Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-37799 | |
Entity Registrant Name | Tactile Systems Technology, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 41-1801204 | |
Entity Address, Address Line One | 3701 Wayzata Blvd, Suite 300 | |
Entity Address, City or Town | Minneapolis | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55416 | |
City Area Code | 612 | |
Local Phone Number | 355-5100 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | TCMD | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 19,233,043 | |
Entity Central Index Key | 0001027838 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 32,297 | $ 22,770 |
Marketable securities | 12,537 | 22,464 |
Accounts receivable | 30,781 | 33,444 |
Net investment in leases | 8,882 | 8,147 |
Inventories | 22,363 | 19,059 |
Income taxes receivable | 3,495 | |
Prepaid expenses and other current assets | 1,966 | 2,451 |
Total current assets | 112,321 | 108,335 |
Non-current assets | ||
Property and equipment, net | 7,334 | 7,408 |
Right of use operating lease assets | 15,289 | 15,885 |
Intangible assets, net | 5,206 | 5,312 |
Accounts receivable, non-current | 5,157 | 4,184 |
Deferred income taxes | 7,973 | 8,970 |
Other non-current assets | 2,239 | 1,658 |
Total non-current assets | 43,198 | 43,417 |
Total assets | 155,519 | 151,752 |
Current liabilities | ||
Accounts payable | 8,739 | 3,843 |
Accrued payroll and related taxes | 8,294 | 10,098 |
Accrued expenses | 5,030 | 4,498 |
Income taxes payable | 632 | |
Operating lease liabilities | 1,585 | 1,454 |
Other current liabilities | 1,073 | 903 |
Total current liabilities | 24,721 | 21,428 |
Non-current liabilities | ||
Accrued warranty reserve, non-current | 2,884 | 2,541 |
Income taxes, non-current | 28 | 54 |
Operating lease liabilities, non-current | 14,846 | 15,134 |
Total non-current liabilities | 17,758 | 17,729 |
Total liabilities | 42,479 | 39,157 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued and outstanding as of March 31, 2020 and December 31, 2019 | ||
Common stock, $0.001 par value, 300,000,000 shares authorized; 19,226,665 shares issued and outstanding as of March 31, 2020; 19,152,715 shares issued and outstanding as of December 31, 2019 | 19 | 19 |
Additional paid-in capital | 93,614 | 91,874 |
Retained earnings | 19,369 | 20,676 |
Accumulated other comprehensive income | 38 | 26 |
Total stockholders' equity | 113,040 | 112,595 |
Total liabilities and stockholders' equity | $ 155,519 | $ 151,752 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common shares authorized | 300,000,000 | 300,000,000 |
Common Stock, Shares, Issued | 19,226,665 | 19,152,715 |
Common Stock, Shares, Outstanding | 19,226,665 | 19,152,715 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Total revenue | $ 43,675 | $ 37,617 |
Total cost of revenue | 12,602 | 11,359 |
Gross profit | 31,073 | 26,258 |
Operating expenses | ||
Sales and marketing | 22,970 | 17,391 |
Research and development | 1,684 | 1,281 |
Reimbursement, general and administrative | 10,870 | 9,388 |
Total operating expenses | 35,524 | 28,060 |
Loss from operations | (4,451) | (1,802) |
Other income | 266 | 161 |
Loss before income taxes | (4,185) | (1,641) |
Income tax benefit | (2,878) | (3,113) |
Net (loss) income | $ (1,307) | $ 1,472 |
Net (loss) income per common share | ||
Basic (in dollars per share) | $ (0.07) | $ 0.08 |
Diluted (in dollars per share) | $ (0.07) | $ 0.08 |
Weighted-average common shares used to compute net (loss) income per common share | ||
Basic (in shares) | 19,173,580 | 18,746,751 |
Diluted (in shares) | 19,173,580 | 19,579,847 |
Sales revenue | ||
Total revenue | $ 37,623 | $ 30,831 |
Total cost of revenue | 10,922 | 9,412 |
Gross profit | 26,701 | 21,419 |
Rental revenue | ||
Total revenue | 6,052 | 6,786 |
Total cost of revenue | 1,680 | 1,947 |
Gross profit | $ 4,372 | $ 4,839 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Consolidated Statements of Comprehensive Income | ||
Net (loss) income | $ (1,307) | $ 1,472 |
Other comprehensive income: | ||
Unrealized gain on marketable securities | 30 | 30 |
Income tax related to items of other comprehensive income | (18) | (7) |
Total other comprehensive income | 12 | 23 |
Comprehensive (loss) income | $ (1,295) | $ 1,495 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total |
Balances at the beginning at Dec. 31, 2018 | $ 19 | $ 79,554 | $ 9,705 | $ (8) | $ 89,270 |
Balances at the beginning (in shares) at Dec. 31, 2018 | 18,631,127 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 2,783 | 2,783 | |||
Exercise of common stock options and vesting of restricted stock units | 861 | 861 | |||
Exercise of common stock options and vesting of restricted stock units (in shares) | 231,812 | ||||
Taxes paid for net share settlement of restricted stock units | (2,410) | (2,410) | |||
Taxes paid for net share settlement of restricted stock units (in shares) | (44,247) | ||||
Comprehensive (loss) income for the period | 1,472 | 23 | 1,495 | ||
Balances at the end at Mar. 31, 2019 | $ 19 | 80,788 | 11,177 | 15 | 91,999 |
Balances at the end (in shares) at Mar. 31, 2019 | 18,818,692 | ||||
Balances at the beginning at Dec. 31, 2019 | $ 19 | 91,874 | 20,676 | 26 | 112,595 |
Balances at the beginning (in shares) at Dec. 31, 2019 | 19,152,715 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 2,728 | 2,728 | |||
Exercise of common stock options and vesting of restricted stock units | 172 | 172 | |||
Exercise of common stock options and vesting of restricted stock units (in shares) | 96,186 | ||||
Taxes paid for net share settlement of restricted stock units | (1,160) | (1,160) | |||
Taxes paid for net share settlement of restricted stock units (in shares) | (22,236) | ||||
Comprehensive (loss) income for the period | (1,307) | 12 | (1,295) | ||
Balances at the end at Mar. 31, 2020 | $ 19 | $ 93,614 | $ 19,369 | $ 38 | $ 113,040 |
Balances at the end (in shares) at Mar. 31, 2020 | 19,226,665 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities | ||
Net (loss) income | $ (1,307) | $ 1,472 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 730 | 1,064 |
Net amortization of premiums and discounts on securities available-for-sale | (43) | (68) |
Deferred income taxes | 979 | (2,264) |
Stock-based compensation expense | 2,728 | 2,783 |
Changes in assets and liabilities: | ||
Accounts receivable | 2,663 | 2,671 |
Net investment in leases | (735) | (3,362) |
Inventories | (3,304) | (132) |
Income taxes | (4,153) | (1,030) |
Prepaid expenses and other assets | 192 | 21 |
Right of use operating lease assets | 151 | (9) |
Medicare accounts receivable, non-current | (973) | (288) |
Accounts payable | 4,741 | 722 |
Accrued payroll and related taxes | (1,804) | (584) |
Accrued expenses and other liabilities | 1,044 | 277 |
Net cash provided by operating activities | 909 | 1,273 |
Cash flows from investing activities | ||
Proceeds from maturities of securities available-for-sale | 10,000 | 4,500 |
Purchases of property and equipment | (358) | (731) |
Intangible assets costs | (36) | (44) |
Net cash provided by investing activities | 9,606 | 3,725 |
Cash flows from financing activities | ||
Taxes paid for net share settlement of restricted stock units | (1,160) | (2,410) |
Proceeds from exercise of common stock options | 172 | 861 |
Net cash used in financing activities | (988) | (1,549) |
Net increase in cash and cash equivalents | 9,527 | 3,449 |
Cash and cash equivalents - beginning of period | 22,770 | 20,099 |
Cash and cash equivalents - end of period | 32,297 | 23,548 |
Supplemental cash flow disclosure | ||
Cash paid for taxes | 311 | 181 |
Capital expenditures incurred but not yet paid | $ 155 | $ 176 |
Nature of Business and Operatio
Nature of Business and Operations | 3 Months Ended |
Mar. 31, 2020 | |
Nature of Business and Operations | |
Nature of Business and Operations | Note 1. Nature of Business and Operations Tactile Systems Technology, Inc. (“we,” “us,” and “our”) is the sole manufacturer and distributor of the Flexitouch® and Entre™ systems, medical devices that help control symptoms of lymphedema, a chronic and progressive medical condition, and the Airwear wrap, a medical device used for the management of venous insufficiency, venous hypertension, venous ulcerations and lymphedema. Our products are purchased or rented for at-home use and are recommended by vascular, wound and lymphedema clinics throughout the United States. 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. In connection with the closing of the initial public offering, all of our outstanding redeemable convertible preferred stock automatically converted to common stock on August 2, 2016. As a result, at August 2, 2016, we did not have any redeemable convertible preferred stock issued or outstanding. 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. Further, seasonality trends in 2020 may be significantly different than in prior years as a result of the COVID-19 pandemic and related impacts. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Basis of Presentation | |
Basis of Presentation | 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 three months ended March 31, 2020, are not necessarily indicative of results to be expected for the year ending December 31, 2020, 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, 2019. Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Tactile Systems Technology, Inc. and its wholly owned subsidiary, Swelling Solutions, Inc. All intercompany balances and transactions have been eliminated in consolidation. Risks and Uncertainties Coronavirus (COVID-19) The United States economy in general and our business specifically have been negatively affected by the COVID-19 pandemic. There are no reliable estimates of how long the pandemic will last or how many people are likely to be affected by it. For that reason, we are unable to reasonably estimate the long-term impact of the pandemic on our business at this time. Our first priority with regard to the COVID-19 pandemic is to ensure the safety and health of our employees, clinicians and patients. Subject to that, we are focusing our efforts on attempting to continue our business