UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~September~~March 3031, ~~2025~~2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37799

Tactile Systems Technology, Inc.

(Exact name of registrant as specified in its charter)


Delaware	3701 Wayzata Blvd, Suite 300	41-1801204
(State or other jurisdiction of incorporation or organization)	Minneapolis, Minnesota 55416	(I.R.S. Employer Identification No.)
	(Address and zip code of principal executive offices)

	(612) 355-5100
	(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.001 Per Share	TCMD	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☑	Non-accelerated filer	◻

Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

22,~~335~~556,~~582~~260 shares of common stock, par value $0.001 per share, were outstanding as of ~~October~~April 30, ~~2025~~2026.

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TABLE OF CONTENTS


	PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2324
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3332
Item 4.	Controls and Procedures	3332

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	3432
Item 1A.	Risk Factors	3432
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3433
Item 3.	Defaults Upon Senior Securities	3433
Item 4.	Mine Safety Disclosures	3433
Item 5.	Other Information	3433
Item 6.	Exhibits	34

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Forward-Looking Information

All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition, are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: "“anticipate,"” "“believe,"” "“continue,"” "“could,"” "“estimate,"” "“expect,"” "“intend,"” "“may,"” "“might,"” "“ongoing,"” "“plan,"” "“potential,"” "“predict,"” "“project,"” "“should,"” "“target,"” "“will,"” "“would,"” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Quarterly Report on Form 10-Q. These risks, uncertainties and other factors include, but are not limited to:

●

our ability to obtain reimbursement from third-party payers for our products;

●

adverse economic conditions, including inflation, rising interest rates or recession;

●

the adequacy of our liquidity to pursue our business objectives;

●

price increases for supplies and components;

●

wage and component price inflation;

●

loss of a key supplier or other supply chain disruptions;

●

entry of new competitors and/or competitive products;

●

compliance with and changes in federal, state and local government laws and regulations;

●

technological obsolescence of, or quality issues with, our products;

●

our ability to expand our business through strategic acquisitions;

●

our ability to integrate acquisitions and related businesses;

●

the effects of current and future U.S. and foreign trade policy and tariff actions; and

●

the inability to carry out research, development and commercialization plans.

You should read the matters described in "“Risk Factors"” and the other cautionary statements made in our Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025, and in subsequent Quarterly Reports on Form 10-Q. We cannot assure you that the forward-looking statements in this report will prove to be accurate and therefore you are encouraged not to place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. You are urged to carefully review and consider the various disclosures made by us in this report and in other filings with the Securities and Exchange Commission (the “SEC”) that advise of the risks and factors that may affect our business. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements


Tactile Systems Technology, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
	~~September~~March 3031,		December 31,
(In thousands, except share and per share data)	~~2025~~2026		~~2024~~2025
Assets
Current assets
Cash	$	6574,~~965~~993	$	9483,~~367~~446
Accounts receivable, net		3738,~~257~~219		4443,~~937~~876
Net investment in leases		1415,~~843~~198		1415,~~540~~754
Inventories		16,~~084~~581		1814,~~666~~025
Prepaid expenses and other current assets		7,~~250~~851		58,~~053~~066
Total current assets		~~141~~152,~~399~~842		~~177~~165,~~563~~167
Non-current assets
Property and equipment, net		5,~~460~~196		5,~~603~~117
Right of use operating lease assets		1413,~~751~~310		1613,~~633~~798
Intangible assets, net		4042,~~023~~306		4239,~~789~~167
Goodwill		3139,~~063~~554		31,063
Deferred income taxes		168,~~745~~721		189,~~311~~783
Other non-current assets		910,~~736~~187		59,~~962~~847
Total non-current assets		~~117~~119,~~778~~274		~~120~~108,~~361~~775
Total assets	$	~~259~~272,~~177~~116	$	~~297~~273,~~924~~942
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	7,~~989~~124	$	54,~~648~~968
Note payable		—		2,956
Accrued payroll and related taxes		11,041		19,378
Accrued payroll and related taxes		14,727		17,923
Accrued expenses		8,545		8,531
Accrued expenses		7,862		7,780
Income taxes payable		2,161		1,428
Income taxes payable		1,200		270
Operating lease liabilities		3,237		3,195
Operating lease liabilities		3,144		2,980
Other current liabilities		3,904		3,457
Other current liabilities		4,264		3,147
Total current liabilities		36,012		40,957
Total current liabilities		39,186		40,704
Non-current liabilities
Note payable, non-current		—		23,220
Accrued warranty reserve, non-current		1,068		1,045
Accrued warranty reserve, non-current		1,121		1,209
Income taxes payable, non-current		370		275
Income taxes payable, non-current		334		239
Operating lease liabilities, non-current		11,937		12,763
Operating lease liabilities, non-current		13,587		15,955
Other non-current liabilities		4,863		—
Total non-current liabilities		1518,~~042~~238		4014,~~623~~083
Total liabilities		54,~~228~~250		8155,~~327~~040

Stockholders’ equity:
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued and outstanding as of September 30, 2025 and December 31, 2024		—		—
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued and outstanding as of March 31, 2026 and December 31, 2025		—		—
Common stock, $0.001 par value, 300,000,000 shares authorized; 22,335,582 shares issued and outstanding as of September 30, 2025; 23,883,475 shares issued and outstanding as of December 31, 2024		22		24
Common stock, $0.001 par value, 300,000,000 shares authorized; 22,710,160 shares issued and outstanding as of March 31, 2026; 22,438,926 shares issued and outstanding as of December 31, 2025		22		22
Additional paid-in capital		~~160~~164,~~621~~667		~~180~~163,~~719~~940
Retained earnings		4453,~~306~~177		3554,~~854~~940
Total stockholders’ equity		~~204~~217,~~949~~866		~~216~~218,~~597~~902
Total liabilities and stockholders’ equity	$	~~259~~272,~~177~~116	$	~~297~~273,~~924~~942

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

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Tactile Systems Technology, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)


	Three Months Ended				~~Nine Months Ended~~
	~~September~~March 3031,				~~September 30,~~
(In thousands, except share and per share data)	~~2025~~2026		~~2024~~2025		~~2025~~		~~2024~~
Revenue
Sales revenue	$	7666,~~890~~966	$	6352,~~168~~469	$	~~199,890~~	$	~~180,742~~
Rental revenue		8,~~865~~301		98,~~925~~799		~~26,038~~		~~26,657~~
Total revenue		8575,~~755~~267		7361,~~093~~268		~~225,928~~		~~207,399~~
Cost of revenue
Cost of sales revenue		1715,~~896~~259		1513,~~603~~891		~~49,270~~		~~46,810~~
Cost of rental revenue		2,~~858~~394		2,~~703~~031		~~7,518~~		~~8,270~~
Total cost of revenue		2017,~~754~~653		1815,~~306~~922		~~56,788~~		~~55,080~~
Gross profit
Gross profit - sales revenue		5851,~~994~~707		4738,~~565~~578		~~150,620~~		~~133,932~~
Gross profit - rental revenue		65,~~007~~907		76,~~222~~768		~~18,520~~		~~18,387~~
Gross profit		6557,~~001~~614		5445,~~787~~346		~~169,140~~		~~152,319~~
Operating expenses
Sales and marketing		2932,~~809~~732		2627,~~838~~516		~~87,364~~		~~82,803~~
Research and development		2,~~191~~776		21,~~417~~741		~~5,950~~		~~6,794~~
Reimbursement, general and administrative		2123,~~442~~044		1819,~~118~~998		~~63,474~~		~~51,158~~
Intangible asset amortization		596		633		1,848		1,898
Intangible asset amortization and earn-out		596		633
Total operating expenses		5459,~~038~~148		4849,~~006~~888		~~158,636~~		~~142,653~~
Income from operations		10,963		6,781		10,504		9,666
Loss from operations		(1,534)		(4,542)
Interest income		~~667~~666		~~969~~895		~~2,412~~		~~2,437~~
Interest expense		(~~193~~28)		(~~517~~424)		~~(1,027)~~		~~(1,614)~~
Other income		—		—		1		9
Loss before income taxes		(896)		(4,071)
Income before income taxes		11,437		7,233		11,890		10,498
Income tax expense (benefit)		867		(1,097)
Income tax expense		3,228		2,078		3,438		3,254
Net loss	$	(1,763)	$	(2,974)
Net income	$	8,209	$	5,155	$	8,452	$	7,244
Net loss per common share
Net income per common share
Basic	$	(0.08)	$	(0.13)
Basic	$	0.37	$	0.21	$	0.37	$	0.30
Diluted	$	(0.08)	$	(0.13)
Diluted	$	0.36	$	0.21	$	0.36	$	0.30
Weighted-average common shares used to compute net loss per common share
Weighted-average common shares used to compute net income per common share
Basic		22,561,053		23,710,643
Basic		22,318,570		23,985,364		23,035,461		23,842,049
Diluted		22,561,053		23,710,643
Diluted		22,513,140		24,254,176		23,304,900		24,070,084

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

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Tactile Systems Technology, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)



				Additional		Retained
	Common Stock			Paid-In		~~Retained~~Earnings
(In thousands, except share data)	Shares	Par Value		Capital		~~Earnings~~(Accumulated Deficit)		Total
Balances, June 30, 2025	22,292,145	$	22	$	158,807	$	36,097	$	194,926
Balances, December 31, 2025	22,438,926	$	22	$	163,940	$	54,940	$	218,902
Stock-based compensation	—		—		1,~~814~~780		—		1,~~814~~780
Exercise of common stock options and vesting of performance and restricted stock units	43311,~~437~~484		—		—20		—		—20
Net income for the period	—		—		—		8,209		8,209
Share repurchases	(40,250)		—		(1,073)		—		(1,073)
Balances, September 30, 2025	22,335,582	$	22	$	160,621	$	44,306	$	204,949
Net loss for the period	—		—		—		(1,763)		(1,763)
Balances, March 31, 2026	22,710,160	$	22	$	164,667	$	53,177	$	217,866

Balances, December 31, 2024	23,883,475	$	24	$	180,719	$	35,854	$	216,597
Stock-based compensation	—		—		52,~~819~~066		—		52,~~819~~066
Exercise of common stock options and vesting of performance and restricted stock units	~~492~~336,~~447~~599		—		10		—		10
Share repurchases	(2635,~~143,099~~603)		~~(2)~~—		(2610,~~770~~068)		—		(2610,~~772~~068)
Common shares issued for employee stock purchase plan	102,759		—		843		—		843
Net loss for the period	—		—		—		(2,974)		(2,974)
Net income for the period	—		—		—		8,452		8,452
Balances, March 31, 2025	23,584,471	$	24	$	172,727	$	32,880	$	205,631
Balances, September 30, 2025	22,335,582	$	22	$	160,621	$	44,306	$	204,949

Balances, June 30, 2024	23,966,748	$	24	$	179,669	$	20,983	$	200,676
Stock-based compensation	—		—		2,070		—		2,070
Exercise of common stock options and vesting of performance and restricted stock units	30,341		—		—		—		—
Net income for the period	—		—		—		5,155		5,155
Balances, September 30, 2024	23,997,089	$	24	$	181,739	$	26,138	$	207,901

Balances, December 31, 2023	23,600,584	$	24	$	174,724	$	18,894	$	193,642
Stock-based compensation	—		—		5,969		—		5,969
Exercise of common stock options and vesting of performance and restricted stock units	288,598		—		2		—		2
Common shares issued for employee stock purchase plan	107,907		—		1,044		—		1,044
Net income for the period	—		—		—		7,244		7,244
Balances, September 30, 2024	23,997,089	$	24	$	181,739	$	26,138	$	207,901

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

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Tactile Systems Technology, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

	~~Nine~~Three Months Ended ~~September~~March 3031,
(In thousands)	~~2025~~2026		~~2024~~2025
Cash flows from operating activities
Net income	$	8,452	$	7,244
Net loss	$	(1,763)	$	(2,974)
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		51,~~023~~639		51,~~079~~726
Deferred income taxes		~~1,566~~24		~~(341)~~252
Stock-based compensation expense		51,~~819~~780		52,~~969~~066
Loss on disposal of property and equipment and intangibles		6873		~~308~~5
Changes in assets and liabilities, net of acquisition:
Accounts receivable, net		75,~~680~~676		39,~~203~~244
Net investment in leases		~~(303)~~556		~~242~~(310)
Inventories		(2,~~582~~556)		~~1,351~~(201)
Income taxes payable		~~1,025~~828		(~~807~~1,347)
Prepaid expenses and other assets		(~~5,971~~125)		(12,~~844~~452)
Right of use operating lease assets		(~~322~~296)		(18267)
Accounts receivable, non-current		—		7,308
Accounts payable		2,171		1,387
Accounts payable		2,117		582
Accrued payroll and related taxes		(8,337)		(6,994)
Accrued payroll and related taxes		(3,196)		(3,703)
Accrued expenses and other liabilities		(9)		282
Accrued expenses and other liabilities		975		(251)
Net cash (used in) provided by operating activities		(339)		417
Net cash provided by operating activities		25,515		24,322
Cash flows from investing activities
Purchases of property and equipment		(1,870)		(1,932)
Payments related to acquisition, net of cash acquired		(6,226)		—
Proceeds from sale of property and equipment		—		12
Purchases of property and equipment		(821)		(379)
Intangible assets expenditures		(8814)		(8528)
Net cash used in investing activities		(17,~~958~~061)		(~~2,005~~407)
Cash flows from financing activities
Payments on note payable		~~(26,250)~~—		(~~2,250~~750)
Proceeds from exercise of common stock options		1020		210
Proceeds from the issuance of common stock from the employee stock purchase plan		843		1,044
Payments for repurchases of common stock		(1,073)		(10,018)
Payments for repurchases of common stock		(26,562)		—
Net cash used in financing activities		(1,053)		(10,758)
Net cash used in financing activities		(51,959)		(1,204)
Net decrease in cash		(8,453)		(10,748)
Net (decrease) increase in cash		(28,402)		21,113
Cash – beginning of period		83,446		94,367
Cash – beginning of period		94,367		61,033
Cash – end of period	$	74,993	$	83,619
Cash – end of period	$	65,965	$	82,146

Supplemental cash flow disclosure
Cash paid for interest	$	~~836~~21	$	~~1,612~~444
Cash paid for taxes	$	~~899~~14	$	~~4,428~~15
Accrued excise tax on stock repurchases	$	~~210~~—	$	—50
Capital expenditures incurred but not yet paid	$	~~224~~63	$	49189

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

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Tactile Systems Technology, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Nature of Business and Operations

Tactile Systems Technology, Inc. (“we,” “us,” “our,” and the “Company”) manufactures and distributes medical devices for the treatment of patients with underserved chronic diseases at home. Our lymphedema product portfolio includes Flexitouch® Plus, Entre™ Plus and Nimbl ~~compression device~~ systems~~. These~~, ~~products~~which help control ~~the~~ symptoms of lymphedema, a chronic ~~and~~ progressive medical condition~~. Our~~, ~~lymphedema~~through ~~products~~our ~~are~~direct ~~sold~~sales inforce ~~the~~for ~~United~~use ~~States~~in ~~through~~the ahome ~~direct~~and ~~sales~~sell ~~force~~or ~~that~~rent ~~calls~~them onthrough vascular ~~disease clinicians~~, ~~vein and~~ wound ~~centers~~ and ~~oncology~~lymphedema ~~providers~~clinics ~~and~~throughout ~~clinicians,~~the ~~including~~United ~~lymphedema therapists~~States.

