What changed in this filing

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Item 1. Business

2025-02-18 compared with 2024-02-20 · 143 added, 98 removed, 576 unchanged (29% of the section changed)

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

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

We sell the AffloVest product to accredited DME providers.

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

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

We sell the AffloVest product to accredited DME providers, whose representatives gather and submit documentation for payer reimbursement, train patients on use of the device, and provide ongoing patient support.

For the year ended December 31, 2024, we generated revenue of $293.0 million and had net income of $17.0 million.

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Venous hypertension can also lead to a marked increase in fluid build-up in the limbs, overwhelming the lymphatic system and causing lymphedema.

Our proprietary Flexitouch and Entre systems are clinically proven at-home solutions for patients with vascular disorders such as lymphedema.

Our proprietary Flexitouch, Entre and Nimbl systems are clinically proven at-home solutions for patients with vascular disorders such as lymphedema.

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

Our current lymphedema products are the Flexitouch Plus and Entre Plus systems.

Our current lymphedema products are the Flexitouch Plus, Entre Plus and Nimbl systems.

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.

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 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:

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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.

Nimbl, our next generation pneumatic compression platform, received 510(k) clearance in June 2024 and, beginning in October 2024, is commercially available throughout the United States for treatment of upper extremity lymphedema.

Sales and rentals of our lymphedema products generated $259.4 million, or 89%, of our revenue in 2024, and $241.7 million, or 88%, of our revenue in 2023.

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

On September 8, 2021, we acquired the assets of the AffloVest airway clearance product line.

AffloVest is a portable, battery-powered, wearable vest that provides airway clearance to treat patients with chronic respiratory conditions such as bronchiectasis or conditions resulting from neuromuscular disorders.

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

As of December 31, 2023, we employed 254 field sales representatives for our lymphedema products and a team of 16 supporting our airway clearance products.

This compares to 241 field sales representatives (excluding 9 key account managers) for our lymphedema products and a team of 10 specialists supporting our airway clearance products as of December 31, 2022.

As of December 31, 2024, we employed 169 account managers and 111 specialists for our lymphedema products and a team of 18 specialists supporting our airway clearance products.

This compares to 150 account managers and 104 specialists for our lymphedema products and a team of 16 specialists supporting our airway clearance products as of December 31, 2023.

Our reimbursement function includes payer relations and reimbursement operations.

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

Our payer relations function focuses on payer policy development, education, payer 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.

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

Health insurance coverage for our Flexitouch Plus and Entre Plus systems is in place with private payers, Medicare, the Veterans Administration and certain Medicaid programs.

Health insurance coverage for our Flexitouch Plus, Entre Plus and Nimbl systems is in place with private payers, Medicare, the Veterans Administration and certain Medicaid programs.

Based on our estimates, we are contracted or enrolled as an in-network provider with payers covering over 275 million lives in the United States.

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Overview of Lymphedema and Chronic Venous Insufficiency

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

back to the cardiovascular system.

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

Lymph nodes are located in several areas of the body, including superficial and deep lymph nodes under each arm, at the hip, in the groin, above the collar bones in the neck, in the abdomen,

tonsils and spleen, and in bone marrow.

Lymph nodes are located in several areas of the body, including superficial and deep lymph nodes under each arm, at the hip, in the groin, above the collar bones in the neck, in the abdomen, tonsils and spleen, and in bone marrow.

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

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While not required to develop a lymphedema diagnosis, some clinicians may choose to perform diagnostic testing.

Diagnostic tests for lymphedema include history and physical examination, soft tissue and vascular imaging, lymph node imaging, volume measurements, changes in electrical conductance, changes in biomechanical properties, genetic testing and blood tests for other conditions that have similar symptoms to lymphedema.

Diagnostic tests for lymphedema include history and physical examination, soft tissue and vascular imaging, lymph node imaging and volume measurements.

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

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Lymphedema and CVI are costly and lifelong conditions with debilitating physical and psychological impacts on patients.

Based on a study performed by Dr.

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

Based on a study published in 2020 by Dr.

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

This, in addition to the estimated five million individuals living in the U.S.

with cancer-related and primary lymphedema, increases the prevalence estimates to over 20 million individuals.

For people with cancer, the build-up of lymph fluid can be caused by

surgery, especially when lymph nodes are removed, radiation therapy that can damage lymph nodes and vessels, infections that damage surrounding tissue or cause scarring, and other conditions.

with cancer-related and primary

lymphedema, increases the prevalence estimates to over 20 million individuals.

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

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

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

The trial will consist of approximately 250 subjects enrolled at ten clinical sites and will span three years.

Ten clinical sites participated in the trial that completed in 2024.

Traditional Treatment and Limitations

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The standard of care treatment for CVI is compression therapy.

Compression stockings and wraps are typically used to provide added pressure, increasing the effectiveness of the calf-muscle pump in returning blood to the heart, but these products can be challenging for patients to apply.

Compression stockings and wraps are used to provide added pressure, increasing the effectiveness of the calf-muscle pump in returning blood to the heart.

As the disease progresses, patients may develop a venous leg ulcer, which is commonly treated using multilayered bandages to minimize swelling and enhance blood flow.

A clinician applies these typically non-removable bandages to patients at a precise pressure and patients wear the bandages between weekly visits to the wound clinic during which they are then removed and reapplied.

Treatment typically occurs for several months and impairs patient quality of life by limiting bathing, range of motion, comfort and other activities of daily living.

Treatment efficacy is inconsistent because bandages can lose their precise pressure between treatments.

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

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The Journal of Venous Disease .

Experts from the American Venous Forum, American Venous and Lymphatic

Society and Society for Vascular Medicine provided the consensus guidance on diagnosis and patient treatment pathways for lymphedema.

Over a majority of the panel (92%) agreed with the statement that sequential pneumatic compression should be recommended for lymphedema patients, with 34% strongly agreeing.

Experts from the American Venous Forum, American Venous and Lymphatic Society and Society for Vascular Medicine provided the consensus guidance on diagnosis and patient treatment pathways for lymphedema.

Over a majority of the panel (92%) agreed with the statement that sequential

pneumatic compression should be recommended for lymphedema patients, with 34% strongly agreeing.

In addition, 72% of the panel agreed with the statement that all patients with CVI (stages C3-C6) should be considered as lymphedema patients, with 38% strongly agreeing.

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

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

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

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

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We rely on a large direct sales force and marketing organization to drive greater product adoption by patients suffering from lymphedema and CVI and their clinicians.

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

respiratory patients.

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

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

We intend to strengthen our distribution network by continuing to recruit, train and

retain talented sales representatives.

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

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

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

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

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

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The garments come in a variety of sizes that can be easily adjusted to patients of all sizes.

When our system is activated, air passes through the hoses, delivering sequential inflation and deflation to the garments and applying gentle pressure to the skin.

When our system is activated, air passes through the hoses, delivering sequential inflation and deflation to the

garments and applying gentle pressure to the skin.

The inflation sequence is designed to stimulate the lymphatic system, moving lymph fluid from the impaired areas toward healthy regions of the body.

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In 2023, our second-generation system, Entre Plus, was introduced.

Nimbl, our next generation pneumatic compression platform, received 510(k) clearance in June 2024, and beginning in October 2024, is commercially available throughout the United States for the treatment of upper extremity lymphedema.

Improving on the Entre Plus garments, the Nimbl system has reduced hose and harnesses while maintaining the eight chambers that inflate in sequence for treatment.

Nimbl controllers include Bluetooth capability that enables therapy data from the controller to be reported through Kylee, a companion application.

In 2022, we introduced Kylee™, a free mobile application to help patients learn about lymphedema, track their symptoms and treatment, and share their progress with their doctor.

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Our customers can use Kylee to track their orders for our devices and view onboarding tutorials for using the device.

Once a patient starts using the device, they can use Kylee to record their treatments and symptoms,

and capture photos of their condition for sharing with their healthcare team.

Flexitouch Plus controllers include Bluetooth technology, which is viewable using Kylee.

Once a patient starts using the device, they can use Kylee to record their treatments and symptoms, and capture photos of their condition for sharing with their healthcare team.

Flexitouch Plus and Nimbl controllers include Bluetooth technology, which is viewable using Kylee.

We acquired the AffloVest business in September 2021.

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A key part of our success is our ability to demonstrate the effectiveness of our products by funding studies that generate clinical and economic outcome data supporting our products.

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

We have developed a

significant body of clinical data supporting the efficacy and safety of our products.

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

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

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

Total costs per

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

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

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Patients reported a significant increase in their ability to control lymphedema through treatment with our Flexitouch system, with an increase in function and a reduction in pain.

Of the 98 patients who responded, 66% reported being "very satisfied" with the treatment by our Flexitouch system and 29, or 30%, of patients reported being "satisfied" with the treatment by our Flexitouch system.

Of the 98 patients who responded, 70% reported being "very satisfied" with the treatment by our Flexitouch system and 30% reported being "satisfied" with the treatment by our Flexitouch system.

Comparison of our Flexitouch System with Simple Pneumatic Compression Devices

A prospective, randomized controlled trial published in Supportive Care in Cancer demonstrated that our Flexitouch system provides better clinical outcomes as compared to those achieved with a simple

pneumatic compression device for home-based treatment of breast cancer-related lymphedema.

A prospective, randomized controlled trial published in Supportive Care in Cancer demonstrated that our Flexitouch system provides better clinical outcomes as compared to those achieved with a simple pneumatic compression device for home-based treatment of breast cancer-related lymphedema.

The study was conducted in the United States and involved 36 patients.

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Eight percent of patients reported skin ulceration of the affected extremity in the year before presentation for treatment.

The number of lower-extremity

ulcers pre- and post-Flexitouch system use decreased from seven to two ( P =0.007).

The number of lower-extremity ulcers pre- and post-Flexitouch system use decreased from seven to two ( P =0.007).

Overall, 46% of the patients had complete limb girth measurements at the ankle and calf, and there was a statistically significant decreased overall limb girth after Flexitouch system treatment in pre- and post-ankle (28.3 cm vs.

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Unlike many of our competitors, we generally utilize a direct-to-patient and -provider model to market our lymphedema products directly to patients and clinics, providing high-quality customer service and capturing both the manufacturer and distributor margins for the majority of this business.

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

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

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

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

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

The respiratory DME channel also already serves the chronic respiratory community, enabling them to identify complex respiratory candidates who are regularly on other respiratory therapies (such as oxygen, nebulizers,

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The below chart reflects these models:

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

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

The chart below describes our U.S.

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

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

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

whose representatives service patients and bill third-party payers for the product.

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

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

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

We market to, and educate, DME provider representatives and clinicians about the AffloVest advantages.

As of December 31, 2024, we also employed a small group of respiratory specialists, who educate DME provider representatives, provide product demonstrations for targeted clinicians and support technical questions related to the AffloVest.

The chart below describes our DME model.

As of December 31, 2023, we employed 270 field sales representatives who provide support throughout the United States for our lymphedema and respiratory therapies compared to 251 field sales representatives as of December 31, 2022.

As of December 31, 2024, we employed 298 account managers and specialists who provide support throughout the United States for our lymphedema and respiratory therapies compared to 270 account managers and specialists as of December 31, 2023.

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

Reimbursement, Payer Relations and Customer Support Process

Private insurers and other payers represented approximately 54% and 57% of our revenue in 2023 and 2022, respectively, while Medicare represented approximately 24% and 19% of our revenue in 2023 and 2022, respectively, Veterans Administration hospitals represented approximately 10% of our revenue in each of 2023 and 2022, and DME distributors represented approximately 12% and 14% of our revenue in 2023 and 2022, respectively.

Private insurers and other payers represented approximately 60% and 54% of our revenue in 2024 and 2023, respectively, while Medicare represented approximately 18% and 24% of our revenue in 2024 and 2023, respectively, Veterans Administration hospitals represented approximately 11% and 10% of our revenue in 2024 and 2023, respectively, and DME distributors represented approximately 11% and 12% of our revenue in 2024 and 2023, respectively.

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

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

We have enjoyed a consistent commercial payer

approval rate of greater than 80% for the last seven years, and a greater than 90% Medicare claims submitted approval rate for the last seven years (post-arbitration and based on the number of claims, not dollar amount of claims, submitted across all our products).

For the last several years we have enjoyed an

80% or greater approval rate on commercial payers and 90% or greater approval rate on Medicare claims submitted (across all our products).

We began doing business with Medicare in 2007.

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

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

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

Garments that cover various parts of the body are used with these systems and billed using HCPCS codes E0656, E0657, E0667, E0668 and E0669.

Our head and neck garments do not currently have billing codes assigned.

Our head and neck garment does not currently have a billing code assigned;

it is currently billed using the miscellaneous DMEPOS HCPCS code E1399.

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

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We forecast our component needs based on historical trends, current utilization patterns and sales forecasts of future demand.

We establish our relationships with our third-party manufacturers and suppliers through supplier contracts and

purchase orders.

We establish our relationships with our third-party manufacturers and suppliers through supplier contracts and purchase orders.

In most cases, these supplier relationships may be terminated by either party upon reasonable notice.

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Order Fulfillment and Patient Education

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

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

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

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These trainers are professionally trained and instructed on proper use of our products.

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

Patient visits and training sessions are assigned by our staff.

Additional materials including training videos and support content is available on our website to support patients and their training needs.

Kylee™ allows patients to manage their conditions by tracking treatments and symptoms, as well as having direct access to educational resources.

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

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

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

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

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

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

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

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

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

To pursue a direct-to-patient and -provider

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

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

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

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In the United States, the FDA regulates medical devices, including the following activities that we perform, or that are performed on our behalf with respect to our devices:

product design and development, pre-clinical and clinical testing, manufacturing, labeling, storage, servicing, premarket clearance or approval, record keeping, product marketing, advertising and promotion, sales and distribution, and post-marketing surveillance.

Failure to comply with applicable U.S.

requirements may subject us to a variety of administrative or judicial sanctions, such as warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.

requirements may subject us to a variety of administrative, enforcement, or judicial sanctions, such as warning letters, import alerts, debarment, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.

The FDA can also refuse to clear or approve pending applications.

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

All of our past and current models of our Flexitouch, Entre and AffloVest systems are Class II devices under the FDA classification system requiring 510(k) clearance.

All of our past and current models of our Flexitouch, Entre, Nimbl and AffloVest systems are Class II devices under the FDA classification system requiring 510(k) clearance.

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

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

In June 2024 we received 510(k) clearance for our Nimbl device.

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

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● establishment registration and device listing;

● quality system regulation, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process;

● quality system regulation, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, current good manufacturing practice, as applicable, and other quality assurance procedures during all aspects of the manufacturing process;

● labeling regulations and the FDA prohibitions against the promotion of products for un-cleared, unapproved or "off-label" uses, and other requirements related to promotional activities;

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Any new Class II devices developed by us will be submitted to the FDA as required by the 510(k) process.

Under this process, when a 510(k) clearance is required, we must submit a premarket notification to the FDA demonstrating that our proposed device is "substantially equivalent" to a previously cleared and legally marketed 510(k) device or a device that was in commercial distribution before May 28, 1976 for which the FDA has not yet called for the submission of a premarket approval application, which is commonly known as the "predicate device." In 2019, the FDA released an optional Safety and Performance Based Pathway for 510(k) clearance, which allows a submitter to demonstrate that an eligible new device of a well-understood type meets FDA-identified performance criteria to demonstrate that the device is as safe and effective as a legally marketed device.

Under this process, when a 510(k) clearance is required, we must submit a premarket notification to the FDA demonstrating that our proposed device is "substantially equivalent" to a previously cleared and legally marketed 510(k) device, a legally marketed device which has been reclassified from high to low or moderate risk or a device that was in commercial distribution before May 28, 1976 for which the FDA does not require the submission of a premarket approval application, which is commonly known as the "predicate device." In 2019, the FDA released a final guidance for industry regarding an optional Safety and Performance Based Pathway for 510(k) clearance, which allows a submitter to demonstrate that an eligible new device of a well-understood type meets FDA-identified performance criteria to demonstrate that the device is as safe and effective as a legally marketed device.

If the FDA determines that the device, or its intended use, is not substantially equivalent to a previously-cleared device or use, the FDA will issue a not substantially equivalent decision.

This means the device cannot be cleared through the 510(k) process and will require marketing authorization through the premarket approval pathway.

In September 2023 the FDA released additional draft guidance around best practices for selecting a predicate device to support a premarket notification submission which further provides best practices for selecting a predicate device.

In September 2023 the FDA released additional draft guidance around best practices for selecting a predicate device to support a premarket notification submission.

A premarket approval application must be submitted to the FDA if the device cannot be cleared through the 510(k) process.

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We are also subject to announced and unannounced inspections by the FDA, and these inspections may include the manufacturing facilities or other sites of our subcontractors to audit any part of our quality system.

We were audited three times since January 2010 by the FDA and found to be in compliance with the Quality System Regulation.

We were inspected three times since January 2010 by the FDA and found to be in compliance with the Quality System Regulation.

We cannot assure you that we can maintain a comparable level of regulatory compliance in the future at our facilities.

FTC Regulation

Device advertising and promotional activity in certain circumstances is also subject to scrutiny by the Federal Trade Commission, as well as similar state consumer protection agencies, which enforce laws related to false and deceptive trade practices.

to false and deceptive trade practices.

A company that is found to have advertised its product in violation of these laws may be subject to liability, including monetary penalties.

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

that furnishes durable medical equipment, in which the physician or an immediate family member of such physician has an ownership or investment interest or with which the physician has entered into a compensation arrangement unless an exception applies.

Violation of the Stark Law could result in denial of payment, disgorgement of reimbursements received under a noncompliant arrangement, civil penalties and exclusion from Medicare or other Federal health care programs.

The Ethics in Patient Referrals Act, commonly known as the "Stark Law," prohibits a physician from making referrals for certain "designated health services" payable by Medicare to an entity, including a company that furnishes durable medical equipment, in which the physician or an immediate family member of such physician has an ownership or investment interest or with which the physician has entered into a compensation arrangement unless an exception applies.

Violation of the Stark Law could result in denial of payment,

disgorgement of reimbursements received under a noncompliant arrangement, civil penalties and exclusion from Medicare or other Federal health care programs.

Additionally, because some of these laws continue to evolve, we lack definitive guidance as to the application of certain key aspects of these laws as they relate to our arrangements with providers.

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We may be subject to a variety of domestic and foreign anti-corruption laws with respect to our regulatory compliance efforts and operations.

Foreign Corrupt Practices Act (the “FCPA”) is a criminal statute that prohibits an individual or business from paying, offering, promising or authorizing the provision of money (such as a bribe or kickback) or anything else of value (such as an improper gift, hospitality, or favor), directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision in order to assist the individual or business in obtaining, retaining, or directing business or other advantages (such as favorable regulatory rulings).

Foreign Corrupt Practices Act (the “FCPA”) is a criminal statute that prohibits an individual

or business from paying, offering, promising or authorizing the provision of money (such as a bribe or kickback) or anything else of value (such as an improper gift, hospitality, or favor), directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision in order to assist the individual or business in obtaining, retaining, or directing business or other advantages (such as favorable regulatory rulings).

In addition to the FCPA, there are other federal and state anti-corruption laws to which we may be subject, including, the U.S.

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Although we will seek to comply with anti-corruption laws, there can be no assurance that all of our employees, representatives, contractors, collaborators, agents, subsidiaries or affiliates will comply with these laws at all times.

Violation of these laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain governments or other persons, the loss of export privileges, reputational harm, adverse media coverage and other collateral consequences.

Violation of these laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain governments or other persons, importation restriction, the loss of export privileges, reputational harm, adverse media coverage and other collateral consequences.

In addition, our directors, officers, employees, and other representatives who engage in violations of the FCPA and certain other anti-corruption statutes may face imprisonment, fines and penalties.

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The time required to obtain clearance or approval by a foreign country may be longer or shorter than that required for FDA clearance or approval, and the requirements may be different.

Many countries also impose product standards, packaging requirements, environmental requirements, labeling requirements, and import restrictions on medical devices.

Many countries also impose product standards, packaging requirements, environmental

requirements, labeling requirements, and import restrictions on medical devices.

Each country has its own tariff regulations, duties and tax requirements.

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

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

The validity of the coverage criteria in the LCD is currently under dispute in the District Court of the District of Columbia.

A LCD, administered by the two Medicare Administrative Contractors responsible for processing durable medical equipment claims, and which had set forth additional coverage criteria impacting Medicare coverage for our products was retired on November 14, 2024.

The validity of the coverage criteria in the LCD remains under dispute in the District Court of the District of Columbia.

Our Medicare business was 18% of revenue in 2024 compared to 24% in 2023.

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

We maintain open communication with physician key opinion leaders and with Medicare contractors to provide data as it becomes available that could potentially influence coverage

We maintain open communication with physician key opinion leaders and with Medicare contractors to provide data as it becomes available that could potentially influence coverage decisions.

We also continue to closely monitor our Medicare business to identify trends that could have a negative impact on certain Medicare patients' access to our products, which in turn could have an adverse effect on our business and results of operations.

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

While this approach has had positive impact, we do not know if or when additional payers may adopt more restrictive criteria like the LCD nor do we know how they will choose to interpret it.

While this approach has had positive impact, we do not know if or when additional payers may adopt more restrictive criteria nor do we know how they will choose to interpret it.

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

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issued patents have varying patent terms, expiring between 2025 and through at least 2040, subject to payment of required maintenance fees, annuities and other charges.

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

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

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

We rely in the United States on common law rights to the Tactile Medical design trademark.

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

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

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

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

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Rewarding and supporting our employees is essential to Company morale.

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

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

To maintain a competitive salary and benefits package, we utilize multiple external survey sources to evaluate employee compensation and an independent third party to review executive compensation.

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

These benefits include but are not limited to retirement savings, an employee stock purchase plan, a variety of health insurance options, including dental and vision, discounts on healthy foods and fitness memberships, disability insurance, paid maternity/paternity leave, and a company volunteer program providing employees paid time to give back to the community.

Diversity, Equity, and Inclusion :

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

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

Employee Engagement and Culture :

We consider employee engagement to be a cornerstone of our business and we encourage different perspectives and ideas, which we believe enables better business decisions and rapid innovation.

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

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

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

● Increased focus on enhancing inclusiveness in our culture and understanding unintentional bias.

Fair Labor Practices:

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In 2024, we continued to focus on recruitment, hiring, and retention to ensure high quality talent and a strong fit for specific roles within the Company.

Our recruitment efforts are expanding through strong recruiting and hiring processes, as well as the expansion of our new internship program in 2023.

The company intranet facilitates employee inclusion, provides resources, and advances transparent

communication efforts.

Our recruitment efforts include strong recruiting and hiring processes, as well as an internship program.

The Company’s intranet facilitates employee inclusion, provides resources, and advances transparent communication efforts.

We also introduced a number of new learning and development options for our team members in 2023.

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

Information About our Executive Officers

Certain information with respect to our executive officers as of February 14, 2025 is set forth below.

Dodd , age 59, has served as a member of our Board of Directors since January 2021 and has served as our Chief Executive Officer since July 2024.

Previously, Ms.

Dodd served as President of Medtronic Canada at Medtronic plc.

Since joining Medtronic in March 2010, Ms.

Dodd served as Vice President and General Manager of Medtronic Care Management Services, Vice President and General Manager of Non-intensive Diabetes Therapies and Vice President for Global Health Economics, Reimbursement & Policy and Global Clinical Research across the Medtronic cardiovascular portfolio.

From November 1997 until March 2010, Ms.

Dodd held various positions in the pharma and medical divisions with Johnson & Johnson, most recently as Vice President of Health Economics and Reimbursement for Ethicon, Inc.

Dodd also served as an outcomes researcher with Orthopedic Surgeons, plc from January 1995 until November 1997.

From May 1988 until September 1993, Ms.

Dodd served as a project coordinator with the World Health Organization.

Birkemeyer , age 50, has served as our Chief Financial Officer since joining the Company in March 2023.

Birkemeyer joined the Company from UnitedHealth Group Incorporated (“UnitedHealth”), where she had served as Chief Financial Officer, Optum Care Solutions, from May 2021 to March 2023.

Prior to that she held various other roles with UnitedHealth, including Chief Financial Officer, Rally Health from March 2020 to May 2021, Senior Vice President, Optum Corporate Finance from February 2017 to March 2020, and Vice President, Optum Operations Finance from July 2014 to February 2017.

Previously, Ms.

Birkemeyer held various positions with Best Buy Co., Inc., including Senior Director, Strategy and Business Planning, Senior Finance Director and Senior Finance Manager.

Birkemeyer has over 26 years of experience in finance, accounting, financial analysis, strategy and business planning.

Birkemeyer holds an M.B.A.

from Northwestern University's Kellogg School of Management and a B.S.

in Economics from the University of Pennsylvania’s Wharton School.

Burns , age 53, has served as our Senior Vice President, Marketing & Clinical Affairs since joining the company in March 2021.

Prior to joining our company, Ms.

Burns was the Chief Marketing Officer of Cala Health, Inc., a privately-held bioelectronic medicine company developing wearable neuromodulation therapies for chronic disease, from January 2017 until March 2021.

At Cala Health, she organized the company’s commercial functions and managed the U.S.

commercial introduction of its lead product.

Prior to joining Cala Health, Inc., Ms.

Burns served as Vice President of Solutions Marketing, ResMed Americas of ResMed Inc.

RMD), a global leader in digital health and cloud-connected medical devices focused on sleep apnea and other chronic diseases, from December 2003 to February 2016.

Burns held various marketing and leadership roles of increasing responsibility with ResMed Inc.

beginning in 2003.

At ResMed Inc., her responsibilities included managing marketing and legal due diligence teams and leading the collaboration between multiple teams following a significant market reorganization.

Burns previously served in consulting and business development roles of increasing responsibility at a privately-held cardiology consulting practice that was subsequently acquired by GE Medical Systems, from 1994 to 1999.

Ferstler , age 55, has served as our Senior Vice President of Sales since joining the company in July 2023.

As described further in Part II, Item 9B.

Other Information, Ms.

Ferstler will cease to be an executive officer of the Company on February 18, 2025.

Prior to joining Tactile Medical, Ms.

Ferstler served as Vice President Sales, North America for Johnson & Johnson Vision since 2016 (NYSE:

In this position, Ms.

Ferstler led the field & inside sales teams, strategic accounts & training functions selling Acuvue brand contact lenses across multiple channels.

Ferstler began her career in 1992 with Parke-Davis Pharmaceuticals where she served in a variety of sales, sales management and training and development roles.

She joined Pfizer in 2000, serving as a district sales manager for all branded pharmaceutical products until 2003, then as Director of Division Operations and as a regional manager for Pfizer’s Urology and

Respiratory product portfolios.

From 2007 to 2016, Ms.

Ferstler led regional and national sales teams for Endo Pharmaceuticals, Bayer Diabetes Care and Mylan Pharmaceuticals.

Ferstler holds Bachelor of Arts in Psychology from the State University of New York College at Buffalo.

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What changed 10-K

Item 1. Business