operations in this unprecedented environment. Part of our strategy includes changing many of our processes and practices in an effort to help mitigate the impact of COVID-19 on our business so that we can support our clinicians and safely make our at-home therapies available to patients. These include, but are not limited to: ● Adjusting work and operations to keep employees safe while continuing to serve our clinicians and patients. As an essential business under federal guidelines, we continue to manufacture product and we have implemented multiple, smaller rotational shifts and other best practices to help protect the health and safety of our workforce. ● Implementing remote and flexible work arrangements for employees wherever possible, including real-time, online training of our new sales representatives. ● Initiating employee travel and contact restrictions to reduce exposure. ● Collaborating with payers to modify coverage requirements by serving patients virtually. ● Postponing large medical education programs and conducting virtual meetings whenever possible, including virtual patient demonstrations and trainings. ● When in-person visits are required, we are supporting clinicians and patients by using rigorous infection control practices. We cannot assure you that these changes to our processes and practices will be successful in mitigating the impact of COVID-19 on our business. 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. Comprehensive Income Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Our comprehensive income represents net income adjusted for unrealized gains and losses on available-for-sale marketable securities and the related taxes. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Significant Accounting Policies There were no material changes in our significant accounting policies during the three months ended March 31, 2020. 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, 2019, for information regarding our significant accounting policies. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments — Credit Losses” (“ASU 2016-13”), which introduced a new model for recognizing credit losses on financial instruments based on an estimate of the current expected credit losses. The new current expected credit losses (“CECL”) model generally calls for the immediate recognition of all expected credit losses and applies to financial instruments and other assets, including accounts receivable and other financial assets measured at amortized cost, debt securities and other financial assets. This guidance replaces the previous incurred loss model for measuring expected credit losses and requires expected losses on available-for-sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities. We adopted ASU 2016-13 as of January 1, 2020, and it did not have an impact on the condensed consolidated financial statements. |
Marketable Securities
Marketable Securities | 3 Months Ended |
Mar. 31, 2020 | |
Marketable Securities | |
Marketable Securities | Note 4. Marketable Securities Our investments in marketable securities, all of which have original contractual maturities of t en to twenty-four months , are classified as available-for-sale and consist of the following: At March 31, 2020 Amortized Unrealized Fair (In thousands) Cost Gains Losses Value U.S. government and agency obligations $ 10,988 $ 51 $ — $ 11,039 Corporate debt securities 1,498 — — 1,498 Marketable securities $ 12,486 $ 51 $ — $ 12,537 At December 31, 2019 Amortized Unrealized Fair (In thousands) Cost Gains Losses Value U.S. government and agency obligations $ 19,950 $ 14 $ 1 $ 19,963 Corporate debt securities 2,493 8 — 2,501 Marketable securities $ 22,443 $ 22 $ 1 $ 22,464 Net pre-tax unrealized gains for marketable securities at March 31, 2020, were recorded as a component of accumulated other comprehensive income in stockholders' equity. There were no sales of marketable securities during the three months ended March 31, 2020. There were no marketable securities in an unrealized loss position at March 31, 2020. At December 31, 2019, unrealized losses and the fair value of marketable securities aggregated by investment category and the length of time the securities were in a continuous loss position, were as follows: At December 31, 2019 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Losses Value Losses Value Losses U.S. government and agency obligations $ 5,997 $ 1 $ — $ — $ 5,997 $ 1 Corporate debt securities — — — — — — Marketable securities $ 5,997 $ 1 $ — $ — $ 5,997 $ 1 |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventories | |
Inventories | Note 5. Inventories Inventories consisted of the following: (In thousands) At March 31, 2020 At December 31, 2019 Finished goods $ 8,178 $ 6,508 Component parts and work-in-process 14,185 12,551 Total inventories $ 22,363 $ 19,059 |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Intangible Assets | |