On September 8, 2021, we acquired the assets of the AffloVest airway clearance business (“AffloVest Acquisition”). AffloVest is a portable, wearable vest that treats patients with chronic respiratory conditions. We sell this device through home medical equipment and durable medical equipment (“DME”) providers throughout the United States.

On February 17, 2026, we acquired all outstanding equity interests of LymphaTech, Inc. (“LymphaTech”). LymphaTech is a medical technology company pioneering a digital, three-dimensional (the “3D”) full body measurement and monitoring platform designed specifically for lymphedema.

We were originally incorporated in Minnesota under the name Tactile Systems Technology, Inc. on January 30, 1995. During 2006, we established a merger corporation and subsequently, on July 21, 2006, merged with and into this merger corporation, resulting in our reincorporation as a Delaware corporation. The resulting corporation assumed the name Tactile Systems Technology, Inc. In September 2013, we began doing business as “Tactile Medical”.

On August 2, 2016, we closed the initial public offering of our common stock, which resulted in the sale of 4,120,000 shares of our common stock at a public offering price of $10.00 per share. We received net proceeds from the initial public offering of approximately $35.4 million, after deducting underwriting discounts and approximately $2.9 million of transaction expenses.

On February 27, 2023, we closed on a public offering of 2,875,000 shares of our common stock at a public offering price of $13.00 per share. We received net proceeds from this offering of $34.6 million after deducting underwriting discounts, commissions, and offering expenses.

Our business is affected by seasonality. In the first quarter of each year, when most patients have started a new insurance year and have not yet met their annual out-of-pocket payment obligations, we experience substantially reduced demand for our products. We typically experience higher revenue in the third and fourth quarters of the year when patients have met their annual insurance deductibles, thereby reducing their out-of-pocket costs for our products, and because patients desire to exhaust their flexible spending accounts at year end. This seasonality applies only to purchases and rentals of our products by patients covered by commercial insurance and is not relevant to Medicare, Medicaid or the Veterans Administration, as those payers either do not have plans that have declining deductibles over the course of the plan year and/or do not have plans that include patient deductibles for purchases or rentals of our products.

Note 2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. 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 nine months ended September 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

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The results for the three months ended March 31, 2026, are not necessarily indicative of results to be expected for the year ending December 31, 2026, or for any other interim period or for any future year. The condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Tactile Systems Technology, Inc. and its wholly owned ~~subsidiary~~subsidiaries, Swelling Solutions, Inc. and LymphaTech, Inc. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and to disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Note 3. Summary of Significant Accounting Policies

Significant Accounting Policies

There were no material changes in our significant accounting policies during the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026. 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~~2025, for information regarding our significant accounting policies.

Business Segments

The Company operates as one operating segment. The Company's Chief Operating Decision Maker ("“CODM"”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated net income (loss) as the measure of segment profit or loss. Significant segment expenses are those expenses reported in the Consolidated Statement of Operations. 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 Pronouncements Not Yet Adopted

In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” which modernizes the accounting for internal-use software costs to better align with the way that software is currently developed. The update removes all reference to the project stages of software development and establishes two criteria that must be met to begin capitalizing software costs. This update is effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” which requires entities to disclose additional information about specific expense categories in the notes to financial statements on an annual and interim basis. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” which requires entities to enhance disclosures around income taxes. The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company

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is currently evaluating the effect this standard will have on its consolidated financial statements and related disclosures.

Note 4. Inventories

Inventories consisted of the following:


(In thousands)	At ~~September~~March 3031, ~~2025~~2026		At December 31, ~~2024~~2025
Finished goods	$	65,~~531~~528	$	65,~~149~~280
Component parts and work-in-process		911,~~553~~053		128,~~517~~745
Total inventories	$	16,~~084~~581	$	1814,~~666~~025

Note 5. Goodwill and Intangible Assets

Goodwill

In the third quarter of fiscal 2021, we completed the AffloVest Acquisition. The purchase price of the AffloVest product line exceeded the net acquisition-date estimated fair value amounts of the identifiable assets acquired and the liabilities assumed by $31.1 million, which was assigned to goodwill. In the first quarter of fiscal 2026, we completed the acquisition of LymphaTech. The purchase price of LymphaTech exceeded the net acquisition-date estimated fair value amounts of the identifiable assets acquired and the liabilities assumed by $8.5 million, which was assigned to goodwill.

The changes in the carrying amount of goodwill were as follows:


(In thousands)
Goodwill at December 31, 2025	$	31,063
Addition for acquisition		8,491
Goodwill at March 31, 2026	$	39,554

Intangible Assets

Our patents and other intangible assets are summarized as follows:


	Weighted-	At ~~September~~March 3031, ~~2025~~2026
	Average	Gross
	Amortization	Carrying		Accumulated		Net
(In thousands)	Period	Amount		Amortization		Amount
Definite-lived intangible assets:
Patents	11 years	$	1,~~121~~099	$	~~336~~338	$	~~785~~761
Defensive intangible assets	—		1,125		1,125		—
Tradenames	10 years		370		—		370
Customer accounts	—		125		125		—
Customer relationships	8 years		31,540		10,877		20,663
Customer relationships	9 years		31,000		9,684		21,316
Developed technology	7 years		16,200		5,390		10,810
Developed technology	7 years		13,000		4,800		8,200
Subtotal			49,209		16,605		32,604
Subtotal			46,371		16,070		30,301
Unamortized intangible assets:
Tradenames			9,500		—		9,500
Patents pending			~~222~~202		—		~~222~~202
Total intangible assets		$	5658,~~093~~911	$	16,~~070~~605	$	4042,~~023~~306


	Weighted-	At December 31, 2024
	Average	Gross
	Amortization	Carrying		Accumulated		Net
(In thousands)	Period	Amount		Amortization		Amount
Definite-lived intangible assets:
Patents	12 years	$	1,148	$	333	$	815
Defensive intangible assets	< 1 year		1,125		1,065		60
Customer accounts	—		125		125		—
Customer relationships	10 years		31,000		7,896		23,104
Developed technology	8 years		13,000		3,913		9,087
Subtotal			46,398		13,332		33,066
Unamortized intangible assets:
Tradenames			9,500		—		9,500
Patents pending			223		—		223
Total intangible assets		$	56,121	$	13,332	$	42,789

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Amortization expense was $0.9 million for each of the three months ended September 30, 2025 and 2024, and $2.8 million for each of the nine months ended September 30, 2025 and 2024, of which $0.3 million in each of the three months ended September 30, 2025 and 2024, and $0.9 million in each of the nine months ended September 30, 2025 and 2024, was recorded in cost of sales revenue. Future amortization expenses are expected as follows:


(In thousands)
	Weighted-		At December 31, 2025
2025 (October 1 - December 31)	$	913
	Average		Gross
2026		3,649
	Amortization		Carrying		Accumulated		Net
2027		3,642
(In thousands)	Period		Amount		Amortization		Amount
2028		3,641
Definite-lived intangible assets:
2029		3,636
Patents	11 years		$	1,083	$	318	$	765
Thereafter		14,820
Customer relationships	9 years			31,000		10,280		20,720
Total	$	30,301
Developed technology	7 years			13,000		5,095		7,905
Subtotal				45,083		15,693		29,390
Unamortized intangible assets:
Tradenames				9,500		—		9,500
Patents pending				277		—		277
Total intangible assets			$	54,860	$	15,693	$	39,167

Amortization expense was $0.9 million and $1.0 million for the three months ended March 31, 2026 and 2025, respectively, of which $0.3 million in each of the three months ended March 31, 2026 and 2025, was recorded in cost of sales revenue. Future amortization expenses are expected as follows:


(In thousands)
2026 (April 1 - December 31)	$	3,152
2027		4,107
2028		4,106
2029		4,103
2030		4,098
Thereafter		13,038
Total	$	32,604

In the third quarter of 2025, we performed our annual goodwill impairment test utilizing both the qualitative and quantitative approach described in FASB ASU No. 2021-03, “Intangibles—Goodwill and Other (Topic 350) – Accounting Alternative for Evaluating Triggering Events.” Based on the testing using the qualitative approach, it was determined that it was not more likely than not that the fair value of the reporting unit was less than the carrying value. As a result, it was not deemed necessary to proceed to the quantitative test and no impairment was recognized.

Note 6. Accrued Expenses

Accrued expenses consisted of the following:


(In thousands)	At ~~September~~March 3031, ~~2025~~2026		At December 31, ~~2024~~2025
Sales and use tax	$	1,712	$	802
Legal and consulting		2,267		1,285
In-transit inventory		1,468		1,013
Sales and use tax	$	1,646	$	1,837
Warranty		1,403		1,784
Travel		1,471		1,424
Travel		1,277		1,120
Warranty		1,185		1,285
Legal and consulting		1,219		1,318
In-transit inventory		1,175		1,931
Clinical studies		1815		~~304~~64
Other		~~765~~786		~~1,439~~705
Total	$	78,~~862~~545	$	78,~~780~~531

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Note 7. Warranty Reserves

The activity in the warranty reserve during and as of the end of the reporting periods presented was as follows:

Three Months Ended

~~Nine Months Ended~~

~~September~~March 3031,

~~September 30,~~

(In thousands)

~~2025~~2026

~~2024~~2025

~~2025~~

~~2024~~

Beginning balance

2,~~636~~330

32,~~692~~993

~~2,993~~

~~4,038~~

Warranty provision

~~458~~511

~~629~~480

~~1,379~~

~~2,371~~

Processed warranty claims

(~~570~~588)

(~~882~~699)

~~(1,848)~~

~~(2,970)~~

Ending balance

2,~~524~~253

32,~~439~~774

~~2,524~~

~~3,439~~

Accrued warranty reserve, current

1,~~403~~185

1,~~991~~573

~~1,403~~

~~1,991~~

Accrued warranty reserve, non-current

1,~~121~~068

1,~~448~~201

~~1,121~~

~~1,448~~

Total accrued warranty reserve

2,~~524~~253

32,~~439~~774

~~2,524~~

~~3,439~~

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Note 8. Credit Agreement

On ~~April~~July 3031, ~~2021~~2025, we entered into an Amended and Restated Credit Agreement ~~(the “2021 Restated Credit Agreement”)~~ with the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as ~~Administrative~~administrative ~~Agent.~~agent ~~The~~(the ~~2021~~“2025 ~~Restated~~ Credit Agreement”), which amended and restated inthe ~~its~~credit ~~entirety~~agreement ~~our~~that we had in place prior ~~credit~~to ~~agreement~~that time (the “Prior Credit Agreement”). The 2025 Credit Agreement provides for a $40.0 million revolving credit facility with a scheduled maturity date of July 31, 2028.

OnIn ~~September~~connection 8,with ~~2021,~~the weentry ~~entered~~ into athe ~~First~~2025 ~~Amendment~~Credit Agreement, ~~(the~~on ~~“Amendment”)~~July 31, ~~which~~2025, ~~amended~~we ~~the~~paid ~~2021~~off ~~Restated~~the ~~Credit~~full ~~Agreement~~amount ~~(as~~outstanding ~~amended~~under by the ~~Amendment,~~term ~~the~~loan ~~“Credit~~that ~~Agreement”)~~was ~~with~~outstanding under the ~~lenders~~Prior ~~from~~Credit ~~time~~Agreement, towhich ~~time~~was ~~party~~$24.4 ~~thereto~~million ~~and~~(inclusive ~~Wells~~of ~~Fargo~~principal ~~Bank,~~and ~~National Association~~interest), asusing ~~administrative~~cash ~~agent~~on hand. The ~~Amendment,~~term ~~among~~loan ~~other~~had ~~things,~~been ~~added~~reflected aon ~~$30.0~~our ~~million~~condensed ~~incremental~~consolidated ~~term~~financial ~~loan~~statements toas ~~the~~a ~~$25~~note payable.0 ~~million~~The ~~revolving~~2025 ~~credit~~Credit ~~facility~~Agreement ~~provided~~removed by the ~~2021~~provisions ~~Restated~~from the Prior Credit Agreement. ~~The~~related ~~term~~to ~~loan~~a iscommitted ~~reflected~~term onloan, ~~our~~such ~~condensed~~that ~~consolidated~~the ~~financial~~only ~~statements~~term asloan arelated ~~note~~provisions ~~payable.~~in ~~The~~the 2025 Credit Agreement ~~provides~~relate ~~that,~~to ~~subject~~our ability to ~~satisfaction~~request ofuncommitted ~~certain~~incremental ~~conditions,~~term weloan ~~may~~facilities and/or an increase in the amount of the revolving loans available under the 2025 Credit Agreement ~~and/or add one or more term loan facilities~~ in an amount not to exceed $25.0 million in the aggregate, ~~such~~subject ~~that~~to the ~~total~~satisfaction ~~aggregate principal amount~~ of ~~loans~~certain ~~available under the Credit Agreement (including under the revolving credit facility) does not exceed $80~~conditions.~~0 million.~~

OnAmounts ~~September~~drawn 8under the revolving credit facility bear interest, ~~2021~~at our option, inat ~~connection~~a ~~with~~rate equal to (a) the ~~closing~~highest of (i) the ~~AffloVest~~prime ~~Acquisition~~rate, we(ii) ~~borrowed~~ the ~~$30.0~~federal ~~million~~funds ~~term~~rate ~~loan~~plus 0.50% and ~~utilized~~(iii) ~~that~~Adjusted ~~borrowing,~~Term ~~together~~SOFR ~~with~~(defined as term Secured Overnight Financing Rate) for a ~~draw~~one-month tenor plus 1% (the “Base Rate”) plus an applicable margin or (b) Adjusted Term SOFR for an interest period of ~~$25~~one, three or six months, at our option, plus the applicable margin. The applicable margin is 0.75% ~~million~~to ~~under~~1.75% ~~the~~on ~~revolving~~loans ~~credit~~bearing ~~facility~~interest at the Base Rate and ~~cash~~1.75% to 2.75% on ~~hand~~loans bearing interest at Adjusted Term SOFR, toin ~~fund~~each ~~the~~case ~~purchase~~depending ~~price~~on our consolidated total leverage ratio.

