What changed in this filing

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Item 1. Financial Statements

2025-08-04 compared with 2025-05-05 · 138 added, 96 removed, 420 unchanged (36% of the section changed)

34 unchanged sentences

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

none issued and outstanding as of March 31, 2025 and December 31, 2024

none issued and outstanding as of June 30, 2025 and December 31, 2024

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

23,584,471 shares issued and outstanding as of March 31, 2025;

22,292,145 shares issued and outstanding as of June 30, 2025;

23,883,475 shares issued and outstanding as of December 31, 2024

7 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except share and per share data)

12 unchanged sentences

Reimbursement, general and administrative

Intangible asset amortization and earn-out

Intangible asset amortization

Total operating expenses

Loss from operations

Income (loss) from operations

Interest income

Interest expense

Loss before income taxes

Income tax benefit

Net loss per common share

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

Income before income taxes

Income tax expense

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, 2025

Stock-based compensation

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

Share repurchases

( 1,507,496 )

Common shares issued for employee stock purchase plan

Net income for the period

Balances, June 30, 2025

Balances, December 31, 2024

2 unchanged sentences

Share repurchases

Net loss for the period

( 2,143,099 )

Common shares issued for employee stock purchase plan

Net income for the period

Balances, June 30, 2025

Balances, March 31, 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, December 31, 2023

1 unchanged sentence

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

Net loss for the period

Balances, March 31, 2024

Common shares issued for employee stock purchase plan

Net income for the period

Balances, June 30, 2024

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands)

Cash flows from operating activities

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

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

Depreciation and amortization

14 unchanged sentences

Purchases of property and equipment

Proceeds from sale of property and equipment

Intangible assets expenditures

3 unchanged sentences

Proceeds from exercise of common stock options

Proceeds from the issuance of common stock from the employee stock purchase plan

Payments for repurchases of common stock

Net cash used in financing activities

Net decrease in cash

Net (decrease) increase in cash

Cash – beginning of period

11 unchanged sentences

(“we,” “us,” “our,” and the “Company”) manufactures and distributes medical devices for the treatment of patients with underserved chronic diseases at home.

We provide our Flexitouch® Plus, Entre™ Plus and Nimbl systems, which help control symptoms of lymphedema, a chronic progressive medical condition, through our direct sales force for use in the home and sell or rent them through oncology-related clinicians, vascular disease clinicians and wound, vein and lymphatic massage clinics throughout the United States.

Our lymphedema product portfolio includes Flexitouch® Plus, Entre™ Plus and Nimbl compression device systems.

These products help control the symptoms of lymphedema, a chronic and progressive condition.

Our lymphedema products are sold in the United States through a direct sales force that calls on vascular disease clinicians, vein and wound centers and oncology providers and clinicians, including lymphedema therapists.

On September 8, 2021, we acquired the assets of the AffloVest airway clearance business (“AffloVest Acquisition”).

18 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 three months ended March 31, 2025, are not necessarily indicative of results to be expected for the year ending December 31, 2025, or for any other interim period or for any future year.

The results for the six months ended June 30, 2025, are not necessarily indicative of results to be expected for the year ending December 31, 2025, 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

9 unchanged sentences

Significant Accounting Policies

There were no material changes in our significant accounting policies during the three months ended March 31, 2025.

There were no material changes in our significant accounting policies during the six months ended June 30, 2025.

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, 2024, for information regarding our significant accounting policies.

5 unchanged sentences

The CODM assesses performance for the segment, allocates resources and monitors budget versus actual results using consolidated revenue and net income (loss) which is reflected in the Consolidated Statement of Operations.

Accounting Pronouncement Not Yet Adopted

Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

10 unchanged sentences

(In thousands)

At March 31, 2025

At June 30, 2025

At December 31, 2024

7 unchanged sentences

Our patents and other intangible assets are summarized as follows:

At March 31, 2025

At June 30, 2025

(In thousands)

17 unchanged sentences

Total intangible assets

Amortization expense was $ 1.0 million and $ 0.9 million for the three months ended March 31, 2025 and 2024, respectively, of which $ 0.3 million in each of the three months ended March 31, 2025 and 2024, was recorded in cost of sales revenue.

Amortization expense was $ 0.9 million and $ 1.0 million for the three months ended June 30, 2025 and 2024, respectively, and $ 1.9 million for each of the six months ended June 30, 2025 and 2024, of which $ 0.3 million in each of the three months ended June 30, 2025 and 2024, and $ 0.6 million in each of the six months ended June 30, 2025 and 2024, was recorded in cost of sales revenue.

Future amortization expenses are expected as follows:

(In thousands)

2025 (April 1 - December 31)

2025 (July 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.

4 unchanged sentences

(In thousands)

At March 31, 2025

At June 30, 2025

At December 31, 2024

6 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

23 unchanged sentences

except that, pursuant to the Second Amendment and the Third Amendment, during the period commencing on February 22, 2022 and ending on the last day of the fiscal quarter ending June 30, 2023, the applicable margin for LIBOR rate loans and Adjusted Term SOFR loans, as applicable, was 3.50 % .

As of March 31, 2025, all outstanding borrowings were subject to interest at a rate calculated at Adjusted Term SOFR plus an applicable margin, for an interest rate of 6.14 % .

As of June 30, 2025, all outstanding borrowings were subject to interest at a rate calculated at Adjusted Term SOFR plus an applicable margin, for an interest rate of 6.13 % .

On August 1, 2023, we entered into a Fourth Amendment Agreement (the “Fourth Amendment”), which further amended the Credit Agreement.

6 unchanged sentences

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 .

As of March 31, 2025, we had outstanding borrowings of $ 25.5 million under the Credit Agreement, comprised entirely of the term loan.

As of June 30, 2025, we had outstanding borrowings of $ 24.8 million under the Credit Agreement, comprised entirely of the term loan.

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 March 31, 2025, are as follows:

Maturities of the term loan for the next two years as of June 30, 2025, are as follows:

(In thousands)

2025 (April 1 - December 31)

2025 (July 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 March 31, 2025, 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 March 31, 2025, we were in compliance with all covenants under the Credit Agreement.

As of June 30, 2025, 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, 2025, we were in compliance with all covenants under the Credit Agreement.

On July 31, 2025, we entered into an Amended and Restated Credit Agreement (the “2025 Restated Credit Agreement”), which amended and restated the Credit Agreement in its entirety.

The 2025 Restated Credit Agreement, among other things, revised the applicable margin payable under the revolving credit facility under the 2025 Restated Credit Agreement from 1.75 % to 2.75 % and the unused line fee at a rate per annum from 0.125 % to 0.250 % , in each case depending on our consolidated leverage ratio.

The 2025 Restated Credit Agreement also eliminated the minimum consolidated EBITDA financial covenant, such that the financial covenants now consist of a maximum consolidated total leverage ratio covenant and a minimum fixed charge coverage ratio covenant.

In addition, the 2025 Restated Credit Amendment expanded the revolving credit facility from $ 25.0 million to $ 40.0 million and extended the maturity date of the revolving credit facility from August 1, 2026, to July 31, 2028.

In connection with the entry into the 2025 Restated Credit Agreement, on July 31, 2025, we paid off the full amount outstanding under the term loan, which was $ 24.4 million (inclusive of principal and interest), using cash on hand.

The 2025 Restated Credit Agreement removes the provisions from the Credit Agreement related to a committed term loan, such that the only term loan related provisions in the 2025 Restated Credit Agreement relate to our ability to request uncommitted incremental term loan facilities and/or an increase in the amount of the revolving loans available under the 2025 Restated Credit Agreement in an amount not to exceed $ 25.0 million in the aggregate, subject to the satisfaction of certain conditions .

Commitments and Contingencies

1 unchanged sentence

We lease property and equipment under operating leases, typically with terms greater than 12 months , and determine if an arrangement contains a lease at inception.

In general, an arrangement contains a lease if there is an identified asset and we have the right to direct the use of and obtain substantially all of the economic benefit from the use of the identified asset.

In general, an arrangement contains a lease if

there is an identified asset and we have the right to direct the use of and obtain substantially all of the economic benefit from the use of the identified asset.

We record an operating lease liability at the present value of lease payments over the lease term on the commencement date.

9 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 six years as of March 31, 2025.

The remaining lease terms vary from approximately one to six years as of June 30, 2025.

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 March 31, 2025, 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 June 30, 2025, ranged from less than one year to approximately three 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 March 31, 2025

At June 30, 2025

At December 31, 2024

4 unchanged sentences

Weighted average discount rate

Three Months Ended March 31,

Six Months Ended June 30,

Supplemental cash flow information for our operating leases:

Cash paid for operating lease liabilities

Non-cash right of use assets obtained in exchange for new operating lease obligations

The table below reconciles the undiscounted cash flows for the periods presented to the operating lease liabilities recorded on the Condensed Consolidated Balance Sheet for the periods presented:

(In thousands)

2025 (April 1 - December 31)

2025 (July 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 March 31, 2025 and 2024.