Intangible Assets | Note 6. Intangible Assets Our patents and other intangible assets are summarized as follows: Weighted- At March 31, 2020 Average Gross Amortization Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Patents 11 years $ 4,386 $ 539 $ 3,847 Defensive intangible assets 5 years 1,125 292 833 Customer accounts 3 years 125 44 81 Total amortizable intangible assets 5,636 875 4,761 Patents pending 445 — 445 Total intangible assets $ 6,081 $ 875 $ 5,206 Weighted- At December 31, 2019 Average Gross Amortization Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Patents 11 years $ 4,386 $ 447 $ 3,939 Defensive intangible assets 5 years 1,125 250 875 Customer accounts 3 years 125 37 88 Total amortizable intangible assets 5,636 734 4,902 Patents pending 410 — 410 Total intangible assets $ 6,046 $ 734 $ 5,312 Amortization expense was $0.1 million for each of the three months ended March 31, 2020 and 2019. Future amortization expenses are expected as follows: (In thousands) 2020 (April 1 - December 31) $ 430 2021 567 2022 567 2023 537 2024 529 Thereafter 2,131 Total $ 4,761 |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2020 | |
Accrued Expenses | |
Accrued Expenses | Note 7. Accrued Expenses Accrued expenses consisted of the following: (In thousands) At March 31, 2020 At December 31, 2019 Warranty $ 1,358 $ 1,218 Lease termination costs 1,200 1,200 Travel and business 629 776 Legal and consulting 812 617 In-transit inventory 352 106 Sales and use tax 177 200 Clinical studies 142 85 Other 360 296 Total $ 5,030 $ 4,498 |
Warranty Reserves
Warranty Reserves | 3 Months Ended |
Mar. 31, 2020 | |
Warranty Reserves | |
Warranty Reserves | Note 8. 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 March 31, (In thousands) 2020 2019 Beginning balance $ 3,759 $ 2,566 Warranty provision 905 418 Processed warranty claims (422) (257) Ending balance $ 4,242 $ 2,727 Accrued warranty reserve, current $ 1,358 $ 873 Accrued warranty reserve, non-current 2,884 1,854 Total accrued warranty reserve $ 4,242 $ 2,727 |
Credit Agreement
Credit Agreement | 3 Months Ended |
Mar. 31, 2020 | |
Credit Agreement | |
Credit Agreement | Note 9. Credit Agreement On August 3, 2018, we entered into a credit agreement with Wells Fargo Bank, National Association, which was amended by a First Amendment dated February 12, 2019, a Waiver and Second Amendment dated March 25, 2019, and a Third Amendment dated August 2, 2019 (collectively, the “Credit Agreement”), which expires on August 3, 2021. The Credit Agreement provides for a $10.0 million revolving credit facility. 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 an incremental $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 $35.0 million. As of March 31, 2020 , and the date on which we filed this report, we did not have any outstanding borrowings under the Credit Agreement. Our obligations under the Credit Agreement are secured by a security interest in substantially all of our and our subsidiaries’ assets and are also guaranteed by our subsidiaries. The Credit Agreement contains a number of restrictions and covenants, including that we maintain compliance with a maximum leverage ratio and a minimum liquidity covenant. As of March 31, 2020, we were in compliance with all financial covenants under the Credit Agreement. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 10. 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 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. We classify our leases as buildings, vehicles or computer and office equipment and do not separate lease and nonlease 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 Sheet. 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 Sheet, with rent expense to be recognized on a straight-line basis over the term of the lease. The remaining lease terms vary from approximately one to ten years as of March 31, 2020. In March 2008, we entered into a noncancelable operating lease agreement for building space for our previous corporate headquarters that provided for monthly rent, real estate taxes and operating expenses that was subsequently extended to July 31, 2021. Due to the move to our new headquarters in September 2019, we entered into a termination agreement for our former corporate headquarters on December 31, 2019. We agreed to pay $1.2 million in order to terminate all further rights and obligations of the lease. The lease was removed from our ROU operating lease assets and operating lease liabilities and the total net loss on termination of $1.1 million was recorded in the reimbursement, general and administrative line of our Consolidated Statements of Operations. 