~~On February 22, 2022, we entered into a Second Amendment Agreement (the “Second Amendment”), which further amended the Credit Agreement.~~ The ~~Second~~2025 ~~Amendment modified the maximum leverage ratio, the minimum fixed charge coverage ratio and the minimum consolidated EBITDA covenants under the~~ Credit Agreement, ~~and~~provides ~~added~~for a ~~minimum~~commitment ~~liquidity~~fee ~~covenant,~~at ~~through~~a ~~the~~rate ~~quarter~~per ~~ended~~annum ~~June~~ranging ~~30,~~from ~~2023~~0.125% ~~The~~to ~~Second~~0.250% ~~Amendment also increased the applicable margin~~ for ~~LIBOR rate loans under~~ the ~~Credit~~unused ~~Agreement~~portion ~~during the period commencing on the date~~ of the ~~Second~~revolving ~~Amendment~~credit ~~and~~facility, ~~ending~~depending on ~~the~~our ~~last~~consolidated ~~day~~total ofleverage ~~the fiscal quarter ending June 30, 2023~~ratio. ~~Pursuant to the Second Amendment, we made a mandatory principal prepayment of the term loan of $3.0 million on February 22, 2022.~~

OnThe ~~June~~2025 ~~21,~~Credit ~~2023,~~Agreement weincludes ~~entered~~financial ~~into~~covenants consisting of a ~~Third~~maximum ~~Amendment~~consolidated ~~Agreement~~total (leverage ratio covenant and a minimum fixed charge coverage ratio covenant. In addition, the ~~“Third~~2025 ~~Amendment”)~~Credit Agreement includes customary negative covenants, including a restricted payment covenant that ~~replaced~~permits the ~~interest~~Company ~~rate~~to ~~benchmark~~repurchase shares of its common stock and make certain other payments, as long as the Company is not in default under the 2025 Credit Agreement, ~~from~~has ~~LIBOR~~a toconsolidated ~~the~~total ~~term~~leverage ~~Secured~~ratio ~~Overnight~~of ~~Financing~~no ~~Rate~~greater ~~(“SOFR”)~~than 1.75 ~~All~~to ~~tenors~~1.00, and has liquidity of ~~term~~not ~~SOFR~~less ~~are~~than ~~subject~~$30.0 million, in each case both before and after giving effect to asuch ~~credit~~stock ~~spread~~repurchases ~~adjustment~~or the making of 0such payments.~~10%~~ ~~(“Adjusted~~As ~~Term~~of ~~SOFR”)~~March 31, 2026, we were in compliance with all covenants under the 2025 Credit Agreement.

Following the Third Amendment, the term loan and amounts drawn under the revolving credit facility bear interest, at our option, at a rate equal to (a) the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) Adjusted Term SOFR for a one-month tenor plus 1% (the “Base Rate”) plus an applicable margin or (b) Adjusted Term SOFR for an interest period of one, three or six months, at our option, plus the applicable margin. The applicable margin is 0.75% to 2.25% on loans bearing interest at the Base Rate and 1.75% to 3.25% on loans bearing interest at Adjusted Term SOFR, in each case depending on our consolidated total leverage ratio; 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%.

On August 1, 2023, we entered into a Fourth Amendment Agreement (the “Fourth Amendment”), which further amended the Credit Agreement. The Fourth Amendment, among other things, decreased the commitment fees payable under the revolving credit facility under the Credit Agreement such that the undrawn portions of the revolving credit facility are subject to an unused line fee at a rate per annum from 0.125% to 0.200%, depending on our consolidated leverage ratio, and eliminated the language providing that the applicable margin for Adjusted Term SOFR loans was 3.50%, such that the interest rates are in effect as set forth in the above paragraph. The Fourth Amendment also eliminated the liquidity financial covenant and modified the remaining financial covenants to reflect the termination of the temporary covenant relief period that was in place until June 30, 2023 pursuant to the Second Amendment, such that the financial covenants now include a maximum consolidated total leverage ratio covenant, a minimum consolidated EBITDA covenant and a minimum fixed charge coverage ratio covenant. In addition, the Fourth Amendment provided for an

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~~additional~~Our ~~term~~obligations ~~loan~~under in the ~~amount~~2025 ofCredit ~~$8.25~~Agreement ~~million,~~are ~~which~~secured weby ~~used for~~ a ~~paydown~~security ofinterest ~~the~~in ~~revolving~~substantially ~~credit~~all ~~facility. The Fourth Amendment also extended the maturity date~~ of ~~the~~our ~~term loans~~ and ~~revolving~~our ~~credit~~subsidiary’s ~~facility~~assets ~~under~~and ~~the~~are ~~Credit~~also ~~Agreement~~guaranteed ~~from~~by ~~September~~our ~~8, 2024, to August 1, 2026~~subsidiary.

OnAs ~~November~~of 1March 31, ~~2024~~2026, we ~~entered~~had ~~into~~no aoutstanding ~~Fifth~~borrowings ~~Amendment~~under ~~Agreement (~~the ~~“Fifth~~2025 ~~Amendment”), which further amended the~~ Credit Agreement. ~~The Fifth Amendment permitted the Company to make payments to repurchase shares of its common stock, subject to certain limitations.~~

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 based on pricing levels determined by our consolidated total leverage ratio that range from 1.75% to 2.75% under the revolving credit facility, and revised the commitment fee to a rate per annum ranging from 0.125% to 0.250% for the unused portion of the revolving credit facility, also depending on our consolidated total leverage ratio. The 2025 Restated Credit Amendment also 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.

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 Agreement revised certain negative covenants, including the restricted payment covenant, which now permits the Company to repurchase shares of its common stock and make certain other payments, as long as the Company is not in default under the 2025 Restated Credit Agreement, has a consolidated total leverage ratio of no greater than 1.75 to 1.00, and has liquidity of not less than $30.0 million, in each case both before and after giving effect to such stock repurchases or the making of such payments.

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.

As of September 30, 2025, we had no outstanding borrowings under the 2025 Restated Credit Agreement.

Our obligations under the 2025 Restated 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 September 30, 2025, the 2025 Restated Credit Agreement contained a number of restrictions and covenants, including that we maintain compliance with a maximum consolidated total leverage ratio and a minimum fixed charge coverage ratio. As of September 30, 2025, we were in compliance with all covenants under the 2025 Restated Credit Agreement.

Note 9. Commitments and Contingencies

Lease Obligations

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. We record an operating lease liability at the present value of lease payments over the lease term on the commencement date. The related right of use (“ROU”) operating lease asset reflects rental escalation clauses, as well as renewal options and/or termination options. The exercise of lease renewal and/or termination options are at our discretion and are included in the determination of the lease term and lease payment obligations when it is deemed reasonably certain that the option will be exercised. When available, we use the rate implicit in the lease to discount lease payments to present value; however, certain leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

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When available, we use the rate implicit in the lease to discount lease payments to present value; however, certain leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

We classify our leases as buildings, vehicles or computer and office equipment and do not separate lease and non-lease components of contracts for any of the aforementioned classifications. In accordance with applicable guidance, we do not record leases with terms that are less than one year on the Condensed Consolidated Balance Sheets.

None of our lease agreements contain material restrictive covenants or residual value guarantees.

Buildings

We lease certain office and warehouse space at various locations in the United States where we provide services. 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~~five years as of ~~September~~March 3031, ~~2025~~2026.

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. In December 2018, we amended the initial lease to add approximately 29,000 square feet of additional office space, which is accounted for as a separate lease (“second lease”) in accordance with ASU No. 2016-02, “Leases” (Topic 842) (“ASC 842”). In December 2019, we further amended the lease which extended the expiration date of the initial lease, extended the expiration date of and added approximately 4,000 square feet to the second lease, as well as added approximately 37,000 square feet of additional office space, accounted for as a separate lease (“third lease”) in accordance with ASC 842. The portion of the space covered under the initial lease was placed in service in September 2019. The portion of the space covered under the second lease commenced in September 2020. Finally, the portion of the space covered under the third lease commenced in September 2021. The three portions were recognized as an operating lease and included in the ROU operating lease assets and operating lease liabilities on the Condensed Consolidated Balance Sheets.

Computer and Office Equipment

We also have operating lease agreements for certain computer and office equipment. The remaining lease terms as of ~~September~~March 3031, ~~2025~~2026, 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. The ~~leases will automatically renew as a month-to-month rental at the end of the lease if the equipment is not purchased or returned.~~

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leases will automatically renew as a month-to-month rental at the end of the lease if the equipment is not purchased or returned.

Lease Position, Undiscounted Cash Flow and Supplemental Information

The table below presents information related to our ROU operating lease assets and operating lease liabilities that we have recorded:


(In thousands)	At ~~September~~March 3031, ~~2025~~2026		At December 31, ~~2024~~2025
Right of use operating lease assets	$	1413,~~751~~310	$	1613,~~633~~798

Operating lease liabilities:
Current	$	3,~~144~~237	$	23,~~980~~195
Non-current		1311,~~587~~937		1512,~~955~~763
Total	$	1615,~~731~~174	$	1815,~~935~~958

Operating leases:
Weighted average remaining lease term		54.17 years		54.89 years
Weighted average discount rate		4.3%		4.43%

	~~Nine~~Three Months Ended ~~September~~March 3031,
	~~2025~~2026		~~2024~~2025
Supplemental cash flow information for our operating leases:
Cash paid for operating lease liabilities	$	~~2,785~~951	$	~~2,642~~925
Non-cash right of use assets obtained in exchange for new operating lease obligations	$	—	$	386

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 (October 1 - December 31)	$	950
2026 (April 1 - December 31)	$	2,857
2026		3,808
2027		3,311
2027		3,311
2028		3,275
2029		3,~~309~~310
Thereafter		3,692
2030		3,340
Total minimum lease payments		18,345
Thereafter		352
Less: Amount of lease payments representing interest		(1,614)
Total minimum lease payments		16,445
Present value of future minimum lease payments		16,731
Less: Amount of lease payments representing interest		(1,271)
Less: Current obligations under operating lease liabilities		(3,144)
Present value of future minimum lease payments		15,174
Non-current obligations under operating lease liabilities	$	13,587
Less: Current obligations under operating lease liabilities		(3,237)
Non-current obligations under operating lease liabilities	$	11,937

Operating lease costs were $0.9 million for each of the three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024. Operating lease costs were $2.7 million and $2.6 million for the nine months ended September 30,~~ 2025 ~~and 2024, respectively~~.

Major Vendors

We had purchases from one vendor that accounted for 1613% ~~and 22%~~ of our total purchases for ~~the~~each ~~three months ended September 30, 2025 and 2024, respectively. We had purchases from one vendor that accounted for 14% and 20%~~ of ~~our total purchases for~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024, respectively~~2025.

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Purchase Commitments

We issued purchase orders prior to ~~September~~March 3031, ~~2025~~2026, totaling $3135.06 million for goods that we expect to receive within the next year.

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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 $0.58 million and $0.67 million for the three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024, respectively, and $2.0 million and $1.7 million for the nine months ended September 30,~~ 2025 ~~and 2024~~, respectively.

Legal Proceedings

From time to time, we are subject to various claims and legal proceedings arising in the ordinary course of business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

On October 25, 2024, the United States District Court, District of Massachusetts (Boston) unsealed two qui tam complaints against us, and we were served with these complaints on January 14, 2025, and January 21, 2025. The ~~United States has indicated that it is not intervening in either matter at this time. The~~ first complaint is captioned United States ex. rel. Benjaman Scarborough vs. Tactile Systems Technology, Inc., Case No. 1:21-cv-10813-IT, and was filed under seal on May 17, 2021, on behalf of the United States by a former employee (the “Scarborough Complaint”). The Scarborough Complaint alleges that we submitted false claims and made false statements in connection with the Medicare programs, in violation of the Federal False Claims Act. The second complaint is captioned United States ex. rel. Jackie Gorham, an individual, and Dustin Gast, an individual, vs. Tactile Systems Technology, Inc. Case No. 1:21-cv-11809-IT, and was filed under seal on September 1, 2021, on behalf of the United States by two former employees (the “Gorham Complaint”). The Gorham Complaint alleges that we submitted false claims and made false statements in connection with the Medicare, Medicare Advantage plans, Medicaid and other government payers, in violation of the Federal False Claims Act and submitted false claims resulting from kickbacks in violation of the Federal False Claims Act and the Federal Anti-Kickback Statute. Both complaints seek damages, statutory penalties, attorneys’ fees, and costs. On February 24, 2025, the parties (the relators under both complaints and the Company) filed a joint motion requesting that both ~~actions~~matters (hereinafter the “Actions”) be stayed until November 25, 2025, to provide time for the government to review and assess sample claims for the purpose of assessing the allegations. On February 25, 2025, the ~~Court~~court granted the motion and issued orders that ~~stay~~stayed ~~both~~the ~~actions~~Actions until November 25, 2025. We ~~will~~By ~~defend~~joint motions of the ~~actions~~parties asgranted ~~they~~by ~~proceed~~the court, the stay was extended until March 25, 2026, and subsequently until June 23, 2026.

16On April 14, 2026, the affected parties (government, relators, and the Company) reached an agreement in principle to settle the Actions for an aggregate payment by the Company of approximately $0.6 million, plus relators’ attorneys’ fees and costs. In connection with the agreement in principle, the Company recorded an accrual of approximately $1.0 million, inclusive of the proposed settlement amount and estimated relators’ attorneys’ fees and related costs, which is reflected in accrued expenses on the Condensed Consolidated Balance Sheet as of March 31, 2026. The accrual amount is based on several factors, conditions, and estimates, and the ultimate resolution of the Actions is subject to negotiation of final terms, approval by the parties and the execution of a definitive settlement agreement. If no settlement is approved, we intend to continue to defend these Actions as they proceed, but we cannot predict with any degree of certainty their ultimate resolution or determine whether, or to what extent, any loss with respect to these Actions may exceed the amount that we have accrued.