Operating lease costs were $ 0.9 million for each of the three months ended June 30, 2025 and 2024.

Operating lease costs were $ 1.8 million for each of the six months ended June 30, 2025 and 2024.

Major Vendors

We had purchases from one vendor that accounted for 13 % of our total purchases for the three months ended March 31, 2025 and 23 % of our total purchases for the three months ended March 31, 2024.

We had purchases from one vendor that accounted for 12 % and 17 % of our total purchases for the three months ended June 30, 2025 and 2024, respectively.

We had purchases from one vendor that accounted for 12 % and 20 % of our total purchases for the six months ended June 30, 2025 and 2024, respectively.

Purchase Commitments

We issued purchase orders prior to March 31, 2025, totaling $ 24.4 million for goods that we expect to receive within the next year.

We issued purchase orders prior to June 30, 2025, totaling $ 30.4 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 $ 0.7 million for each of the three months ended March 31, 2025 and 2024.

We recorded an expense related to our discretionary contributions to the 401(k) plan of $ 0.7 and $ 0.4 million for the three months ended June 30, 2025 and 2024, respectively, and $ 1.4 million and $ 1.1 million for the six months ended June 30, 2025 and 2024, respectively.

Legal Proceedings

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On November 4, 2024, we announced that our board of directors authorized a program to repurchase shares of our common stock in the open market or in privately negotiated purchases, or both, in an aggregate amount not to exceed $ 30.0 million.

The share repurchase program became effective on October 30, 2024 and expires on October 31, 2026.

The share repurchase program became effective on October 30, 2024 and was scheduled to expire on October 31, 2026.

Upon purchase of the shares, we reduce our common stock for the par value of the shares with the excess cost applied against additional paid-in capital.

Repurchases are funded through available cash balances and ongoing business operating cash generation and could have been suspended or discontinued at any time.

Shares of stock repurchased under the program are immediately retired.

Repurchases under our share repurchase program reduce the weighted-average number of shares of common stock outstanding for basic and diluted earnings per share calculations.

We made repurchases under the share repurchase program in the following periods, which include the market price of the shares, commissions and excise tax:

Three Months Ended

Six Months Ended

(In thousands, except share and per share data)

2 unchanged sentences

Average total cost per repurchased share

As of March 31, 2025, approximately $ 16.5 million of authorized share repurchases were remaining under the share repurchase program.

The timing and amount of future repurchases will be determined based on an evaluation of market conditions and other factors.

Repurchases will be funded through available cash balances and ongoing business operating cash generation and may be suspended or discontinued at any time.

Shares of stock repurchased under the program are immediately retired.

Repurchases under our share repurchase program reduce the weighted-average number of shares of common stock outstanding for basic and diluted earnings per share calculations.

As of June 24, 2025, the Company had utilized substantially all of the repurchase authorization under the program and therefore completed the share repurchase program.

In aggregate under the program, the Company repurchased a total of 2,338,617 shares of common stock at a total cost of $ 30.0 million.

Stock-Based Compensation

Our 2016 Equity Incentive Plan (the “2016 Plan”) authorizes us to grant stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards to employees, non-employee directors and certain consultants and advisors.

There were up to 4,800,000 shares of our common stock initially reserved for issuance pursuant to the 2016 Plan.

The 2016 Plan provides that the number of shares reserved and available for issuance under the 2016 Plan will automatically increase annually on January 1 of each calendar year, commencing in 2017 and ending on and including January 1, 2026, by an amount equal to the lesser of:

(a) 5 % of the number of common shares of stock outstanding as of December 31 of the immediately preceding calendar year, or (b) 2,500,000 shares;

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.

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, 2025.

As of March 31, 2025, 5,966,176 shares were available for future grant pursuant to the 2016 Plan.

On March 25, 2025, our Board of Directors approved, on the recommendation of the Compensation and Organization Committee, the Tactile Systems Technology, Inc.

2025 Equity Incentive Plan (the “2025 Plan”), subject to stockholder approval at the 2025 annual meeting of stockholders, which is scheduled for May 7, 2025.

If approved by our stockholders, 1,850,000 shares of our common stock will be reserved for issuance under the 2025 Plan, plus the number of shares subject to any awards under the 2016 Plan that are outstanding on the date our stockholders approve the 2025 Plan, that later expires, is cancelled or forfeited, is settled for cash or otherwise does not result in the issuance of all of the shares subject to such award.

If our stockholders approve the 2025 Plan, no additional grants will be made under 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 $ 2.1 million and $ 2.0 million for the three months ended March 31, 2025 and 2024, respectively.

On May 7, 2025, our stockholders approved the Tactile Systems Technology, Inc.

2025 Equity Incentive Plan (the “2025 Plan”), which authorizes us to grant stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards to employees, non-employee directors and certain consultants and advisors.

The 2025 Plan provides for the issuance of up to 1,850,000 shares of our common stock, plus the number of shares subject to any award under the 2016 Equity Incentive Plan (the “2016 Plan”) that was outstanding on May 7, 2025 and that later expires, is cancelled or forfeited, is settled for cash or otherwise does not result in the issuance of all of the shares subject to such award.

As of June 30, 2025, 1,595,027 shares were available for future grant pursuant to the 2025 Plan.

Following our stockholders’ approval of the 2025 Plan on May 7, 2025, no additional grants will be made under 2016 Plan.

However, outstanding awards under the 2016 Plan will continue to be governed by their respective original terms.

We recorded stock-based compensation expense of $ 1.9 million for each of the three months ended June 30, 2025 and 2024, and $ 4.0 million and $ 3.9 million for the six months ended June 30, 2025 and 2024, respectively.

This expense was allocated as follows:

Three Months Ended

Six Months Ended

(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 $ 0.0 million and $ 0.1 million for

the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, there was approximately $ 20,358 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 0.6 years.

Our stock option activity for the three months ended March 31, 2025, was as follows:

Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $ 0.0 million and $ 0.1 million for the three months ended June 30, 2025 and 2024, respectively, and $ 0.0 million and $ 0.2 million for the six months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, there was approximately $ 12,050 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 0.4 years.

Our stock option activity for the six months ended June 30, 2025, was as follows:

Exercise Price

3 unchanged sentences

Cancelled/Expired

Balance at March 31, 2025

Options exercisable at March 31, 2025

Balance at June 30, 2025

Options exercisable at June 30, 2025

(1) The aggregate intrinsic value of options exercised represents the difference between the exercise price of the option and the closing stock price of our common stock on the date of exercise.

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 395,952 as of March 31, 2024, had a weighted-average exercise price of $ 41.94 per share.

Options exercisable of 392,239 as of June 30, 2024, had a weighted-average exercise price of $ 42.19 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 $ 1.4 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, there was approximately $ 9.5 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 2.3 years.

Our time-based restricted stock unit activity for the three months ended March 31, 2025, was as follows:

Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for time-based restricted stock units was $ 1.4 million and $ 1.5 million for the three months ended June 30, 2025 and 2024, respectively, and $ 2.9 million for each of the six months ended June 30, 2025 and 2024.

As of June 30, 2025, there was approximately $ 9.1 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 2.0 years.

Our time-based restricted stock unit activity for the six months ended June 30, 2025, was as follows:

Average Grant

2 unchanged sentences

Balance at December 31, 2024

Balance at March 31, 2025

Balance at June 30, 2025

(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 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 each of 2024 and 2025 (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 2026 (ranging from 25 % to 175 % of target).

in 2025 (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 2026 (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 2027 (ranging from 25 % to 175 % of target).

The PSUs granted in 2025 have three separate performance periods, and one-third of each grant will be earned if and to the extent performance goals based on revenue and adjusted EBITDA margin are achieved in 2025 (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 2026 (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 2027 (ranging from 25 % to 175 % of target).

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

Stock-based compensation expense recognized for PSUs was $ 0.4 million for each of the three months ended March 31, 2025 and 2024.

As of March 31, 2025, there was approximately $ 3.4 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.6 years.

Our PSU activity for the three months ended March 31, 2025, was as follows:

Stock-based compensation expense recognized for PSUs was $ 0.3 and $ 0.2 million for the three months ended June 30, 2025 and 2024, respectively, and $ 0.7 and $ 0.6 million for the six months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, there was approximately $ 2.5 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.4 years.

Our PSU activity for the six months ended June 30, 2025, was as follows:

Average Grant

2 unchanged sentences

Balance at December 31, 2024

Balance at March 31, 2025

Balance at June 30, 2025

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

2 unchanged sentences

The ESPP is available to all of our employees and employees of participating subsidiaries.

Participating employees may purchase common stock, on a voluntary after-tax basis, at a price equal to 85 % of the lower of the closing market price per share of our common stock on the first or last trading day of each stock purchase period.

Participating employees may purchase common stock, on a voluntary after-tax basis, at a price equal to 85 % of the lower of the closing market price per share of our common stock

on the first or last trading day of each stock purchase period.

The ESPP provides for six-month purchase periods, beginning on May 16 and November 16 of each calendar year.

2 unchanged sentences

Pursuant to the automatic increase feature of the ESPP, 240,780 shares were added as available for issuance thereunder on January 1, 2025 and 236,003 shares were added as available for issuance thereunder on January 1, 2024.

As of March 31, 2025, 1,685,685 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 March 31, 2025 and 2024, respectively.

As of June 30, 2025, 1,582,926 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 June 30, 2025 and 2024, respectively.

We recognized stock-based compensation expense associated with the ESPP of $ 0.4 million and $ 0.2 million for the six months ended June 30, 2025 and 2024, respectively.

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

(In thousands)

4 unchanged sentences

Airway clearance products

Our revenue by channel, inclusive of sales and rental revenue, for the three months ended March 31, 2025 and 2024, are summarized in the following table:

Our revenue by channel, inclusive of sales and rental revenue, for the three and six months ended June 30, 2025 and 2024, are summarized in the following table:

Three Months Ended

Six Months Ended

(In thousands)

7 unchanged sentences

We bill the patients’ insurance payers monthly over the duration of the rental term.

We record the net investment in leases and recognize revenue upon commencement of the lease in the amount of the expected consideration to be received through the monthly payments.

We record the net investment in leases and recognize revenue upon commencement of the lease in the amount of the expected

consideration to be received through the monthly payments.

Similar to our sales revenue, the transaction price is impacted by multiple factors, including the terms and conditions contracted by third-party payers.

4 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 each of the three months ended March 31, 2025 and 2024, was primarily from private insurers.

Sales-type lease revenue and the associated cost of revenue for the three months ended March 31, 2025 and 2024, was:

Three Months Ended March 31,

Rental revenue for each of the three and six months ended June 30, 2025 and 2024, was primarily from private insurers.

Sales-type lease revenue and the associated cost of revenue for the three and six months ended June 30, 2025 and 2024, was:

Three Months Ended June 30,

Six Months Ended June 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 March 31, 2025, was a benefit of 26.9 % , compared to a benefit of 21.4 % for the three months ended March 31, 2024.

The primary driver of the change in our effective tax rate was attributable to the Company recording less expense related to stock-based compensation discrete items when compared to the prior year.

We recorded an income tax benefit of $ 1.1 million and $ 0.6 million for the three months ended March 31, 2025 and 2024, respectively.

The effective tax rate for the three months ended June 30, 2025 was an expense of 28.9 % , compared to an expense of 29.2 % for the three months ended June 30, 2024.

The primary driver of the change in the Company’s effective tax rate was attributable to the relative impact of stock-based compensation discrete tax items.

We recorded an income tax expense of $ 1.3 million and an income tax expense of $ 1.8 million for the three months ended June 30, 2025 and 2024, respectively.

The effective tax rate for the six months ended June 30, 2025 was an expense of 46.4 % , compared to an expense of 36.0 % for the six months ended June 30, 2024.

The primary driver of the change in the Company’s effective tax rate was attributable to the relative impact of stock-based compensation discrete tax items.

Although discrete tax expense was lower in absolute terms in the current year period, it represented a larger proportion of pre-tax income due to lower overall earnings.

As a result, the discrete items had a more significant effect on the effective tax rate, increasing it compared to the same prior year period.

We recorded an income tax expense of $ 0.2 million and an income tax expense of $ 1.2 million for the six months ended June 30, 2025 and 2024, 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 Loss Per Share

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

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted.

Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of research and development

expenditures under Internal Revenue Code (IRC) Section 174 (reinstating full expensing beginning in 2025), extension of bonus depreciation, and revisions to international tax regimes.

We are evaluating the financial implications of the OBBBA and will begin reflecting its effects in the third quarter of 2025.

We currently expect the OBBBA to have a minimal impact on our effective tax rate and to favorably impact the timing of cash taxes.

Based on our estimates and assumptions, we currently expect that, after taking into account the anticipated impacts of the OBBBA, our full-year 2025 cash tax benefit will be approximately $ 4.6 million.

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

(In thousands, except share and per share data)

Weighted-average shares outstanding

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

Net loss per share - Basic

Net loss per share - Diluted

The following common stock equivalents were excluded from the computation of diluted net 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

Restricted stock units

1 unchanged sentence

Performance stock units

Employee stock purchase plan

Fair Value Measurements

8 unchanged sentences

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