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 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 under the initial lease was placed in service in September 2019. This portion was recognized as an operating lease and included in the ROU operating lease assets and operating lease liabilities on the Consolidated Balance Sheets. The portion of the space covered under the second lease is expected to be occupied and commence in the second half of 2020 and the portion of the space covered under the third lease is expected to be occupied and commence in the second half of 2021. Vehicles We lease vehicles for certain members of our field sales organization under a vehicle fleet program whereby the initial, noncancelable lease is for a term of 367 days , thus more than one year. Subsequent to the initial term, the lease becomes a month-to-month, cancelable lease. As of March 31, 2020, we had approximately 84 vehicles with agreements within the initial, noncancelable lease term that are recorded as ROU operating lease assets and operating lease liabilities. In addition to monthly rental fees specific to the vehicle, there are fixed monthly nonlease components that have been included in the ROU operating lease assets and operating lease liabilities. The nonlease components are not significant. Computer and Office Equipment We also have operating lease agreements for certain computer and office equipment. The remaining lease terms as of March 31, 2020, ranged from less than one year to approximately four years with fixed monthly payments that are included in the ROU operating lease assets and operating lease liabilities. The leases provide an option to purchase the related equipment at fair market value at the end of the lease. 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. 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 March 31, 2020 At December 31, 2019 Right of use operating lease assets $ 15,289 $ 15,885 Operating lease liabilities: Current $ 1,585 $ 1,454 Non-current 14,846 15,134 Total $ 16,431 $ 16,588 Operating leases: Weighted average remaining lease term 9.8 years 10.1 years Weighted average discount rate (1) 4.6% 4.6% Three Months Ended March 31, 2020 2019 Supplemental cash flow information for our operating leases: Cash paid for operating lease liabilities $ 463 $ 341 Non-cash right of use assets obtained in exchange for new operating lease obligations $ 295 $ 553 (1) Discount rates were established as of January 1, 2019, the adoption date of ASC 842, September 16, 2019, the commencement date of the initial lease for our new headquarters and December 31, 2019, the date of our new headquarters lease modification. The table below reconciles the undiscounted cash flows under the operating lease liabilities recorded on the Condensed Consolidated Balance Sheet for the periods presented: (In thousands) 2020 (April 1 - December 31) $ 1,793 2021 1,939 2022 1,936 2023 1,893 2024 1,901 Thereafter 11,025 Total minimum lease payments 20,487 Less: Amount of lease payments representing interest (4,056) Present value of future minimum lease payments 16,431 Less: Current obligations under operating lease liabilities (1,585) Non-current obligations under operating lease liabilities $ 14,846 As of March 31, 2020, we have additional lease commitments of $14.3 million related to amendments to existing building leases that have not yet commenced. As the lessee we are involved in providing guidance to the lessor for related improvements, however these improvements are managed and owned by the lessor. Operating lease costs were $0.7 million and $0.3 million for the three months ended March 31, 2020 and 2019, respectively. Major Vendors We had purchases from two major vendors that accounted for 32% of our total purchases for the three months ended March 31, 2020, and from three major vendors that accounted for 40% of our total purchases for the three months ended March 31, 2019. Purchase Commitments We issued purchase orders prior to March 31, 2020, totaling $33.8 million for goods that we expect to receive within the next year. Retirement Plan We maintain a 401(k) retirement plan for our employees in which eligible employees can contribute a percentage of their pre-tax compensation. Discretionary contributions to the 401(k) plan totaled $0.1 million for each of the three months ended March 31, 2020 and 2019, respectively. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | Note 11. Stockholders' Equity Stock-Based Compensation Our 2016 Equity Incentive Plan (the “2016 Plan”) authorizes us to grant stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards to employees, non-employee directors and certain consultants and advisors. There were up to 4,800,000 shares of our common stock initially reserved for issuance pursuant to the 2016 Plan. The 2016 Plan provides that the number of shares reserved and available for issuance under the 2016 Plan will automatically increase annually on January 1 of each calendar year, commencing in 2017 and ending on and including January 1, 2026, by an amount equal to the lesser of: (a) 5% of the number of common shares of stock outstanding as of December 31 of the immediately preceding calendar year, or (b) 2,500,000 shares; provided, however, that our Board of Directors may determine that any annual increase be a lesser number. In addition, all awards granted under our 2007 Omnibus Stock Plan and our 2003 Stock Option Plan that were outstanding when the 2016 Plan became effective and that are forfeited, expired, cancelled, settled for cash or otherwise not issued, will become available for issuance under the 2016 Plan. Pursuant to the automatic increase feature of the 2016 Plan, shares were added as approved by the Board of Directors for each year since inception other than 2019, at which point, the Board exercised its prerogative to forgo the increase. On January 1, 2020, 952,697 shares were added as available for issuance thereunder. As of March 31, 2020, 4,696,923 shares were available for future grant pursuant to the 2016 Plan. Upon adoption and approval of the 2016 Plan, all of our previous equity incentive compensation plans were terminated. However, existing awards under those plans continue to vest in accordance with the original vesting schedules and will expire at the end of their original terms. We recorded stock-based compensation expense of $2.7 million and $2.8 million for the three months ended March 31, 2020 and 2019, respectively. This expense was allocated as follows: Three Months Ended March 31, (In thousands) 2020 2019 Cost of revenue $ 82 $ 98 Sales and marketing expenses 1,246 1,166 Research and development expenses 88 80 Reimbursement, general and administrative expenses 1,312 1,439 Total stock-based compensation expense $ 2,728 $ 2,783 Stock Options We have granted stock options to certain participants that vest over three or four years and typically have a contractual term of seven or ten years . Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $0.9 million and $ 0.7 million for the three months ended March 31, 2020 and 2019, respectively. At March 31, 2020, there was approximately $9.6 million of total unrecognized pre-tax stock option expense under our equity compensation plans, which is expected to be recognized on a straight-line basis over a weighted-average period of 2.5 years. Our stock option activity for the three months ended March 31, 2020, 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 (2) Balance at December 31, 2019 866,955 $ 28.76 6.1 years $ 33,957 Granted 221,983 $ 50.41 Exercised (13,117) $ 13.09 $ 390 Forfeited (7,331) $ 61.63 Cancelled (1,388) $ 62.40 Balance at March 31, 2020 1,067,102 $ 33.19 6.0 years $ 14,740 Options exercisable at March 31, 2020 529,219 $ 17.88 4.9 years $ 13,095 (1) The exercise price of each option granted during the period shown was equal to the market price of the underlying stock on the date of grant. (2) The aggregate intrinsic value of options exercised represents the difference between the exercise price of the option and the closing stock price of our common stock on the date of exercise. The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period. Options exercisable of 586,039 as of March 31, 2019, had a weighted-average exercise price of $8.57 per share. Time-Based Restricted Stock Units We have granted time-based restricted stock units to certain participants under the 2016 Plan that are stock-settled with common shares. Time-based restricted stock units granted under the 2016 Plan vest over one to three years . Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for time-based restricted stock units was $1.2 million and $0.8 million for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, there was approximately $9.2 million of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 2.4 years. Our time-based restricted stock unit activity for the three months ended March 31, 2020, 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, 2019 171,687 $ 43.74 $ 11,591 Granted 110,723 $ 50.38 Vested (50,636) $ 39.19 Cancelled (330) $ 75.73 Balance at March 31, 2020 231,444 $ 47.87 $ 9,295 Deferred and unissued at March 31, 2020 (2) 6,389 $ 40.40 $ 257 (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. (2) For the three months ended March 31, 2020, there were 280 restricted stock units granted to non-employee directors in lieu of their quarterly cash retainer payments. These restricted stock units were fully vested upon grant and represent the right to receive one share of common stock, per unit, upon the earlier of the director’s termination of service as a director of ours or the occurrence of a change of control of us. These restricted stock units are included in the “Granted” line in the table above and are also included in the “Vested” line in the table above due to their being fully vested upon grant. As of March 31, 2020, there were 6,389 outstanding restricted stock units that have been previously granted to non-employee directors in lieu of their quarterly director retainer payments. Performance-Based Restricted Stock Units We have granted performance-based restricted stock units (“PSUs”) to certain participants under the 2016 Plan. These PSUs have both performance-based and time-based vesting features. The PSUs granted in 2018 were earned to the extent performance goals based on revenue and adjusted EBITDA were achieved in 2019. The PSUs granted in 2019 will be earned if and to the extent performance goals based on revenue and adjusted EBITDA are achieved in 2020. The PSUs granted in 2020 will be earned if and to the extent performance goals based on revenue and adjusted EBITDA are achieved in 2021. The number of PSUs earned will depend on the level at which the performance targets are achieved