarily consisting of payments of $5.3 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

6 unchanged sentences

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.

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All tenors of term SOFR are subject to a credit spread adjustment of 0.10% (“Adjusted Term SOFR”).

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.

The Fourth Amendment, among other things, decreased the commitment fees payable under the revolving credit facility and eliminated the temporary increase in the applicable margin for Adjusted Term SOFR loans.

The Fourth Amendment also eliminated the liquidity financial covenant and modified 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 provided for an additional term loan in the amount of $8.25 million, which we used for a paydown of the revolving credit facility.

The Fourth Amendment also extended the maturity date of the term loans and revolving credit facility under the Credit Agreement from September 8, 2024 to August 1, 2026.

As of September 30, 2023, we had outstanding borrowings of $46.8 million under the Credit Agreement, comprised of $30.0 million under the term loan and $16.8 million under the revolving credit facility.

The principal of the term loan is required to be repaid in quarterly installments of $750,000.

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.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis