What changed in this filing

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Item 1. Financial Statements

2024-11-04 compared with 2024-08-05 · 131 added, 98 removed, 456 unchanged (33% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

(In thousands, except share and per share data)

29 unchanged sentences

Total liabilities

Commitments and Contingencies (see Note 9)

Stockholders’ equity:

Preferred stock, $ 0.001 par value, 50,000,000 shares authorized;

none issued and outstanding as of June 30, 2024 and December 31, 2023

none issued and outstanding as of September 30, 2024 and December 31, 2023

Common stock, $ 0.001 par value, 300,000,000 shares authorized;

23,966,748 shares issued and outstanding as of June 30, 2024;

23,997,089 shares issued and outstanding as of September 30, 2024;

23,600,584 shares issued and outstanding as of December 31, 2023

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except share and per share data)

14 unchanged sentences

Total operating expenses

Income (loss) from operations

Income from operations

Other income (expense)

Income (loss) before income taxes

Income before income taxes

Income tax expense (benefit)

Net income (loss)

Net income (loss) per common share

Weighted-average common shares used to compute net income (loss) per common share

Net income per common share

Weighted-average common shares used to compute net income per common share

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(In thousands, except share data)

Balances, March 31, 2024

Balances, June 30, 2024

Stock-based compensation

Exercise of common stock options and vesting of performance and restricted stock units

Common shares issued for employee stock purchase plan

Net income for the period

Balances, June 30, 2024

Balances, September 30, 2024

Balances, December 31, 2023

3 unchanged sentences

Net income for the period

Balances, September 30, 2024

Balances, June 30, 2023

Balances, March 31, 2023

Stock-based compensation

Exercise of common stock options and vesting of performance and restricted stock units

Common shares issued for employee stock purchase plan

Net loss for the period

Balances, June 30, 2023

Net income for the period

Balances, September 30, 2023

Balances, December 31, 2022

3 unchanged sentences

Common shares issued for employee stock purchase plan

Net loss for the period

Balances, June 30, 2023

Net income for the period

Balances, September 30, 2023

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands)

Cash flows from operating activities

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

19 unchanged sentences

Cash flows from financing activities

Proceeds from issuance of note payable

Payments on earn-out

Payments on note payable

Payments on revolving line of credit

Payments of deferred debt issuance costs

Proceeds from exercise of common stock options

36 unchanged sentences

In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included.

The results for the six months ended June 30, 2024, are not necessarily indicative of results to be expected for the year ending December 31, 2024, or for any other interim period or for any future year.

The results for the nine months ended September 30, 2024, are not necessarily indicative of results to be expected for the year ending December 31, 2024, or for any other interim period or for any future year.

The condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.

8 unchanged sentences

Significant Accounting Policies

There were no material changes in our significant accounting policies during the six months ended June 30, 2024.

There were no material changes in our significant accounting policies during the nine months ended September 30, 2024.

See Note 3 – “Summary of Significant Accounting Policies” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, for information regarding our significant accounting policies.

12 unchanged sentences

(In thousands)

At June 30, 2024

At September 30, 2024

At December 31, 2023

7 unchanged sentences

Our patents and other intangible assets are summarized as follows:

At June 30, 2024

At September 30, 2024

(In thousands)

17 unchanged sentences

Total intangible assets

Amortization expense was $ 1.0 million for each of the three months ended June 30, 2024 and 2023, and $ 1.9 million for each of the six months ended June 30, 2024 and 2023, of which $ 0.3 million in each of the three months ended June 30, 2024 and 2023, and $ 0.6 million in each of the six months ended June 30, 2024 and 2023, were recorded in cost of sales revenue.

Amortization expense was $ 0.9 million for each of the three months ended September 30, 2024 and 2023, and $ 2.8 million and $ 2.9 million for the nine months ended September 30, 2024 and 2023, respectively, of which $ 0.3 million in each of the three months ended September 30, 2024 and 2023, and $ 0.9 million in each of the nine months ended September 30, 2024 and 2023, were recorded in cost of sales revenue.

Future amortization expenses are expected as follows:

(In thousands)

2024 (July 1 - December 31)

2024 (October 1 - December 31)

In the third quarter of 2024, we performed our annual goodwill impairment test utilizing both the qualitative and quantitative approach described in FASB ASU No.

5 unchanged sentences

(In thousands)

At June 30, 2024

At September 30, 2024

At December 31, 2023

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

29 unchanged sentences

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.

On November 1, 2024, we entered into a Fifth Amendment Agreement (the “Fifth Amendment”), which further amended the Credit Agreement.

The Fifth Amendment permits the Company to make payments to repurchase shares of its common stock, as long as the Company is not in default before and after giving effect to such repurchases, and as long as such repurchases do not exceed $ 30.0 million .

On December 21, 2023, we made a payment of $ 16.8 million to repay in full the outstanding balance on the revolving credit facility.

As of June 30, 2024, we had outstanding borrowings of $ 27.8 million under the Credit Agreement, comprised entirely of the term loan.

At June 30, 2024, all outstanding borrowings were subject to interest at a rate calculated at Adjusted Term SOFR plus an applicable margin, for an interest rate of 7.18 % .

As of September 30, 2024, we had outstanding borrowings of $ 27.0 million under the Credit Agreement, comprised entirely of the term loan.

At September 30, 2024, all outstanding borrowings were subject to interest at a rate calculated at Adjusted Term SOFR plus an applicable margin, for an interest rate of 7.10 % .

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

Maturities of the term loan for the next three years as of June 30, 2024, were as follows:

Maturities of the term loan for the next three years as of September 30, 2024, were as follows:

(In thousands)

2024 (July 1 - December 31)

2024 (October 1 - December 31)

Deferred financing fees

3 unchanged sentences

Our obligations under the Credit Agreement are secured by a security interest in substantially all of our and our subsidiary’s assets and are also guaranteed by our subsidiary.

As of June 30, 2024, the Credit Agreement contained a number of restrictions and covenants, including that we maintain compliance with a maximum consolidated total leverage ratio, a minimum fixed charge coverage ratio and a minimum consolidated EBITDA covenant.

As of June 30, 2024, we were in compliance with all covenants under the Credit Agreement.

As of September 30, 2024, the Credit Agreement contained a number of restrictions and covenants, including that we maintain compliance with a maximum consolidated total leverage ratio, a minimum fixed charge coverage ratio and a minimum consolidated EBITDA covenant.

As of September 30, 2024, we were in compliance with all covenants under the Credit Agreement.

Commitments and Contingencies

13 unchanged sentences

These leases are typically greater than one year with fixed, escalating rents over the noncancelable terms and, therefore, ROU operating lease assets and operating lease liabilities are recorded on the Condensed Consolidated Balance Sheets, with rent expense recognized on a straight-line basis over the term of the lease.

The remaining lease terms vary from approximately one to seven years as of June 30, 2024.

The remaining lease terms vary from approximately one to seven years as of September 30, 2024.

We entered into a lease (“initial lease”) in October 2018, for approximately 80,000 square feet of office space for our new corporate headquarters in Minneapolis, Minnesota.

8 unchanged sentences

We also have operating lease agreements for certain computer and office equipment.

The remaining lease terms as of June 30, 2024, ranged from less than one year to approximately four years with fixed monthly payments that are included in the ROU operating lease assets and operating lease liabilities.

The remaining lease terms as of September 30, 2024, ranged from less than one year to approximately four years with fixed monthly payments that are included in the ROU operating lease assets and operating lease liabilities.

The leases provide an option to purchase the related equipment at fair market value at the end of the lease.

3 unchanged sentences

(In thousands)

At June 30, 2024

At September 30, 2024

At December 31, 2023

4 unchanged sentences

Weighted average discount rate

Six Months Ended June 30,

Nine Months Ended September 30,

Supplemental cash flow information for our operating leases:

3 unchanged sentences

(In thousands)

2024 (July 1 - December 31)

2024 (October 1 - December 31)

Total minimum lease payments

3 unchanged sentences

Non-current obligations under operating lease liabilities

Operating lease costs were $ 0.9 million for each of the three months ended June 30, 2024 and 2023.

Operating lease costs were $ 1.8 million for each of the six months ended June 30, 2024 and 2023.

Operating lease costs were $ 0.9 million for each of the three months ended September 30, 2024 and 2023.

Operating lease costs were $ 2.6 million and $ 2.7 million for the nine months ended September 30, 2024 and 2023, respectively.

Major Vendors

We had purchases from one vendor that accounted for 17 % of our total purchases for the three months ended June 30, 2024, and purchases from one vendor that accounted for 20 % of our total purchases for the six months ended June 30, 2024.

We had purchases from two vendors that accounted for 30 % of our total purchases for the three months ended June 30, 2023, and purchases from one vendor that accounted for 24 % of our total purchases for the six months ended June 30, 2023.

We had purchases from one vendor that accounted for 22 % of our total purchases for the three months ended September 30, 2024, and purchases from one vendor that accounted for 20 % of our total purchases for the nine months ended September 30, 2024.

We had purchases from one vendor that accounted for 29 % of our total purchases for the three months ended September 30, 2023, and purchases from one vendor that accounted for 26 % of our total purchases for the nine months ended September 30, 2023.

Purchase Commitments

We issued purchase orders prior to June 30, 2024, totaling $ 28.8 million for goods that we expect to receive within the next year.

We issued purchase orders prior to September 30, 2024, totaling $ 24.8 million for goods that we expect to receive within the next year.

Retirement Plan

We maintain a 401(k) retirement plan for our employees in which eligible employees can contribute a percentage of their pre-tax compensation.

We recorded an expense related to our discretionary contributions to the 401(k) plan of $ 0.4 million and $ 0.3 million for the three months ended June 30, 2024 and 2023, respectively, and $ 1.1 million and $ 0.7 million for the six months ended June 30, 2024 and 2023, respectively.

We recorded an expense related to our discretionary contributions to the 401(k) plan of $ 0.6 million and $ 0.4 million for the three months ended September 30, 2024 and 2023, respectively, and $ 1.7 million and $ 1.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Legal Proceedings

21 unchanged sentences

On July 31, 2023, the plaintiff filed a Joint Notice of Preliminary Settlement indicating that the parties had reached a non-binding settlement-in-principal on most of the material terms that would resolve all claims between the parties and requested that the Court temporarily stay all deadlines, hearings, and conferences while the parties continued to finalize settlement.

On June 6, 2024, we entered into a Stipulation of Settlement in the Weaver Lawsuit.

On June 6, 2024, the parties entered into a Stipulation of Settlement in the Weaver Lawsuit.

On June 7, 2024, the plaintiff filed an unopposed motion for preliminary approval of the settlement.

On June 27, 2024, the Court entered an order granting the motion for preliminary approval of the settlement.

The Court has scheduled a settlement hearing for August 28, 2024 to consider whether to grant final approval to the settlement.

Pursuant to the settlement, we will adopt, implement and maintain certain corporate governance reforms and have agreed to pay approximately $ 0.5 million in fees and expenses related to this lawsuit.

The final settlement hearing occurred on August 28, 2024, and on September 4, 2024, the Court entered its order approving the settlement, including the agreed upon attorneys’ fees and expense awards to plaintiffs’ counsel and service awards to the shareholder plaintiffs.

Pursuant to the settlement, we are adopting, implementing, and maintaining certain corporate governance reforms.

The attorneys’ fees and expense award of approximately $ 0.5 million was covered by insurance and has been paid.

The settlement does not constitute an admission of liability or wrongdoing by us or any of our current or former directors or officers.

This matter is now concluded.

On October 25, 2024, the United States District Court, District of Massachusetts (Boston) unsealed two qui tam complaints against us.

The first complaint is captioned United States ex.

Benjaman Scarborough vs.

Tactile Systems Technology, Inc., Case No.

1:21-cv-10813-IT, and was filed under seal on May 17, 2021, on behalf of the United States by a former employee (the “Scarborough Complaint”).

The Scarborough Complaint alleges that we submitted false claims and made false statements in connection with the Medicare

programs, in violation of the Federal False Claims Act.

The second complaint is captioned United States ex.

Jackie Gorham, an individual, and Dustin Gast, an individual, vs.

Tactile Systems Technology, Inc.

1:21-cv-11809-IT, and was filed under seal on September 1, 2021, on behalf of the United States by two former employees (the “Gorham Complaint”).

The Gorham Complaint alleges that we submitted false claims and made false statements in connection with the Medicare, Medicare Advantage plans, Medicaid and other government payers, in violation of the Federal False Claims Act and submitted false claims resulting from kickbacks in violation of the Federal False Claims Act and the Federal Anti-Kickback Statute.

Both complaints seek damages, statutory penalties, attorneys’ fees, and costs.

Stockholders' Equity

5 unchanged sentences

provided, however, that our Board of Directors may determine that any annual increase be a lesser number.

In addition, all awards granted under our 2007 Omnibus

Stock Plan and our 2003 Stock Option Plan that were outstanding when the 2016 Plan became effective and that are forfeited, expired, cancelled, settled for cash or otherwise not issued, will become available for issuance under the 2016 Plan.

In addition, all awards granted under our 2007 Omnibus Stock Plan and our 2003 Stock Option Plan that were outstanding when the 2016 Plan became effective and that are forfeited, expired, cancelled, settled for cash or otherwise not issued, will become available for issuance under the 2016 Plan.

Pursuant to the automatic increase feature of the 2016 Plan, 1,180,019 shares were added as available for issuance thereunder on January 1, 2024.

Our Board of Directors exercised its prerogative to forego the automatic increase on January 1, 2023.

As of June 30, 2024, 6,615,454 shares were available for future grant pursuant to the 2016 Plan.

As of September 30, 2024, 6,462,956 shares were available for future grant pursuant to the 2016 Plan.

Upon adoption and approval of the 2016 Plan, all of our previous equity incentive compensation plans were terminated.

However, existing awards under those plans continue to vest in accordance with the original vesting schedules and will expire at the end of their original terms.

We recorded stock-based compensation expense of $ 1.9 million and $ 1.8 million for the three months ended June 30, 2024 and 2023, respectively and $ 3.9 million and $ 3.8 million for the six months ended June 30, 2024 and 2023, respectively.

We recorded stock-based compensation expense of $ 2.1 million and $ 1.8 million for the three months ended September 30, 2024 and 2023, respectively, and $ 6.0 million and $ 5.6 million for the nine months ended September 30, 2024 and 2023, respectively.

This expense was allocated as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

6 unchanged sentences

Stock options issued to participants other than non-employees typically vest over three or four years and typically have a contractual term of seven or ten years .

Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $ 0.1 million and $ 0.2 million for the three months ended June 30, 2024 and 2023, respectively and $ 0.2 million and $ 0.5 million for the six months ended June 30, 2024 and 2023, respectively.

At June 30, 2024, there was approximately $ 0.1 million of total unrecognized pre-tax stock option expense under our equity compensation plans, which is expected to be recognized on a straight-line basis over a weighted-average period of 1.0 years.

Our stock option activity for the six months ended June 30, 2024, was as follows:

Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $ 0.0 million and $ 0.2 million for the three months ended September 30, 2024 and 2023, respectively, and $ 0.2 million and $ 0.8 million for the nine months ended September 30, 2024 and 2023, respectively.

At September 30, 2024, there was approximately $ 42,100 of total unrecognized pre-tax stock option expense under our equity compensation plans, which is expected to be recognized on a straight-line basis over a weighted-average period of 1.0 years.

Our stock option activity for the nine months ended September 30, 2024, was as follows:

Exercise Price

4 unchanged sentences

Cancelled/Expired

Balance at June 30, 2024

Options exercisable at June 30, 2024

Balance at September 30, 2024

Options exercisable at September 30, 2024

(1) The exercise price of each option granted during the period shown was equal to the market price of the underlying stock on the date of grant.

1 unchanged sentence

The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period.

Options exercisable of 435,559 as of June 30, 2023, had a weighted-average exercise price of $ 44.67 per share.

Options exercisable of 400,484 as of September 30, 2023, had a weighted-average exercise price of $ 43.45 per share.

Time-Based Restricted Stock Units

1 unchanged sentence

Time-based restricted stock units granted under the 2016 Plan vest over one to three years .

Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for time-based restricted stock units was $ 1.5 million and $ 1.3 million for the three months ended June 30, 2024 and 2023, respectively, and $ 2.9 million and $ 2.6 million for the six months ended June 30, 2024 and 2023, respectively.

At June 30, 2024, there was approximately $ 8.3 million of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 1.9 years.

Our time-based restricted stock unit activity for the six months ended June 30, 2024, was as follows:

Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for time-based restricted stock units was $ 1.5 million and $ 1.2 million for the three months ended September 30, 2024 and 2023, respectively, and $ 4.4 million and $ 3.8 million for the nine months ended September 30, 2024 and 2023, respectively.

At September 30, 2024, there was approximately $ 7.7 million of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 1.9 years.

Our time-based restricted stock unit activity for the nine months ended September 30, 2024, was as follows:

Average Grant

2 unchanged sentences

Balance at December 31, 2023

Balance at June 30, 2024

Balance at September 30, 2024

(1) The aggregate intrinsic value of restricted stock units outstanding was based on our closing stock price on the last trading day of the period.

3 unchanged sentences

The PSUs granted in 2023 have three separate performance periods, and one-third of each grant will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA margin are achieved in each of 2023 and 2024 (ranging from 25 % to 175 % of target), and one-third will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA change are achieved in 2025 (ranging from 25 % to 175 % of target).

The PSUs granted in 2024 have three separate performance periods, and one-third of each grant will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA margin are achieved in 2024 (ranging from 25 % to 175 % of target), one-third will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA change are achieved in 2025 (ranging from 25 % to 175 % of target), and one-third will be earned if and to the extent performance goals to be established are achieved in 2026.

achieved in 2024 (ranging from 25 % to 175 % of target), one-third will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA change are achieved in 2025 (ranging from 25 % to 175 % of target), and one-third will be earned if and to the extent performance goals to be established are achieved in 2026.

All earned and vested PSUs will be settled in shares of common stock.

Stock-based compensation expense recognized for PSUs was $ 0.2 million and $ 0.1 million for the three months ended June 30, 2024 and 2023, respectively, and $ 0.6 million and $ 0.3 million for the six months ended June 30, 2024 and 2023, respectively.

At June 30, 2024, there was approximately $ 1.5 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.2 years.

Our PSU activity for the six months ended June 30, 2024, was as follows:

Stock-based compensation expense recognized for PSUs was $ 0.4 million and $ 0.3 million for the three months ended September 30, 2024 and 2023, respectively, and $ 1.0 million and $ 0.6 million for the nine months ended September 30, 2024 and 2023, respectively.

At September 30, 2024, there was approximately $ 2.0 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.2 years.

Our PSU activity for the nine months ended September 30, 2024, was as follows:

Average Grant

2 unchanged sentences

Balance at December 31, 2023

Balance at June 30, 2024

Balance at September 30, 2024

(1) The aggregate intrinsic value of PSUs outstanding was based on our closing stock price on the last trading day of the period.

8 unchanged sentences

Our Board of Directors exercised its prerogative to forego the automatic increase on January 1, 2023.

As of June 30, 2024, 1,497,964 shares were available for future issuance under the ESPP.

We recognized stock-based compensation expense associated with the ESPP of $ 0.1 million for each of the three months ended June 30, 2024 and 2023, and $ 0.2 million and $ 0.3 million for the six months ended June 30, 2024 and 2023, respectively.

As of September 30, 2024, 1,497,964 shares were available for future issuance under the ESPP.

We recognized stock-based compensation expense associated with the ESPP of $ 0.2 million and $ 0.1 million for the three months ended September 30, 2024 and 2023, respectively, and $ 0.4 million for each of the nine months ended September 30, 2024 and 2023.

We derive our revenue from the sale and rental of our products to our customers in the United States.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

4 unchanged sentences

Airway clearance products

Our revenue by channel, inclusive of sales and rental revenue, for the three and six months ended June 30, 2024 and 2023, are summarized in the following table:

Our revenue by channel, inclusive of sales and rental revenue, for the three and nine months ended September 30, 2024 and 2023, are summarized in the following table:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

14 unchanged sentences

Completion of these payments represents the fair market value of the equipment, and as such, interest income is not applicable.

Rental revenue for the three months ended June 30, 2024 and 2023, was primarily from private insurers.

Sales-type lease revenue and the associated cost of revenue for the three and six months ended June 30, 2024 and 2023, was:

Three Months Ended June 30,

Six Months Ended June 30,

Rental revenue for the three and nine months ended September 30, 2024 and 2023, was primarily from private insurers.

Sales-type lease revenue and the associated cost of revenue for the three and nine months ended September 30, 2024 and 2023, was:

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

5 unchanged sentences

Our provision for income taxes includes current federal and state income tax expense, as well as deferred federal and state income tax expense.

The effective tax rate for the three months ended June 30, 2024, was an expense of 29.2 % , compared to an expense of 108.3 % for the three months ended June 30, 2023.

The primary driver of the change in our effective tax rate was attributable to the fact that we did not have a full valuation allowance on our deferred tax assets for the current year period, while the prior year period reported a full valuation allowance.

income tax expense of $ 1.8 million and $ 1.3 million for the three months ended June 30, 2024 and 2023, respectively.

The effective tax rate for the six months ended June 30, 2024, was an expense of 36.0 % , compared to a benefit of 44.5 % for the six months ended June 30, 2023.

Additionally, in the prior year period we had year-to-date losses that we expected to realize, which drove a tax benefit.

We recorded an income tax expense of $ 1.2 million and an income tax benefit of $ 1.6 million for the six months ended June 30, 2024 and 2023, respectively.

The effective tax rate for the three months ended September 30, 2024, was an expense of 28.7 % , compared to a benefit of 194.0 % for the three months ended September 30, 2023.

We recorded income tax expense of $ 2.1 million and an income tax benefit of $ 14.7 million for the three months ended September 30, 2024 and 2023, respectively.

The effective tax rate for the nine months ended September 30, 2024, was an expense of 31.0 % , compared to a benefit of 407.1 % for the nine months ended September 30, 2023.

We recorded an income tax expense of $ 3.3 million and an income tax benefit of $ 16.3 million for the nine months ended September 30, 2024 and 2023, respectively.

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority is more-likely-than-not to sustain the position following an audit.

1 unchanged sentence

The Company currently is not under examination in any jurisdictions.

Net Income (Loss) Per Share

The following table sets forth the computation of our basic and diluted net income (loss) per share:

Net Income Per Share

The following table sets forth the computation of our basic and diluted net income per share:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except share and per share data)

Net income (loss)

Weighted-average shares outstanding

Weighted-average shares used to compute diluted net income (loss) per share

Net income (loss) per share - Basic

Net income (loss) per share - Diluted

The following common stock equivalents were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been anti-dilutive:

Weighted-average shares used to compute diluted net income per share

Net income per share - Basic

Net income per share - Diluted

The following common stock equivalents were excluded from the computation of diluted net income per share for the periods presented because including them would have been anti-dilutive:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Restricted stock units

7 unchanged sentences

The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1).

The next highest priority is based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical

or similar assets or liabilities in non-active markets or other observable inputs (Level 2).

The next highest priority is based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in non-active markets or other observable inputs (Level 2).

The lowest priority is given to unobservable inputs (Level 3).

As of June 30, 2024, our obligations under the AffloVest Acquisition earn-out arrangements had been paid in full.

As of September 30, 2024, our obligations under the AffloVest Acquisition earn-out arrangements had been paid in full.

Prior to the determination of the actual amount of the earn-out, the earn-out liability was valued by employing a Monte Carlo Simulation model in a risk-neutral framework, which is a Level 3 input.

9 unchanged sentences

Fair value adjustments

Earn-out liability at June 30, 2023

Earn-out liability at September 30, 2023

On May 25, 2023, the Company paid $ 5.0 million, plus an imputed interest payment of $ 250,000 , relating to the initial earn-out.

2 unchanged sentences

Non-financial assets, such as equipment and leasehold improvements, and intangible assets are subject to non-recurring fair value measurements if they are deemed impaired.

Subsequent Event

On October 30, 2024, our Board of Directors authorized a program to repurchase up to $ 30.0 million of common stock.

Under the program, purchases may be made from time to time in the open market, in privately negotiated purchases, or both.

The timing and number of shares to be purchased will be based on the price of the Company's common stock, general business and market conditions and other investment considerations and factors.

The share repurchase program expires on October 31, 2026.

The program does not obligate the Company to repurchase any specific number of shares and may be suspended or discontinued at any time without prior notice.

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 1. Financial Statements