and can range from 50% of target if the minimum performance threshold is achieved and up to 150% of target if maximum performance is achieved. One-third of the earned PSUs will vest on the date the Compensation and Organization Committee certifies the number of PSUs earned, and the remaining two-thirds of the earned PSUs will vest on the first anniversary of that certification date. All earned and vested PSUs will be settled in shares of common stock. Stock-based compensation expense recognized for PSUs for the three months ended March 31, 2020 and 2019, was $0.4 million and $0.7 million , respectively. As of March 31, 2020, there was approximately $3.2 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.2 years. Our performance-based restricted stock unit activity for the three months ended March 31, 2020, was as follows: Performance- Weighted- Based 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, 2019 91,151 $ 44.63 $ 6,154 Granted 31,731 $ 50.41 Vested (21,589) $ 33.62 Balance at March 31, 2020 101,293 $ 48.79 $ 4,068 (1) The aggregate intrinsic value of performance-based restricted stock units 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. 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, shares were added as approved by the Board of Directors for each year since inception other than 2019, at which point, the Board exercised its prerogative to forgo the increase. On January 1, 2020, 190,539 shares were added as available for issuance thereunder. As of March 31, 2020, 1,661,988 shares were available for future issuance under the ESPP. We recognized stock-based compensation expense associated with the ESPP of $ 0.2 million and $0.3 million for the three months ended March 31, 2020 and 2019, respectively. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Revenue | |
Revenue | Note 12. Revenue We derive our revenue from the sale and rental of our compression products to our customers in the United States. The following table presents our revenue, inclusive of sales and rental revenue, disaggregated by product categories: Three Months Ended March 31, (In thousands) 2020 2019 Revenue Flexitouch system $ 38,586 $ 34,109 Other products (1) 5,089 3,508 Total $ 43,675 $ 37,617 Percentage of total revenue Flexitouch system 88 % 91 % Other products (1) 12 % 9 % Total 100 % 100 % (1) The “other products” line primarily includes revenue from our Entre system. The Actitouch system and the Airwear wrap contributed immaterial amounts of revenue for both of the three months ended March 31, 2020 and 2019. Rental revenue for the three months ended March 31, 2020 and 2019, was primarily from private insurers. Our revenue from third-party payers, inclusive of sales and rental revenue, for the three months ended March 31, 2020 and 2019, are summarized in the following table: Three Months Ended March 31, (In thousands) 2020 2019 Private insurers and other payers $ 30,237 $ 25,882 Veterans Administration 7,058 7,670 Medicare 6,380 4,065 Total $ 43,675 $ 37,617 Our rental revenue is derived from rent-to-purchase arrangements that typically range from three to ten months. Under ASC 840, our rental revenue was recognized as month-to-month, cancelable leases; however, because 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. Rental agreements initiated subsequent to January 1, 2019, are recorded as sales-type leases in accordance with ASC 842, whereby rental revenue and cost of rental revenue are recognized upon the lease commencement date. In 2019, in accordance with applicable guidance, we continued to recognize rental agreements commencing prior to December 31, 2018, on a month-to-month basis as an operating lease until they were completed. These rental agreements will not have an impact on the revenue results in 2020. Total rental revenue in the three months ended March 31, 2019 included both operating and sales-type lease revenue. Operating lease revenue was $2.8 million for the three months ended March 31, 2019. 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 Sheet. 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. Sales-type lease revenue and the associated cost of revenue for the three months ended March 31, 2020 and 2019, was: Three Months Ended March 31, (In thousands) 2020 2019 Sales-type lease revenue $ 6,052 $ 3,965 Cost of sales-type lease revenue 1,680 1,543 Gross profit $ 4,372 $ 2,422 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Taxes | |
Income Taxes | Note 13. 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 March 31, 2020 was a benefit of 68.8% , compared to a benefit of 189.7% for the three months ended March 31, 2019. The primary driver of the change in our effective tax rate is attributable to a decrease in the tax benefits related to share-based compensation proportionate to pre-tax book income as compared to the prior year's reporting period. We recorded an income tax benefit of $2.9 million and $3.1 million for the three months ended March 31, 2020 and 2019, 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. As of March 31, 2020, the Company has an unrecognized tax benefit of approximately $27,000 . We are not currently under examination in any jurisdiction. In the event of any future tax assessments, we have elected to record the income taxes and any related interest and penalties as income tax expense on our statement of operations. |