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Note 10. Stockholders' Equity

Share Repurchase Program

On ~~November~~October 416, ~~2024~~2025, ~~we announced that~~ our ~~board~~Board of ~~directors~~Directors authorized a new program to repurchase ~~shares~~up to $25.0 million of our common stock, following the prior repurchase authorization that had been fully utilized. Under the new program, purchases may be made from time to time in the open market, or in privately negotiated purchases, or both,. inThe antiming ~~aggregate~~and ~~amount~~number ~~not~~of shares to ~~exceed~~be ~~$30.0~~purchased ~~million.~~will ~~The~~be ~~share~~based ~~repurchase~~on ~~program~~the ~~became~~price ~~effective~~of onthe ~~October~~Company's 30common stock, ~~2024~~general business and ~~was~~market ~~scheduled~~conditions toand ~~expire~~other oninvestment ~~October~~considerations ~~31,~~and ~~2026~~factors. ~~Upon~~This ~~purchase~~share ofrepurchase ~~the~~program ~~shares~~expires on November 3, we2027. ~~reduce~~The ~~our~~program ~~common~~does ~~stock~~not ~~for~~obligate the ~~par~~Company ~~value~~to ofrepurchase ~~the~~any specific number of shares ~~with~~and ~~the~~may ~~excess~~be ~~cost~~suspended ~~applied~~or ~~against~~discontinued ~~additional~~at ~~paid-in~~any ~~capital.~~time without prior notice.

AsWe ofmade ~~June~~repurchases ~~24, 2025, the Company had utilized substantially all of the repurchase authorization~~ under the ~~program~~applicable ~~and therefore completed the~~ share repurchase program. Inin ~~aggregate under~~ the ~~program~~following periods, ~~the~~which ~~Company~~include ~~repurchased~~the amarket ~~total~~price of ~~2,338,617~~the shares, ofcommissions ~~common~~and ~~stock~~excise ~~at a total cost of $30.0 million.~~tax:

Repurchases were 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 were 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				~~Nine Months Ended~~
		~~September~~March 3031,				~~September 30,~~
(In thousands, except share and per share data)		~~2025~~2026		~~2024~~2025		~~2025~~		~~2024~~
Number of shares repurchased		—40,250		—635,603		~~2,143,099~~		—
Total share repurchased cost	$	—	$	—	$	26,772	$	—
Total shares repurchased cost	$	1,073	$	10,068
Average total cost per repurchased share	$	—26.67	$	—15.76	$	~~12.49~~	$	—

As of March 31, 2026, approximately $23.9 million of authorized share repurchases were remaining under the share repurchase program. We expect that repurchases will be funded through available cash balances and ongoing business operating cash generation. Shares of common 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.

Stock-Based Compensation

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 ~~September~~March 3031, ~~2025~~2026, 1,~~856~~503,~~492~~952 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 the 2016 Plan. However, outstanding awards under the 2016 Plan will continue to be governed by their respective original terms.

17We recorded stock-based compensation expense of $1.8 million and $2.1 million for the three months ended March 31, 2026 and 2025, respectively. This expense was allocated as follows:

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We recorded stock-based compensation expense of $1.8 million and $2.1 million for the three months ended September 30, 2025 and 2024, respectively, and $5.8 million and $6.0 million for the nine months ended September 30, 2025 and 2024, respectively. This expense was allocated as follows:

Three Months Ended

~~Nine Months Ended~~

~~September~~March 3031,

~~September 30,~~

(In thousands)

~~2025~~2026

~~2024~~2025

~~2025~~

~~2024~~

Cost of revenue

9690

~~100~~99

~~296~~

~~286~~

Sales and marketing expenses

~~379~~447

~~595~~503

~~1,347~~

~~1,939~~

Research and development expenses

4544

4233

~~130~~

~~123~~

Reimbursement, general and administrative expenses

1,~~294~~199

1,~~333~~431

~~4,046~~

~~3,621~~

Total stock-based compensation expense

1,~~814~~780

2,~~070~~066

~~5,819~~

~~5,969~~

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Stock Options

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~~No stock-based compensation expense was included in the Condensed Consolidated Statements of Operations for stock options ~~was $0.0 million~~ for each of the three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024, and $0.0 million and $0.2 million for the nine months ended September 30,~~ 2025 ~~and 2024, respectively~~. As of ~~September~~March 3031, ~~2025~~2026, there was ~~approximately~~no ~~$3,648 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~~.~~1 years.~~

Our stock option activity for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, was as follows:


		Weighted-		Weighted-
		Average		Average	Aggregate
	Options	Exercise Price		Remaining	Intrinsic
(In thousands except options and per share data)	Outstanding	Per Share (1)		Contractual Life	Value (12)
Balance at December 31, 2024	394,871	$	40.70	2.8 years	$	309
Balance at December 31, 2025	225,448	$	43.87	1.8 years	$	316
Exercised	(2,~~364~~127)	$	410.2300		$	22
Cancelled/Expired	(~~139~~7,~~966~~453)	$	4159.7443
Balance at September 30, 2025	252,541	$	40.46	2.2 years	$	169
Balance at March 31, 2026	215,868	$	43.67	1.6 years	$	161

Options exercisable at September 30, 2025	244,660	$	41.51	2.18 years	$	123
Options exercisable at March 31, 2026	215,868	$	43.87	1.6 years	$	161

(1) The ~~aggregate intrinsic value of options exercised represents the difference between the~~ exercise price of ~~the~~each option ~~and~~granted ~~the~~during ~~closing stock price of our common stock on~~ the ~~date~~periods ofshown ~~exercise.~~was ~~The~~equal ~~aggregate~~to ~~intrinsic value of options outstanding represents~~ the ~~difference~~market ~~between the exercise~~ price of the ~~option~~underlying ~~and the closing~~ stock ~~price of our common stock~~ on the ~~last~~date ~~trading day~~ of ~~the period~~grant.

~~Options~~(2) ~~exercisable~~The ofaggregate ~~385,514~~intrinsic asvalue of ~~September~~options ~~30,~~exercised ~~2024,~~represents ~~had~~the adifference ~~weighted-average~~between the exercise price of ~~$42~~the option and the closing stock price of our common stock on the date of exercise.11 ~~per~~The ~~share~~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 366,517 as of March 31, 2025, had a weighted-average exercise price of $41.49 per share.

Time-Based Restricted Stock Units

We have granted time-based restricted stock units to certain participants under the 2016 Plan and the 2025 Plan that are stock-settled with common shares. Time-based restricted stock units 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 $1.3 million and $1.5 million for the three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024, respectively, and $4.2 million and $4.4 million for the nine months ended September 30,~~ 2025 ~~and 2024~~, respectively. As of ~~September~~March 3031, ~~2025~~2026, there was approximately $710.54 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 12.93 years.

18Our time-based restricted stock unit activity for the three months ended March 31, 2026, was as follows:

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


		Weighted-
		Average Grant		Aggregate
	Units	Date Fair Value		Intrinsic
(In thousands except unit and per unit data)	Outstanding	Per Unit		Value (1)
Balance at December 31, 2024	728,426	$	14.33	$	12,478
Balance at December 31, 2025	718,621	$	13.92	$	20,840
Granted	~~473~~212,~~075~~336	$	1328.8325
Vested	(~~389~~213,~~357~~980)	$	14.7268
Cancelled	(6226,~~934~~302)	$	14.3960
Balance at September 30, 2025	749,210	$	13.80	$	10,369
Balance at March 31, 2026	690,675	$	18.07	$	18,047

(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.

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Performance-Based Restricted Stock Units

We have granted performance-based restricted stock units (“PSUs”) to certain participants. These PSUs have both performance-based and time-based vesting features. The PSUs granted in ~~2024~~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 ~~change~~ and adjusted EBITDA margin are achieved in ~~each~~2025 (ranging from 25% to 175% of ~~2024~~target), one-third will be earned if and ~~2025~~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 ~~2026~~2027 (ranging from 25% to 175% of target). The PSUs granted in ~~2025~~2026 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~~2026 (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~~2027 (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~~2028 (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 $0.43 million ~~for each of the three months ended September 30, 2025~~ and ~~2024, and~~ $10.14 million ~~and $1.0 million~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025, respectively. As of ~~September~~March 3031, ~~2025~~2026, there was approximately $24.10 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.25 years.

Our PSU activity for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, was as follows:


		Weighted-
		Average Grant		Aggregate
	PSUs	Date Fair Value		Intrinsic
(In thousands except unit and per unit data)	Outstanding	Per Unit		Value (1)
Balance at December 31, 2024	272,919	$	15.19	$	4,675
Balance at December 31, 2025	310,296	$	14.76	$	8,999
Granted	~~168~~108,~~722~~846	$	1528.3825
Vested	(120,436)	$	16.67
Adjusted	12,705
Cancelled	(10,909)	$	13.85
Vested	(95,377)
Balance at September 30, 2025	310,296	$	14.76	$	4,294
Balance at March 31, 2026	336,470	$	19.33	$	8,792

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

Employee Stock Purchase Plan

Our employee stock purchase plan (“ESPP”), which was approved by our Board of Directors on April 27, 2016, and by our stockholders on June 20, 2016, allows participating employees to purchase shares of our common stock at a discount through payroll deductions. 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. The ESPP provides for six-month purchase periods, beginning on May 16 and November 16 of each calendar year.

19A total of 1,600,000 shares of common stock was initially reserved for issuance under the ESPP. This share reserve was automatically supplemented each January 1, commencing in 2017 and ending on and including January 1, 2026, by an amount equal to the least of (a) 1% of the shares of our common stock outstanding on the immediately preceding December 31, (b) 500,000 shares or (c) such lesser amount as our Board of Directors may determine. Pursuant to the automatic increase feature of the ESPP, 224,381 shares were added as available for issuance thereunder on January 1, 2026 and 240,780 shares were added as available for issuance thereunder on January 1, 2025. As of March 31, 2026, 1,745,124 shares were available for future issuance under the ESPP. We recognized stock-based compensation expense associated with the ESPP of $0.2 million for each of the three months ended March 31, 2026 and 2025.

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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.

A total of 1,600,000 shares of common stock was initially reserved for issuance under the ESPP. This share reserve will automatically be supplemented each January 1, commencing in 2017 and ending on and including January 1, 2026, by an amount equal to the least of (a) 1% of the shares of our common stock outstanding on the immediately preceding December 31, (b) 500,000 shares or (c) such lesser amount as our Board of Directors may determine. 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 September 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 $0.1 million and $0.2 million for the three months ended September 30, 2025 and 2024, respectively. We recognized stock-based compensation expense associated with the ESPP of $0.5 million and $0.4 million for the nine months ended September 30, 2025 and 2024, respectively.

Note 11. Revenue

We derive our revenue from the sale and rental of our products to our customers in the United States. The following table presents our revenue, inclusive of sales and rental revenue, disaggregated by product line:

Three Months Ended

~~Nine Months Ended~~

~~September~~March 3031,

~~September 30,~~

(In thousands)

~~2025~~2026

~~2024~~2025

~~2025~~

~~2024~~

Revenue

Lymphedema products

7262,~~381~~221

6550,~~282~~554

~~188,905~~

~~182,278~~

Airway clearance products

13,~~374~~046

710,~~811~~714

~~37,023~~

~~25,121~~

Total

8575,~~755~~267

7361,~~093~~268

~~225,928~~

~~207,399~~

Percentage of total revenue

Lymphedema products

8483%

8983%

~~84%~~

~~88%~~

Airway clearance products

1617%

1117%

~~16%~~

~~12%~~

Total

100%

~~100%~~

Our revenue by channel, inclusive of sales and rental revenue, for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025, are summarized in the following table:

Three Months Ended

~~Nine Months Ended~~

~~September~~March 3031,

~~September 30,~~

(In thousands)

~~2025~~2026

~~2024~~2025

~~2025~~

~~2024~~

Private insurers and other payers

4334,~~369~~974

4728,~~564~~943

~~111,355~~

~~122,907~~

Veterans Administration

76,~~662~~203

86,~~442~~537

~~21,705~~

~~23,339~~

Medicare

21,~~350~~044

915,~~276~~074

~~55,845~~

~~36,032~~

Durable medical equipment distributors

13,~~374~~046

710,~~811~~714

~~37,023~~

~~25,121~~

Total

8575,~~755~~267

7361,~~093~~268

~~225,928~~

~~207,399~~

Our rental revenue is derived from rent-to-purchase arrangements that typically range from three to ten months. As title transfers to the patient, with whom we have the contract, upon the termination of the lease term and because collectability is probable, under ASC 842, these are recognized as sales-type leases. Each rental agreement contains two components, the controller and related garments, both of which are interdependent and recognized as one lease component.

The revenue and associated cost of revenue of sales-type leases are recognized on the lease commencement date and a net investment in leases is recorded on the Condensed Consolidated Balance Sheets. 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. Similar to our sales revenue, the transaction price is impacted by multiple factors, including the terms and conditions contracted by third-party payers. As the rental contract resides with the patients, we have elected the portfolio approach, at the payer level, to determine the expected consideration, which considers the impact of early terminations. While the contract is with the patient, in certain circumstances, the third-party payer elects an initial rental period with an option to extend. We assess the likelihood of extending the lease at the onset of the lease to determine if the option is reasonably certain to be exercised. As the lease is short-term in nature, we anticipate collection of substantially all of the net investment within the first year of the lease agreement. Completion of these payments represents the fair market value of the equipment, and as such, interest income is not applicable.

2019

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~~investment~~Rental ~~in leases and recognize~~ revenue ~~upon~~for ~~commencement~~each of the ~~lease~~three inmonths ~~the~~ended ~~amount~~March ~~of the expected consideration to be received through the monthly payments. Similar to our sales revenue~~31, ~~the~~2026 ~~transaction price is impacted by multiple factors, including the terms~~ and ~~conditions contracted by third-party payers. As the rental contract resides with the patients~~2025, wewas ~~have~~primarily ~~elected~~from ~~the~~private ~~portfolio~~insurers ~~approach,~~and ~~at the payer level, to determine the expected consideration, which considers the impact of early terminations~~Medicare. ~~While the contract is with the patient, in certain circumstances, the third~~Sales-~~party~~type ~~payer elects an initial rental period with an option to extend. We assess the likelihood of extending the~~ lease atrevenue ~~the~~and ~~onset of~~ the ~~lease~~associated tocost ~~determine if the option is reasonably certain to be exercised. As the lease is short-term in nature, we anticipate collection~~ of ~~substantially~~revenue ~~all~~for of the ~~net~~three ~~investment~~months ~~within~~ended ~~the~~March ~~first year of the lease agreement. Completion of these payments represents the fair market value of the equipment~~31, 2026 and ~~as such~~2025, ~~interest income is not applicable.~~ was:

Rental revenue for each of the three and nine months ended September 30, 2025 and 2024, was primarily from private insurers. Sales-type lease revenue and the associated cost of revenue for the three and nine months ended September 30, 2025 and 2024, was:

Three Months Ended

~~Nine Months Ended~~

~~September~~March 3031,

~~September 30,~~

(In thousands)

~~2025~~2026

~~2024~~2025

~~2025~~

~~2024~~

Sales-type lease revenue

8,~~865~~301

98,~~925~~799

~~26,038~~

~~26,657~~

Cost of sales-type lease revenue

2,~~858~~394

2,~~703~~031

~~7,518~~

~~8,270~~

Gross profit

65,~~007~~907

76,~~222~~768

~~18,520~~

~~18,387~~

Note 12. Income Taxes

We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjusting for discrete tax items recorded in the period. Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. These differences relate primarily to different methods used for income tax reporting purposes, including for depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable and inventory reserves. Our provision for income taxes included 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 ~~September~~March 3031, ~~2025~~2026 was an expense of 2896.28%, compared to ana ~~expense~~benefit of 2826.79% for the three months ended ~~September~~March 3031, ~~2024~~2025. The primary driver of the change in the Company’s effective tax rate iswas attributable to the ~~relative~~Company ~~impact~~recording ofmore ~~stock~~expense ~~based~~related to stock-based compensation discrete ~~tax~~ items when compared to the prior year period. We recorded an income tax expense of $30.29 million and an ~~expense~~income tax benefit of $21.1 million for the three months ended ~~September~~March 3031, ~~2025~~ 2026 and ~~2024~~2025, respectively.

The effective tax rate for the nine months ended September 30, 2025 was an expense of 28.9%, compared to an expense of 31.0% for the nine months ended September 30, 2024. The primary drivers of the change in the Company’s effective tax rate were attributable to a lower discrete expense in the current year period as compared to true-ups recognized in the prior year period and rate changes in the current year period compared to prior year period. We recorded an income tax expense of $3.4 million and an expense of $3.3 million for the nine months ended September 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. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the condensed consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

The Company currently is not under income tax examination in any jurisdictions.

OnNote ~~July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted~~13. ~~Key~~Net ~~income~~Loss ~~tax-related~~Per ~~provisions~~Share ~~of the OBBBA include the repeal of mandatory capitalization of research and development~~

21The following table sets forth the computation of our basic and diluted net loss per share:

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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 have evaluated the financial implications of the OBBBA and have reflected its effects in the three months ended September 30, 2025. The OBBBA is expected to have no impact on our effective tax rate and a favorable impact on the timing of cash taxes. We currently expect our full-year 2025 cash tax benefit will be approximately $4.5 million.

Note 13. Net Income Per Share

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


	Three Months Ended				~~Nine Months Ended~~
	~~September~~March 3031,				~~September 30,~~
(In thousands, except share and per share data)	~~2025~~2026		~~2024~~2025		~~2025~~		~~2024~~
Net income	$	8,209	$	5,155	$	8,452	$	7,244
Net loss	$	(1,763)	$	(2,974)
Weighted-average shares outstanding		22,~~318~~561,~~570~~053		23,~~985~~710,~~364~~643		~~23,035,461~~		~~23,842,049~~
Weighted-average shares used to compute diluted net income per share		22,513,140		24,254,176		23,304,900		24,070,084
Weighted-average shares used to compute diluted net loss per share		22,561,053		23,710,643
Net income per share - Basic	$	0.37	$	0.21	$	0.37	$	0.30
Net loss per share - Basic	$	(0.08)	$	(0.13)
Net income per share - Diluted	$	0.36	$	0.21	$	0.36	$	0.30
Net loss per share - Diluted	$	(0.08)	$	(0.13)

~~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:~~20

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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:


	Three Months Ended		~~Nine Months Ended~~
	~~September~~March 3031,		~~September 30,~~
	~~2025~~2026	~~2024~~2025	~~2025~~	~~2024~~
Restricted stock units	~~387~~690,~~911~~675	~~361~~811,~~130~~503	~~280,533~~	~~520,171~~
Common stock options	~~277~~215,~~438~~868	~~370~~374,~~040~~398	~~296,956~~	~~370,040~~
Performance stock units	~~112~~336,~~481~~470	63286,~~103~~821	~~119,499~~	~~142,351~~
Employee stock purchase plan	—43,450	7972,~~295~~280	—	—
Total	~~777~~1,~~830~~286,463	~~873~~1,~~568~~545,002	~~696,988~~	~~1,032,562~~

Note 14. Fair Value Measurements

We determine the fair value of our assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We use a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1). The next highest priority is based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in non-active markets or other observable inputs (Level 2). The lowest priority is given to unobservable inputs (Level 3).

The carrying amounts of financial instruments such as accounts receivable, other current assets, accounts payable, accrued expenses and other current liabilities approximate their related fair values due to the short-term maturities of these items. Non-financial assets, such as equipment and leasehold improvements, and intangible assets are subject to non-recurring fair value measurements if they are deemed impaired.

~~Note~~The ~~15.~~following ~~Subsequent~~table ~~Event~~provides information regarding the fair value measurement of our contingent consideration liability as of March 31, 2026, according to the three-level fair value hierarchy:


	At March 31, 2026
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
(In thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Recurring Fair Value Measurements:
Contingent Consideration	$	—		—	$	4,863	$	4,863
Total	$	—	$	—	$	4,863	$	4,863

See Note 15 – “Business Combination” for additional information regarding this contingent consideration liability.

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Note 15. Business Combination

On February 17, 2026, we acquired all outstanding equity interests of LymphaTech pursuant to the Stock Purchase Agreement, dated as of February 17, 2026. LymphaTech is a medical technology company pioneering a digital, three-dimensional (the “3D”) full body measurement and monitoring platform designed specifically for lymphedema. We acquired LymphaTech to further expand our position as a leader in treating lymphedema by extending our solutions across the care continuum, including earlier identification, assessment, and long‑term monitoring.

The total purchase consideration for LymphaTech payable at closing, on a cash-free, debt-free basis, was approximately $7.2 million. Each holder of issued and outstanding shares of LymphaTech capital stock received their pro rata portion (based on their relative ownership percentage) of the consideration paid at closing, less $0.2 million, which was utilized to pay the sellers’ transaction expenses. The other component of purchase consideration is contingent consideration based on the achievement of non-financial milestones after closing, which contingent consideration had an estimated fair value of approximately $4.9 million as of the acquisition date.

The acquisition date fair value of contingent consideration was measured using the income approach, specifically the probability weighted expected return method for the milestone payments. We will remeasure the fair value of the contingent liability on a quarterly basis. Estimates and assumptions used in the valuation include the probability of achieving these non-financial milestones, the expected timing of achieving these milestones, and a discount rate. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. Changes in the fair value subsequent to the acquisition date will be recognized in our consolidated statements of operations.

The acquisition of LymphaTech was funded by cash on hand. We recognized transaction costs of $0.8 million in the three months ended March 31, 2026. These costs are reported in Reimbursement, general and administrative expenses in our Condensed Consolidated Statements of Operations. Transaction costs include, but are not limited to, investment banker, advisory, legal, and other professional fees.

The following table reflects the allocation of the purchase consideration between the amount paid at closing and the contingent consideration:


(In thousands)		Purchase Consideration
Cash consideration payments to LymphaTech stockholders		$	7,230
Estimated fair value of contingent consideration			4,863
Total purchase consideration		$	12,093

Fair Value of Assets Acquired and Liabilities Assumed

The acquisition of LymphaTech has been accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations, with the Company treated as the accounting acquirer, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair value on the acquisition date. Acquisition accounting is dependent upon certain valuations and other studies that have yet to commence or progress to a stage where there is sufficient information for a definitive measurement. The process for estimating the fair values of identifiable intangible assets and certain tangible assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates.

The table below presents the preliminary estimated fair values of assets acquired and liabilities assumed on the acquisition date based on valuations and management estimates. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations. We are still finalizing the allocation of the purchase price, therefore, the fair value estimates assigned to intangible

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assets, goodwill and the ~~price~~related tax impacts of the ~~Company's~~acquisition, ~~common~~among ~~stock~~other items, ~~general~~are ~~business~~subject ~~and~~to ~~market~~change ~~conditions~~as ~~and~~additional ~~other~~information ~~investment~~is ~~considerations~~received to complete our analysis and ~~factors~~certain tax returns are finalized. ~~This~~As ~~share~~a ~~repurchase~~result, ~~program~~the ~~expires~~preliminary onestimates ~~November~~may 3be revised during the measurement period, ~~2027~~which is 12 months following the acquisition date. ~~The~~These ~~program~~differences ~~does~~could ~~not~~change ~~obligate~~the value of the ~~Company~~intangible toassets ~~repurchase~~acquired, ~~any~~the ~~specific~~contingent ~~number~~liabilities ofassumed, ~~shares~~and the tax impacts related to the acquisition and ~~may~~could behave ~~suspended~~a ormaterial ~~discontinued~~impact aton ~~any~~our ~~time~~results ~~without~~of ~~prior~~operations ~~notice.~~and financial position.



(In thousands)		Estimated Fair Value
Assets
Current assets
Cash and cash equivalents		$	1,004
Accounts receivable, net			19
Total current assets			1,023
Non-current assets
Intangible assets			4,110
Goodwill⁽¹⁾			8,491
Total non-current assets			12,601
Total assets acquired		$	13,624
Liabilities and stockholders' equity
Current liabilities
Accrued expenses and other current liabilities		$	180
Unearned revenue			313
Total current liabilities			493
Non-current liabilities
Deferred income taxes			1,038
Total long term liabilities			1,038
Total liabilities assumed		$	1,531

Net assets acquired		$	12,093

(1)	Of the $8.5 million of goodwill from the acquisition, none is expected to be tax deductible. Goodwill is comprised of expected synergies for the combined operations and the assembled workforce acquired in the acquisition.

Identifiable Intangible Assets

The identifiable intangible assets acquired consist of a developed technology asset, customer relationship assets and a tradename asset. The estimated fair value of the developed technology asset was prepared using the relief from royalty method which calculates the value of the developed technology based on royalties that would be paid if licensed by a third party. The estimated fair value of customer relationship assets was prepared using the multi-period excess earnings method which calculates the present value of the incremental after-tax cash flows attributable solely to each customer relationship. The estimated fair value of the tradename asset was prepared using the relief from royalty method which calculates the value of the tradename based on royalties that would be paid if licensed by a third party. The estimated useful lives are based on forecasted periods of benefit for each intangible asset. Estimated useful lives and estimated preliminary fair values are presented in the table below.


(In thousands)		Estimated Fair Value⁽¹⁾		Estimated Useful Life
Developed technology		$	3,200	10 years
Customer relationships			540	5 years
Tradename			370	10 years
Estimated fair value of intangible assets acquired		$	4,110

(1)	The preliminary acquisition accounting, including the valuation of identifiable intangible assets, is subject to change during the measurement period.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this report.

Overview

We are a medical technology company that develops and commercializes medical devices in the United States. Our mission is to ~~reveal~~help ~~and treat~~ people ~~with~~suffering ~~underserved~~from chronic ~~conditions~~diseases ~~and~~live ~~help~~better ~~them~~and care for themselves at home. We focus our efforts on advancing the standard of care in ~~home-based~~treating ~~solutions~~underserved ~~for~~chronic ~~patients~~diseases ~~with~~in ~~lymphedema~~the ~~and~~home ~~chronic~~to ~~respiratory~~improve ~~conditions~~patient byoutcomes ~~improving~~and ~~clinical,~~quality ~~patient~~of life and ~~economic~~help ~~outcomes~~control rising healthcare expenditures. InOur ~~our~~areas ~~lymphedema~~of ~~product~~therapeutic ~~line~~focus are (1) vascular disease, ~~our~~with ~~sales~~a ~~and~~goal ~~marketing~~of ~~channel~~advancing ~~focus~~the ~~includes~~standard ~~(1)~~of ~~oncology-related~~care ~~clinicians~~in ~~who~~treating ~~treat~~lymphedema ~~cancer~~and ~~survivors~~chronic ~~diagnosed~~venous ~~with~~insufficiency, ~~secondary~~(2) oncology, where lymphedema ~~related~~is toa ~~their~~common consequence among cancer ~~treatments,~~survivors and (23) ~~vascular~~providing ~~disease~~airway ~~clinicians~~clearance ~~who~~therapy ~~support~~for ~~patients~~those ~~with~~suffering ~~lymphedema,~~from chronic ~~venous~~respiratory ~~insufficiency~~conditions. We possess a unique, ~~and~~scalable ~~lipedema~~platform ~~and~~to ~~(3)~~deliver ~~wound,~~at-home ~~vein~~healthcare ~~and~~solutions ~~lymphatic~~throughout ~~massage~~the ~~clinics~~United States. InThis ~~our~~evolving ~~airway~~home ~~clearance~~care ~~product~~delivery ~~line,~~model weis ~~support~~recognized ~~patients~~by ~~suffering~~policymakers ~~from~~and ~~chronic,~~insurance ~~severe~~payers ~~respiratory~~as ~~conditions,~~a ~~particularly~~key ~~bronchiectasis,~~for ~~and~~controlling werising ~~sell~~healthcare ~~our~~costs. ~~products~~Our ~~indirectly~~solutions ~~through~~deliver ~~home~~cost-effective, ~~medical~~clinically ~~equipment~~proven, ~~and~~long-term ~~DME~~treatment ~~providers~~for people with these chronic diseases. We generally employ a direct-to-patient and -~~clinician~~provider ~~business~~ model within our lymphedema portfolio, through which we obtain patient referrals ~~and prescriptions~~ from clinicians, manage insurance claims on behalf of our patients and their clinicians, deliver our solutions directly to patients and train them on the proper use of our solutions. ~~Across~~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 ~~two~~respiratory therapy product, ~~lines~~we have a durable medical equipment (“DME”) distribution model, ~~our~~through ~~home-based~~which ~~solutions~~we ~~deliver~~sell ~~cost-effective~~the AffloVest product to accredited DME providers, ~~clinically~~whose ~~proven~~representatives gather and ~~long-term~~submit ~~treatment~~documentation for ~~indicated~~payer reimbursement, train patients on use of the device, and provide ongoing patient support.

Our current lymphedema products are the Flexitouch Plus, Entre Plus and Nimbl pneumatic compression pump systems and our airway clearance product is a High-Frequency Chest Wall Oscillation (“HFCWO”) device called AffloVest. The Flexitouch system product line is considered an advanced pneumatic compression device. The first generation Flexitouch system received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) in July 2002, introducing a medical device technology to address the many limitations of self-administered home-based manual lymphatic drainage therapy. A second generation Flexitouch system received 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. A third generation, Flexitouch Plus, received 510(k) clearance from the FDA in June 2017. In December 2020, we received 510(k) clearance from the FDA for two new indications for our Flexitouch Plus system: phlebolymphedema and lipedema. The Entre system product line and Nimbl product line are considered basic, or simple, pneumatic compression devices. These systems are sold or rented to patients who need a simple pump or who do not yet qualify for insurance reimbursement for an advanced compression device e.g., a Flexitouch Plus system. We introduced the Entre system in the United States in February 2013, this device was manufactured by Thermotek, Inc. and received FDA clearance in 2010. In 2015, we received FDA clearance for our own first generation Entre system and the second generation, Entre Plus, was released in March 2023. Nimbl, our next-generation pneumatic compression platform, received 510(k) clearance in June 2024 and was commercially launched for upper extremity lymphedema in October 2024 and was commercially launched for lower extremity lymphedema in February 2025. Nimbl has replaced most orders for our Entre system and we expect will continue to do so. Sales and rentals of our lymphedema products represented 8483% ~~and 88%~~ of our revenue in each of the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024, respectively~~2025.

On September 8, 2021, we acquired the assets of the AffloVest airway clearance product line. AffloVest is a portable, wearable vest that provides airway clearance to treat patients with chronic respiratory conditions such as bronchiectasis or conditions resulting from neuromuscular disorders. For each of the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025, sales of AffloVest represented 1617% ~~and 12%~~ of our revenue~~, respectively~~.

To support the growth of our business, we continue to invest in our commercial infrastructure, consisting of a lymphedema and respiratory sales force, marketing team including clinical education programs, patient education team, reimbursement capabilities and clinical expertise. We market our lymphedema products using

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~~education team, reimbursement capabilities and clinical expertise. We market our lymphedema products using~~ a direct-to-patient and -clinician model. The AffloVest device is sold through respiratory durable medical equipment providers throughout the United States that service patients and bill third-party payers for the product. We employ a small group of respiratory specialists, who educate DME representatives, provide product demonstrations for targeted clinicians and support technical questions related to the AffloVest. As of ~~September~~March 3031, ~~2025~~2026, we employed ~~167~~172 account managers and ~~162~~163 specialists for our lymphedema products and a team of 1918 specialists supporting our airway clearance products. This compares to ~~167~~161 account managers and 103 specialists for our lymphedema products and a team of 19 specialists supporting our airway clearance products as of ~~September~~March 3031, ~~2024~~2025.

We invest in our reimbursement function to improve operational efficiencies and enhance individual payer expertise, while continuing our strategic focus of payer development. Our payer relations function focuses on payer policy development, education, contract negotiations, and data analysis. Our reimbursement operations function is responsible for verifying patient insurance benefits, individual patient case development, prior authorization submissions, case follow-up, and appeals when necessary.

We also have a clinical team, consisting of a scientific advisory board, in-house therapists and nurses, and a Chief Medical Officer, that serves as a resource to clinicians and patients and guides the development of clinical evidence in support of our products. Most clinical studies require observation and interaction with clinicians and patients to monitor results and progress.

We rely on third-party contract manufacturers for the sourcing of parts, the assembly of our controllers and the manufacturing of the garments used with our systems. We conduct final assembly of the garments used with our products, perform quality assurance and ship our products from our facility in Minnesota. We also manufacture and ship the AffloVest device from our Minnesota-based facility.

In July 2022, we launched Kylee™ a free mobile app that makes it easier for patients to manage their conditions by tracking treatments and symptoms, as well as having direct access to educational resources. Flexitouch Plus and Nimbl devices include Bluetooth technology, which is viewable using Kylee.

For the three months ended ~~September~~March 3031, ~~2025~~2026, we generated revenue of $8575.83 million and had a net ~~income~~loss of $81.28 million, compared to revenue of $7361.13 million and net ~~income~~loss of $53.20 million for the three months ended ~~September~~March 3031, ~~2024. For the nine months ended September 30,~~ 2025~~, we generated revenue of $225~~.9 ~~million and had net income of $8.5 million, compared to revenue of $207.4 million and net income of $7.2 million for the nine months ended September 30, 2024.~~ Our primary sources of capital since our initial public offering in 2016 have been from operating income, bank financing and our public offering in February 2023.

We operate in one segment for financial reporting purposes.

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Results of Operations

Comparison of the Three ~~and Nine~~ Months Ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025

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


	Three Months Ended
	~~September~~March 3031,								Change
(In thousands)	~~2025~~2026				~~2024~~2025				$		%
Condensed Consolidated Statement			% of				% of
of Operations Data:			revenue				revenue
Revenue
Sales revenue	$	7666,~~890~~966	9089	%	$	6352,~~168~~469	86	%	$	1314,~~722~~497	2228	%
Rental revenue		8,~~865~~301	1011	%		98,~~925~~799	14	%		(~~1,060~~498)	(116)	%
Total revenue		8575,~~755~~267	100	%		7361,~~093~~268	100	%		1213,~~662~~999	1723	%
Cost of revenue
Cost of sales revenue		1715,~~896~~259	2120	%		1513,~~603~~891	2123	%		21,~~293~~368	1510	%
Cost of rental revenue		2,~~858~~394	3	%		2,~~703~~031	43	%		~~155~~363	618	%
Total cost of revenue		2017,~~754~~653	2423	%		1815,~~306~~922	2526	%		21,~~448~~731	1311	%
Gross profit
Gross profit - sales revenue		5851,~~994~~707	69	%		4738,~~565~~578	6563	%		1113,~~429~~129	2434	%
Gross profit - rental revenue		65,~~007~~907	78	%		76,~~222~~768	1011	%		(~~1,215~~861)	(1713)	%
Gross profit		6557,~~001~~614	7677	%		5445,~~787~~346	7574	%		1012,~~214~~268	1927	%
Operating expenses
Sales and marketing		2932,~~809~~732	3543	%		2627,~~838~~516	3745	%		25,~~971~~216	1119	%
Research and development		2,~~191~~776	34	%		21,~~417~~741	3	%		~~(226)~~1,035	~~(9)~~59	%
Reimbursement, general and administrative		2123,~~442~~044	2531	%		1819,~~118~~998	2532	%		3,~~324~~046	1815	%
Intangible asset amortization		596	1	%		633	1	%		(37)	(6)	%
Total operating expenses		5459,~~038~~148	6479	%		4849,~~006~~888	6681	%		69,~~032~~260	1319	%
Income from operations		10,963	12	%		6,781	9	%		4,182	62	%
Loss from operations		(1,534)	(2)	%		(4,542)	(7)	%		3,008	(66)	%
Interest income		~~667~~666	1	%		~~969~~895	21	%		(~~302~~229)	(3126)	%
Interest expense		(~~193~~28)	—	%		(~~517~~424)	(1)	%		~~324~~396	(6393)	%
Other income		—	—	%		—	—	%		—	—	%
Loss before income taxes		(896)	(1)	%		(4,071)	(7)	%		3,175	(78)	%
Income before income taxes		11,437	13	%		7,233	10	%		4,204	58	%
Income tax expense (benefit)		867	1	%		(1,097)	(2)	%		1,964	(179)	%
Income tax expense		3,228	4	%		2,078	3	%		1,150	55	%
Net loss	$	(1,763)	(2)	%	$	(2,974)	(5)	%	$	1,211	(41)	%
Net income	$	8,209	9	%	$	5,155	7	%	$	3,054	59	%

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	Nine Months Ended
	September 30,								Change
(In thousands)	2025				2024				$		%
Condensed Consolidated Statement			% of				% of
of Operations Data:			revenue				revenue
Revenue
Sales revenue	$	199,890	88	%	$	180,742	87	%	$	19,148	11	%
Rental revenue		26,038	12	%		26,657	13	%		(619)	(2)	%
Total revenue		225,928	100	%		207,399	100	%		18,529	9	%
Cost of revenue
Cost of sales revenue		49,270	22	%		46,810	23	%		2,460	5	%
Cost of rental revenue		7,518	3	%		8,270	4	%		(752)	(9)	%
Total cost of revenue		56,788	25	%		55,080	27	%		1,708	3	%
Gross profit
Gross profit - sales revenue		150,620	66	%		133,932	64	%		16,688	12	%
Gross profit - rental revenue		18,520	9	%		18,387	9	%		133	1	%
Gross profit		169,140	75	%		152,319	73	%		16,821	11	%
Operating expenses
Sales and marketing		87,364	39	%		82,803	40	%		4,561	6	%
Research and development		5,950	3	%		6,794	3	%		(844)	(12)	%
Reimbursement, general and administrative		63,474	28	%		51,158	24	%		12,316	24	%
Intangible asset amortization		1,848	1	%		1,898	1	%		(50)	(3)	%
Total operating expenses		158,636	71	%		142,653	68	%		15,983	11	%
Income from operations		10,504	4	%		9,666	5	%		838	9	%
Interest income		2,412	1	%		2,437	1	%		(25)	(1)	%
Interest expense		(1,027)	—	%		(1,614)	(1)	%		587	(36)	%
Other income		1	—	%		9	—	%		(8)	(89)	%
Income before income taxes		11,890	5	%		10,498	5	%		1,392	13	%
Income tax expense		3,438	1	%		3,254	2	%		184	6	%
Net income	$	8,452	4	%	$	7,244	3	%	$	1,208	17	%

Revenue

Revenue increased $1214.70 million, or 1723%, to $8575.83 million in the three months ended ~~September~~March 3031, ~~2025~~2026, compared to $7361.13 million in the three months ended ~~September~~March 3031, ~~2024~~2025. The increase in total revenue was attributable to an increase of $711.17 million, or 1123%, in sales and rentals of the lymphedema product line and an increase of $52.63 million, or 7122%, in sales of the airway clearance product line in the three months ended ~~September~~March 3031, ~~2025~~2026, compared to the three months ended ~~September~~March 3031, ~~2024~~2025.

~~Revenue~~The ~~increased~~increase ~~$18.5~~in ~~million,~~the orlymphedema ~~9%,~~product toline ~~$225.9~~revenue ~~million~~ in the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, ~~compared~~was todriven ~~$207.4~~by ~~million~~accelerating incommercial ~~the~~momentum ~~nine~~from ~~months~~our ~~ended~~strong ~~September 30~~partnerships, ~~2024.~~execution ~~The~~of ~~increase~~our ingo-to-market ~~total~~commercial ~~revenue~~strategy ~~was~~and ~~attributable~~disciplined tofocus anon ~~increase~~sales offorce ~~$11~~productivity.9 ~~million,~~The orincrease ~~47%,~~ in ~~sales of~~ the airway clearance product line ~~and~~revenue anwas ~~increase~~primarily ofdriven ~~$6.6~~by ~~million,~~strong orpartnerships ~~4%, in sales~~ and ~~rentals~~prioritized ofplacement ~~the~~agreements ~~lymphedema~~with ~~product~~our ~~line~~top in10 ~~the~~respiratory ~~nine~~DME ~~months ended September 30, 2025, compared to the nine months ended September 30, 2024~~providers.

The ~~increase~~following intable ~~the~~summarizes ~~airway~~our ~~clearance~~revenue by product line ~~revenue~~for in the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025,~~2026 ~~was primarily attributable to increased placements of AffloVest among our DME partners. The increase in the lymphedema product line revenue in the three~~ and ~~nine months ended September 30~~2025, ~~2025~~both ~~was~~in ~~primarily~~dollars ~~attributable to operational execution~~ and ~~meaningful~~percentage ~~progress~~of ~~across~~total ~~business~~revenue: ~~transformation, product innovation and market leadership initiatives.~~


		Three Months Ended
		March 31,				Change
(In thousands)		2026		2025		$		%
Revenue
Lymphedema products		$	62,221	$	50,554	$	11,667	23%
Airway clearance products			13,046		10,714		2,332	22%
Total		$	75,267	$	61,268	$	13,999	23%

Percentage of total revenue
Lymphedema products			83%		83%
Airway clearance products			17%		17%
Total			100%		100%

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The following table summarizes our revenue by product line for the three and nine months ended September 30, 2025 and 2024, both in dollars and percentage of total revenue:


	Three Months Ended
	September 30,				Change
(In thousands)	2025		2024		$		%
Revenue
Lymphedema products	$	72,381	$	65,282	$	7,099	11%
Airway clearance products		13,374		7,811		5,563	71%
Total	$	85,755	$	73,093	$	12,662	17%

Percentage of total revenue
Lymphedema products		84%		89%
Airway clearance products		16%		11%
Total		100%		100%


	Nine Months Ended
	September 30,				Change
(In thousands)	2025		2024		$		%
Revenue
Lymphedema products	$	188,905	$	182,278	$	6,627	4%
Airway clearance products		37,023		25,121		11,902	47%
Total	$	225,928	$	207,399	$	18,529	9%

Percentage of total revenues
Lymphedema products		84%		88%
Airway clearance products		16%		12%
Total		100%		100%

Our business is affected by seasonality. In the first quarter of each year, when most patients have started a new insurance year and have not yet met their annual out-of-pocket payment obligations, we experience substantially reduced demand for our products. We typically experience higher revenue in the third and fourth quarters of the year when patients have met their annual insurance deductibles, thereby reducing their out-of-pocket costs for our products, and have an increasing desire to exhaust their flexible spending accounts at year end. This seasonality applies only to purchases and rentals of our products by patients covered by commercial insurance and is not relevant to Medicare, Medicaid or the Veterans Administration, as those payers either do not have plans that have declining deductibles over the course of the plan year and/or do not have plans that include patient deductibles for purchases or rentals of our products.

Cost of Revenue and Gross Margin

Cost of revenue increased $21.47 million, or 1311%, to $2017.87 million in the three months ended ~~September~~March 3031, ~~2025~~2026, compared to $1815.39 million in the three months ended ~~September~~March 3031, ~~2024. Cost of revenue increased $1.7 million, or 3%, to $56.8 million in the nine months ended September 30,~~ 2025~~, compared to $55~~.1 ~~million in the nine months ended September 30, 2024.~~ The increase in cost of revenue ~~for both the three- and nine- month periods~~ was primarily attributable to the increase in revenue.

Gross margin was 7677% and 7574% in the three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024, respectively, and 75% and 73% in the nine months ended September 30,~~ 2025 ~~and 2024~~, respectively.

Sales and Marketing Expenses

Sales and marketing expenses increased $35.02 million, or 1119%, to $2932.87 million in the three months ended ~~September~~March 3031, ~~2025~~2026, compared to $2627.85 million in the three months ended ~~September~~March 3031, ~~2024~~2025. The increase was primarily attributable to a $24.31 million increase in personnel-related compensation expenses, a $01.3 million increase in ~~travel~~expenses related to meetings and ~~entertainment~~seminars ~~expenses,~~and a $0.21 million increase in expenses for demo units, partially offset by a $0.3 million decrease in travel and entertainment expenses.

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a $0.1 million increase in expenses related to meetings and seminars and a $0.1 million increase in general office and printing expenses.

Sales and marketing expenses increased $4.6 million, or 6%, to $87.4 million in the nine months ended September 30, 2025, compared to $82.8 million in the nine months ended September 30, 2024. The increase was primarily attributable to a $3.2 million increase in personnel-related compensation expenses, a $0.9 million increase in travel and entertainment expenses, a $0.4 increase in expenses related to meetings and seminars, and a $0.1 million increase in expenses related to educational grants.

Research and Development Expenses

Research and development (“R&D”) expenses ~~decreased~~increased $01.20 million, or 959%, to $2.28 million in the three months ended ~~September~~March 3031, ~~2025~~2026, compared to $21.47 million in the three months ended ~~September~~March 3031, ~~2024~~2025. The ~~decrease~~increase was primarily attributable to a $0.26 million ~~decrease~~increase in ~~clinical~~IT ~~study~~and other professional fees related expenses and a $0.15 million ~~decrease~~increase in personnel-related compensation expenses,. ~~partially~~IT-related ~~offset~~expenses byreflected ain ~~$0.1~~both ~~million~~R&D ~~increase~~expenses inand ~~IT-related~~Reimbursement, general and administrative expenses. primarily relate to the ongoing implementation of new technology across the entire order process, replacing legacy systems, which we expect to continue through the remainder of 2026.

R&D expenses decreased $0.8 million, or 12%, to $6.0 million in the nine months ended September 30, 2025, compared to $6.8 million in the nine months ended September 30, 2024. The decrease was primarily attributable to a $0.8 million decrease in clinical study related expenses and a $0.3 million decrease in personnel-related compensation expenses, partially offset by a $0.3 million increase in IT-related expenses.

Reimbursement, General and Administrative Expenses

Reimbursement, general and administrative expenses increased $3.30 million, or 1815%, to $2123.40 million in the three months ended ~~September~~March 3031, ~~2025~~2026, compared to $1820.10 million in the three months ended ~~September~~March 3031, ~~2024~~2025. This increase was primarily attributable to a $21.82 million increase in personnel-related compensation expenses, ~~and~~ a $0.68 million increase in ~~IT-~~acquisition and integration costs related ~~expenses,~~to ~~partially~~the ~~offset~~LymphaTech byacquisition, a $0.16 million ~~decrease~~increase in occupancy costs, depreciation expense and professional fees and a $0.4 million increase in IT-related expenses.

Reimbursement, general and administrative expenses increased $12.3 million, or 24%, to $63.5 million in the nine months ended September 30, 2025, compared to $51.2 million in the nine months ended September 30, 2024. This increase was primarily attributable to a $8.1 million increase in personnel-related compensation expenses, a $2.7 million increase in IT-related expenses, and a $1.5 million increase in occupancy costs, depreciation expense and professional fees.

Intangible Asset Amortization

Intangible asset amortization remained consistent at $0.6 million for each of the three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025.

Intangible asset amortization was $1.8 and $1.9 million for the nine months ended September 30, 2025 and 2024, respectively.

Interest Income and Interest Expense

Interest income decreased $0.32 million, or 3126%, to $0.7 million in the three months ended ~~September~~March 3031, ~~2025~~2026, compared to $1.0.9 million in the three months ended ~~September~~March 3031, ~~2024~~2025, primarily due to a lower cash balance in an Institutional Insured Liquid Deposit demand account due to ~~the~~funds ~~repayment~~being ofutilized ~~debt~~for the LymphaTech acquisition. Interest expense decreased $0.34 million, or 6393%, to $~~0.2~~28,000 ~~million~~ in the three months ended ~~September~~March 3031, ~~2025~~2026, compared to $0.54 million in the three months ended ~~September~~March 3031, ~~2024~~2025, primarily due to the repayment of debt.

~~Interest~~Income income decreased $25,000, or 1%, to $2.4 million in the nine months ended September 30, 2025, compared to $2.4 million in the nine months ended September 30, 2024. Interest expense decreased $0.6 million, or 36%, to $1.0 million in the nine months ended September 30, 2025, compared to $1.6 million in Taxes

We recorded an income tax expense of $0.9 million compared to an income tax benefit of $1.1 million for the three months ended March 31, 2026 and 2025, respectively. The primary driver of the change in our effective tax rate was attributable to the Company recording stock-based compensation discrete items when compared to the prior year period.

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the nine months ended September 30, 2024, primarily due to the decrease in the outstanding balance and repayment of our term loan.

Income Taxes

We recorded an income tax expense of $3.2 million and $2.1 million for the three months ended September 30, 2025 and 2024, respectively. The effective tax rate for the three months ended September 30, 2025 was an expense of 28.2%, compared to an expense of 28.7% for the three months ended September 30, 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 period.

We recorded an income tax expense of $3.4 million and $3.3 million for the nine months ended September 30, 2025 and 2024, respectively. The effective tax rate for the nine months ended September 30, 2025 was an expense of 28.9%, compared to an expense of 31.0% for the nine months ended September 30, 2024. The primary drivers of the change in the Company’s effective tax rate were attributable to a lower discrete expense in the current year period as compared to true-ups recognized in the prior year period and rate changes in the current year period compared to prior year period.

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 have evaluated the financial implications of the OBBBA and have reflected its effects in the three months ended September 30, 2025. The OBBBA is expected to have no impact on our effective tax rate and a favorable impact on the timing of cash taxes. We currently expect our full-year 2025 cash tax benefit will be approximately $4.5 million.

Liquidity and Capital Resources

Cash Flows

On ~~September~~March 3031, ~~2025~~2026, ~~our~~we ~~principal~~had ~~sources of liquidity were~~ cash of $6675.0 million and net accounts receivable of $3738.32 million. This compares to cash of $8283.16 million and net accounts receivable of $4335.27 million at ~~September~~March 3031, ~~2024~~2025.

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


	~~Nine~~Three Months Ended
	~~September~~March 3031,
(In thousands)	~~2025~~2026		~~2024~~2025
Net cash provided by (used in):
Net cash (used in) provided by:
Operating activities	$	~~25,515~~(339)	$	~~24,322~~417
Investing activities		(17,~~958~~061)		(~~2,005~~407)
Financing activities		(511,~~959~~053)		(110,~~204~~758)
Net (decrease) increase in cash	$	(28,402)	$	21,113
Net decrease in cash	$	(8,453)	$	(10,748)

Operating Activities

Net cash ~~provided~~used byin operating activities during the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 was $250.53 million, resulting from non-cash net income adjustments of $123.5 million, a net ~~income~~loss of $81.58 million, and a net ~~increase~~decrease in operating assets and liabilities of $41.68 million. ~~Cash~~The ~~provided~~positive ~~relating~~non-cash tonet ~~the~~income ~~change~~adjustments inconsisted ~~operating~~primarily ~~assets~~of ~~and~~$1.8 ~~liabilities~~million ~~primarily~~of ~~consisted~~stock-based compensation expense, $1.6 million of depreciation, and a ~~decrease~~loss inon ~~net~~disposal ~~accounts~~of ~~receivable~~property and equipment and intangibles of $70.71 million,. aCash ~~$1.0~~used ~~million~~relating ~~increase~~to the change in ~~accrued~~operating ~~expenses~~assets and ~~other~~ liabilities, primarily consisted of a decrease in ~~inventories~~net accounts receivable of $25.67 million, a $2.12 million increase in accounts payable, ~~and~~ a $0.8 million decrease in income taxes payable ofand a $1.0.6 million decrease in net investment in leases, partially offset by a decrease in accrued payroll and related taxes of $38.23 million, an increase in ~~prepaid~~inventories ~~expenses and other assets~~ of $62.06 million, an increase in ~~net investment in leases of $0.3 million and an increase in~~ right of use operating lease assets of $0.3 million. ~~The~~and ~~positive~~an ~~non-cash~~increase ~~net~~in ~~income~~prepaid ~~adjustments~~expenses ~~consisted~~and ~~primarily~~other assets of $50.81 million .

29Net cash provided by operating activities during the three months ended March 31, 2025 was $0.4 million, resulting from non-cash net income adjustments of $4.0 million, a net loss of $3.0 million and a net decrease in operating assets and liabilities of $0.7 million. The positive non-cash net income adjustments consisted primarily of $2.1 million of stock-based compensation expense and $1.7 million of depreciation. Cash used relating to the change in operating assets and liabilities primarily consisted of a decrease in net accounts receivable of $9.2 million, a $1.4 million increase in accounts payable and a $0.3 million increase in accrued expenses and other liabilities, partially offset by a decrease in accrued payroll and related taxes of $7.0 million, an increase in prepaid expenses and other assets of $2.5 million, a decrease in income taxes payable of $1.3 million, an increase in right of use operating lease assets of $0.3 million, an increase in net investment in leases of $0.3 million and an increase in inventories of $0.2 million.

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of stock-based compensation expense, $5.0 million of depreciation and amortization, $1.6 million of deferred income taxes, and $0.1 million of loss on disposals.

Net cash provided by operating activities during the nine months ended September 30, 2024 was $24.3 million, resulting from non-cash net income adjustments of $11.0 million, net income of $7.2 million and a net increase in operating assets and liabilities of $6.1 million. The positive non-cash net income adjustments consisted primarily of $6.0 million of stock-based compensation expense and $5.1 million of depreciation. Cash provided relating to the change in operating assets and liabilities primarily consisted of a decrease in accounts receivable of $10.5 million, a decrease in inventories of $1.4 million and a $0.6 million increase in accounts payable, partially offset by a decrease in accrued payroll and related taxes of $3.7 million, an increase in prepaid expenses and other assets of $1.8 million, a decrease in income taxes payable of $0.8 million and a decrease in accrued expenses and other liabilities of $0.3 million.

Investing Activities

Net cash used in investing activities during the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, was $27.21 million, primarily consisting of $6.2 million of net payments related to the acquisition of LymphaTech and $0.8 million of purchases of property and equipment and patent costs.

Net cash used in investing activities during the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, was $2.0.4 million, consisting of purchases of property and equipment ~~primarily related to tenant improvements,~~ and patent costs.

Financing Activities

Net cash used in financing activities during the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, was $521.01 million, primarily consisting of payments of $261.61 million for the repurchase of our common stock ~~and a payment of $26~~.~~3 million made on our term loan, partially offset by $0.8 million in proceeds from the issuance of common stock under the ESPP.~~

Net cash used in financing activities during the nine months ended September 30, 2024, was $1.2 million, primarily consisting of a $2.3 million payment made on our term loan, partially offset by $1.0 million in proceeds from the issuance of common stock under the ESPP.29

Credit Agreement

On April 30, 2021, we entered into an Amended and Restated Credit Agreement (the “2021 Restated Credit Agreement”) with the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative Agent. The 2021 Restated Credit Agreement amended and restated in its entirety our prior credit agreement.

On September 8, 2021, we entered into a First Amendment Agreement (the “Amendment”), which amended the 2021 Restated Credit Agreement (as amended by the Amendment, the “Credit Agreement”) with the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent. The Amendment, among other things, added a $30.0 million incremental term loan to the $25.0 million revolving credit facility provided by the 2021 Restated Credit Agreement. The term loan is reflected on our condensed consolidated financial statements as a note payable. The Credit Agreement provides that, subject to satisfaction of certain conditions, we may increase the amount of the revolving loans available under the Credit Agreement and/or add one or more term loan facilities in an amount not to exceed $25.0 million in the aggregate, such that the total aggregate principal amount of loans available under the Credit Agreement (including under the revolving credit facility) does not exceed $80.0 million.

On September 8, 2021, in connection with the closing of the acquisition of the AffloVest business, we borrowed the $30.0 million term loan and utilized that borrowing, together with a draw of $25.0 million under the revolving credit facility and cash on hand, to fund the purchase price.

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OnNet ~~February~~cash ~~22,~~used ~~2022,~~in wefinancing ~~entered~~activities ~~into~~during ~~a Second Amendment Agreement (~~the ~~“Second~~three ~~Amendment”),~~months ~~which~~ended ~~further~~March ~~amends the Credit Agreement. The Second Amendment modified the maximum leverage ratio~~31, ~~the minimum fixed charge coverage ratio and the minimum consolidated EBITDA covenants under the Credit Agreement~~2025, ~~and~~was ~~added~~$10.8 ~~a minimum liquidity covenant~~million, ~~through~~primarily ~~the~~consisting ~~quarter~~of ~~ended~~payments ~~June~~of ~~30, 2023~~$10.0 ~~The~~million ~~Second Amendment also increased the applicable margin~~ for ~~LIBOR rate loans under~~ the ~~Credit~~repurchase ~~Agreement during the period commencing on the date~~ of ~~the~~our ~~Second~~common ~~Amendment~~stock and ~~ending~~a onpayment ~~the last day~~ of ~~the fiscal quarter ending June 30, 2023~~$0.8 ~~Pursuant~~million ~~to the Second Amendment, we~~ made aon ~~mandatory~~our ~~principal prepayment of the~~ term loan ~~of $3~~.~~0 million on February 22, 2022.~~

~~On June 21, 2023, we entered into a Third Amendment Agreement (the “Third Amendment”) that replaced the interest rate benchmark under the~~ Credit Agreement ~~from LIBOR to the term Secured Overnight Financing Rate (“SOFR”). All tenors of term SOFR are subject to a credit spread adjustment of 0.10% (“Adjusted Term SOFR”).~~

On ~~August~~July 131, ~~2023~~2025, we entered into aan ~~Fourth~~Amended ~~Amendment~~and ~~Agreement~~Restated ~~(the “Fourth Amendment”), which further amended the~~ Credit Agreement. ~~The~~with ~~Fourth Amendment, among other things, decreased~~ the ~~commitment~~lenders ~~fees~~from ~~payable~~time ~~under~~to ~~the~~time ~~revolving~~party ~~credit~~thereto, ~~facility~~ and ~~eliminated~~Wells ~~the~~Fargo ~~temporary~~Bank, ~~increase~~National inAssociation, ~~the~~as ~~applicable~~administrative ~~margin~~agent ~~for~~(the ~~Adjusted~~“2025 ~~Term~~Credit ~~SOFR~~Agreement”), ~~loans.~~which ~~The~~amended ~~Fourth Amendment also eliminated the liquidity financial covenant~~ and ~~modified~~restated the ~~remaining~~credit ~~financial~~agreement ~~covenants to reflect the termination of the temporary covenant relief period~~ that ~~was~~we had in place ~~until~~prior ~~June~~to ~~30,~~that ~~2023~~time ~~pursuant to~~ (the ~~Second~~“Prior ~~Amendment~~Credit Agreement”). InThe ~~addition,~~2025 ~~the~~Credit ~~Fourth~~Agreement ~~Amendment~~provides ~~provided~~ for ana ~~additional term loan in the amount of~~ $840.250 million, ~~which we used for a paydown of the~~ revolving credit facility. ~~The~~with ~~Fourth~~a ~~Amendment~~scheduled ~~also extended the~~ maturity date of ~~the~~July ~~term loans and revolving credit facility under the Credit Agreement from September 8~~31, ~~2024 to August 1, 2026~~2028.

OnIn ~~November~~connection 1with the entry into the 2025 Credit Agreement, ~~2024~~on July 31, 2025, we ~~entered~~paid ~~into~~off athe ~~Fifth~~full ~~Amendment~~amount outstanding under the term loan that was outstanding under the Prior Credit Agreement, which was $24.4 million (~~the~~inclusive ~~“Fifth~~of ~~Amendment”~~principal and interest), ~~which~~using ~~further~~cash ~~amended~~on hand. The term loan had been reflected on our condensed consolidated financial statements as a note payable. The 2025 Credit Agreement removed the provisions from the Prior Credit Agreement. ~~The~~related ~~Fifth~~to ~~Amendment~~a ~~permitted~~committed term loan, such that the ~~Company~~only term loan related provisions in the 2025 Credit Agreement relate to ~~make~~our ~~payments~~ability to ~~repurchase~~request ~~shares~~uncommitted incremental term loan facilities and/or an increase in the amount of ~~its~~the ~~common~~revolving ~~stock~~loans available under the 2025 Credit Agreement in an amount not to exceed $25.0 million in the aggregate, subject to the satisfaction of certain ~~limitations~~conditions.

OnAmounts ~~July~~drawn ~~31,~~under ~~2025,~~the werevolving ~~entered~~credit ~~into~~facility anbear ~~Amended~~interest, ~~and~~at ~~Restated~~our ~~Credit~~option, ~~Agreement~~at ~~(the~~a ~~“2025~~rate ~~Restated~~equal ~~Credit~~to ~~Agreement”~~(a), ~~which~~the ~~amended~~highest ~~and~~of ~~restated~~(i) the ~~Credit~~prime ~~Agreement~~rate, in(ii) ~~its~~the ~~entirety.~~federal ~~The~~funds ~~2025~~rate ~~Restated~~plus ~~Credit~~0.50% ~~Agreement,~~and ~~among~~(iii) ~~other~~Adjusted ~~things,~~Term ~~revised~~SOFR ~~the~~(defined ~~applicable~~as ~~margin~~term ~~payable~~Secured ~~based~~Overnight onFinancing ~~pricing~~Rate) ~~levels~~for ~~determined~~a byone-month ~~our~~tenor ~~consolidated~~plus ~~total leverage ratio that range from~~ 1~~.75~~% to(the ~~2.75%~~“Base ~~under~~Rate”) ~~the~~plus ~~revolving~~an ~~credit~~applicable ~~facility,~~margin ~~and~~or ~~revised~~(b) ~~the~~Adjusted ~~commitment~~Term ~~fee~~SOFR tofor aan ~~rate~~interest ~~per~~period ~~annum~~of ~~ranging~~one, ~~from~~three ~~0.125%~~or tosix ~~0.250%~~months, ~~for~~at ~~the~~our ~~unused~~option, ~~portion~~plus of the ~~revolving~~applicable ~~credit~~margin. ~~facility,~~The ~~also~~applicable ~~depending~~margin onis ~~our~~0.75% ~~consolidated~~to ~~total leverage ratio~~1.75% ~~The~~on ~~2025~~loans ~~Restated~~bearing ~~Credit~~interest ~~Amendment~~at ~~also expanded~~ the ~~revolving~~Base ~~credit~~Rate ~~facility~~and ~~from $25~~1.075% ~~million~~ to ~~$40~~2.075% ~~million~~on ~~and~~loans ~~extended~~bearing ~~the~~interest ~~maturity~~at ~~date~~Adjusted ofTerm ~~the~~SOFR, ~~revolving~~in ~~credit~~each ~~facility~~case ~~from~~depending ~~August~~on 1,our ~~2026,~~consolidated tototal ~~July~~leverage ~~31, 2028~~ratio.

The 2025 ~~Restated~~ Credit Agreement ~~also~~provides ~~eliminated~~for ~~the minimum consolidated EBITDA financial covenant, such that the financial covenants now consist of~~ a ~~maximum~~commitment ~~consolidated~~fee ~~total~~at ~~leverage ratio covenant and~~ a ~~minimum~~rate ~~fixed~~per ~~charge~~annum ~~coverage~~ranging ~~ratio~~from ~~covenant~~0.125% Into ~~addition,~~0.250% ~~the~~for ~~2025 Restated Credit Agreement revised certain negative covenants, including~~ the ~~restricted~~unused ~~payment~~portion ~~covenant, which now permits the Company to repurchase shares~~ of ~~its common stock and make certain other payments, as long as~~ the ~~Company~~revolving iscredit ~~not in default under the 2025 Restated Credit Agreement~~facility, ~~has~~depending aon our consolidated total leverage ratio ~~of no greater than 1~~.75 ~~to 1.00, and has liquidity of not less than $30.0 million, in each case both before and after giving effect to such stock repurchases or the making of such payments.~~

InThe ~~connection~~2025 ~~with~~Credit ~~the~~Agreement ~~entry~~includes ~~into~~financial ~~the~~covenants ~~2025~~consisting ~~Restated~~of ~~Credit~~a ~~Agreement,~~maximum onconsolidated ~~July~~total ~~31,~~leverage ~~2025,~~ratio wecovenant ~~paid~~and ~~off~~a ~~the~~minimum ~~full~~fixed ~~amount~~charge ~~outstanding~~coverage ~~under~~ratio ~~the~~covenant. ~~term~~In ~~loan~~addition, ~~which~~the ~~was~~2025 ~~$24.4~~Credit ~~million~~Agreement ~~(inclusive~~includes ofcustomary ~~principal~~negative ~~and interest)~~covenants, ~~using~~including ~~cash~~a onrestricted ~~hand.~~payment ~~The~~covenant ~~2025~~that ~~Restated~~permits ~~Credit~~the ~~Agreement~~Company ~~removes~~to ~~the~~repurchase ~~provisions~~shares ~~from~~of ~~the~~its ~~Credit~~common ~~Agreement~~stock ~~related~~and tomake acertain ~~committed~~other ~~term loan~~payments, ~~such~~as ~~that~~long as the ~~only~~Company ~~term~~is ~~loan~~not ~~related~~in ~~provisions~~default inunder the 2025 ~~Restated~~ Credit Agreement, ~~relate~~has toa ~~our~~consolidated ~~ability~~total toleverage ~~request~~ratio ~~uncommitted~~of ~~incremental~~no ~~term~~greater ~~loan~~than ~~facilities~~1.75 ~~and/or~~to an1.00, ~~increase~~and inhas ~~the~~liquidity ~~amount~~ of ~~the~~not ~~revolving~~less ~~loans~~than ~~available~~$30.0 ~~under~~million, ~~the~~in ~~2025~~each ~~Restated~~case ~~Credit~~both ~~Agreement~~before inand anafter ~~amount~~giving ~~not~~effect to ~~exceed~~such ~~$25.0~~stock ~~million~~repurchases inor the ~~aggregate,~~making ~~subject~~of tosuch ~~the~~payments. ~~satisfaction~~As of ~~certain~~March ~~conditions~~31, 2026, we were in compliance with all covenants under the 2025 Credit Agreement.

AsOur ofobligations ~~September~~under ~~30,~~the 2025, weCredit ~~had~~Agreement noare ~~outstanding~~secured ~~borrowings~~by ~~under~~a ~~the~~security ~~2025~~interest ~~Restated~~in ~~Credit~~substantially ~~Agreement~~all of our and our subsidiary’s assets and are also guaranteed by our subsidiary.

As of March 31, 2026, we had no outstanding borrowings under the 2025 Credit Agreement.

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For additional information regarding the 2025 Restated Credit Agreement, including interest rates, fees and maturities, see Note 8 – “Credit Agreement” of the condensed consolidated financial statements contained in this report.

Share Repurchase Program

On October 30, 2024, our Board of Directors authorized a program to repurchase up to $30.0 million of our common stock. Under the program, purchases could be made from time to time in the open market, in privately negotiated purchases, or both. The timing and number of shares to be purchased was based on the price of our common stock, general business and market conditions and other investment considerations and factors. The share repurchase program was scheduled to expire on October 31, 2026. As of June 24, 2025, we had utilized substantially all of the repurchase authorization under the program and therefore completed the share repurchase program. In aggregate under the program, we repurchased a total of 2,338,617 shares of common stock at a total cost of $30.0 million. The program did not obligate us to repurchase any specific number of shares and could have been suspended or discontinued at any time without prior notice.

During the nine months ended September 30, 2025, we repurchased 2,143,099 shares for approximately $26.6 million. We used cash on hand to fund these repurchases.

On October 16, 2025, our Board of Directors authorized a new program to repurchase up to $25.0 million of our common stock. Under the program, purchases may be made from time to time in the open market, in privately negotiated purchases, or both. The timing and number of shares to be purchased will be based on the price of the Company's common stock, general business and market conditions and other investment considerations and factors. This share repurchase program expires on November 3, 2027. The program does not obligate the Company to repurchase any specific number of shares and may be suspended or discontinued at any time without prior notice.

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During the three months ended March 31, 2026, we repurchased 40,250 shares for approximately $1.1 million. We used cash on hand to fund these repurchases.

Future Cash Requirements

For a discussion of our material estimated future cash requirements under our contractual obligations and commercial commitments, in total and disaggregated into current and long-term, see “Future Cash Requirements” included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025. There have been no material changes since December 31, ~~2024~~2025.

Adequacy of Resources

Our future cash requirements may vary significantly from those now planned and will depend on many factors, including:

●

the impacts of inflation, rising interest rates or a recession on our business;

●

sales and marketing resources needed to further penetrate our market;

●

expansion of our operations;

●

IT investments to scale our business;

●

response of competitors to our solutions and applications;

●

costs associated with clinical research activities;

●

increases in interest rates;

●

labor shortages and wage inflation;

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●

component price inflation;

●

costs to develop and implement new products and revisions to existing products; and

●

use of capital for acquisitions or licenses, if any.

Historically, we have experienced increases in our expenditures consistent with the growth in our revenue, operations and personnel, and we anticipate that our expenditures will continue to increase as we expand our business.

We believe our cash and cash flows from operations will be sufficient to meet our working capital, capital expenditure, debt repayment and related interest, and other cash requirements for at least the next twelve months.

Inflation, changing prices, and tariffs did not have a material effect on our business during the quarter ended September 30, 2025. However, recent changes and announcements in U.S. and global tariff frameworks have negatively impacted, and could continue to negatively impact, our supply chain and increase our cost of goods sold. The ultimate impact of tariffs, including any related responses, are uncertain and will depend on various factors, including which tariffs are ultimately implemented, the timing of implementation, any exemptions available, whether exemptions are granted and maintained, and the amount, scope and nature of the tariffs. We continue to analyze the potential impact of recently announced tariffs, trade actions and related effects on our business and, at this time, we estimate that the impacts on our cost of goods sold could be up to $1.0 million for the year ended December 31, 2025, of which approximately $0.9 million was incurred through September 30, 2025. While we continue to actively work to mitigate tariff impacts, there is no assurance that such actions will be effective.

Recent Accounting Pronouncements

Refer to Note 3 – “Summary of Significant Accounting Policies” of the condensed consolidated financial statements contained in this report for a description of recently issued accounting pronouncements that are applicable to our business.

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Critical Accounting Estimates

Critical accounting estimates are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. For additional information, please see the discussion of our most critical accounting estimates under “Critical Accounting Estimates” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For a discussion on our market risks, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” included in our Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025. There have been no material changes since December 31, ~~2024~~2025.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~September~~March 3031, ~~2025~~2026. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2026, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

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and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the quarter ended ~~September~~March 3031, ~~2025~~2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Information pertaining to certain legal proceedings in which we are involved can be found in Note 9 – “Commitments and Contingencies” to our condensed consolidated financial statements included in Part I, Item 1 of this report and is incorporated herein by reference.

Item 1A. Risk Factors.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025, which could materially affect our business, financial condition or future results. There have been no material changes in our risk factors from those disclosed in that report.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~None~~Issuer Purchases of Equity Securities

Total Number

Approximate

of Shares

Dollar Value of

Purchased as

Shares that

Part of Publicly

May Yet Be

Total Number

Average

Announced

Purchased

of Shares

Price Paid

Plans or

Under the Plans or

Period

Purchased

Per Share⁽¹⁾

Programs

Programs⁽²⁾

January 1, 2026 - January 31, 2026

—

25,000,000

February 1, 2026 - February 28, 2026

—

25,000,000

March 1, 2026 - March 31, 2026

40,250

26.67

40,250

23,927,840

Total

40,250

(1) Amount includes commissions paid.

(2) On November 3, 2025, we announced that our board of directors authorized a program to repurchase shares of our common stock in an aggregate amount not to exceed $25.0 million. The share repurchase program became effective on November 3, 2025 and expires on November 3, 2027.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Trading Arrangements

During the quarter ended ~~September~~March 3031, ~~2025~~2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

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Item 6. Exhibits.

The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index below.

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EXHIBIT INDEX


		Incorporated by Reference
Exhibit				Exhibit	Filed
Number	Description of Exhibit	Form	Date of Filing	Number	Herewith

3.1	Amended and Restated Certificate of Incorporation, conformed version reflecting all amendments through May 8, 2024	10-Q	08/05/2024	3.3

3.2	Amended and Restated By-laws, effective December 19, 2022	10-K	02/21/2023	3.2

10.1	Amended and Restated Credit Agreement, dated as of July 31, 2025, by and among Tactile Systems Technology, Inc., the lenders from time to time party thereto and Wells Fargo Bank, National Association	10-Q	08/04/2025	10.5

31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) / 15d-14(a) of the Securities Exchange Act of 1934, as amended				X

31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) / 15d-14(a) of the Securities Exchange Act of 1934, as amended				X

32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X

32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X

101.1	Inline XBRL for the following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~March 3031, ~~2025~~2026: (i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of Stockholders’ Equity, (iv) Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements; and for the information set forth in Part II, Item 5.				X

104.1	Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.1)				X

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Tactile Systems Technology, Inc.

Date: November 3, 2025	By:	/s/ Elaine M. Birkemeyer
Date: May 4, 2026	By:	/s/ Elaine M. Birkemeyer
		Elaine M. Birkemeyer
		Chief Financial Officer
		(Principal financial and accounting officer)

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