Net Income Per Common Share
Net Income Per Common Share | 3 Months Ended |
Mar. 31, 2020 | |
Net Income (Loss) Per Share Attributable to Common Stockholders | |
Net Income (Loss) Per Share Attributable to Common Stockholders | Note 14. Net Income Per Share The following table sets forth the computation of our basic and diluted net (loss) income per share: Three Months Ended March 31, (In thousands, except share and per share data) 2020 2019 Net (loss) income $ (1,307) $ 1,472 Weighted-average shares outstanding 19,173,580 18,746,751 Dilutive effect of stock-based awards — 833,096 Weighted-average shares used to compute diluted net (loss) income per share 19,173,580 19,579,847 Net (loss) income per share - Basic $ (0.07) $ 0.08 Net (loss) income per share - Diluted $ (0.07) $ 0.08 The following common stock equivalents were excluded from the computation of diluted net (loss) income per share for the periods presented because including them would have been anti-dilutive: Three Months Ended March 31, 2020 2019 Restricted stock units 237,709 42,691 Common stock options 1,071,148 165,638 Performance stock units 123,212 — Employee stock purchase plan 44,607 — Total 1,476,676 208,329 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | Note 15. 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 following provides information regarding fair value measurements for our cash equivalents and marketable securities as of March 31, 2020, and December 31, 2019, according to the three-level fair value hierarchy: At March 31, 2020 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: Money market mutual funds $ 8,583 $ — $ — $ 8,583 U.S. government and agency obligations 15,035 — — 15,035 Corporate debt securities — 1,498 — 1,498 Total $ 23,618 $ 1,498 $ — $ 25,116 At December 31, 2019 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: Money market mutual funds $ 481 $ — $ — $ 481 U.S. government and agency obligations 25,954 — — 25,954 Corporate debt securities — 2,501 — 2,501 Total $ 26,435 $ 2,501 $ — $ 28,936 During the three months ended March 31, 2020, there were no transfers within the three-level hierarchy. A significant transfer is recognized when the inputs used to value a security have been changed, which merits a transfer between the disclosed levels of the valuation hierarchy. The fair values for our money market mutual funds, U.S. government and agency obligations and corporate debt securities are determined based on valuations provided by external investment managers who obtain them from a variety of industry standard data providers. The carrying amounts of financial instruments such as cash equivalents, accounts receivable, other assets, accounts payable, accrued expenses and other 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. We had no re-measurements of non-financial assets to fair value in the three months ended March 31, 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
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 three months ended March 31, 2020, are not necessarily indicative of results to be expected for the year ending December 31, 2020, 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, 2019. |
Risks and Uncertainties | Risks and Uncertainties Coronavirus (COVID-19) The United States economy in general and our business specifically have been negatively affected by the COVID-19 pandemic. There are no reliable estimates of how long the pandemic will last or how many people are likely to be affected by it. For that reason, we are unable to reasonably estimate the long-term impact of the pandemic on our business at this time. Our first priority with regard to the COVID-19 pandemic is to ensure the safety and health of our employees, clinicians and patients. Subject to that, we are focusing our efforts on attempting to continue our business operations in this unprecedented environment. Part of our strategy includes changing many of our processes and practices in an effort to help mitigate the impact of COVID-19 on our business so that we can support our clinicians and safely make our at-home therapies available to patients. These include, but are not limited to: ● Adjusting work and operations to keep employees safe while continuing to serve our clinicians and patients. As an essential business under federal guidelines, we continue to manufacture product and we have implemented multiple, smaller rotational shifts and other best practices to help protect the health and safety of our workforce. ● Implementing remote and flexible work arrangements for employees wherever possible, including real-time, online training of our new sales representatives. ● Initiating employee travel and contact restrictions to reduce exposure. ● Collaborating with payers to modify coverage requirements by serving patients virtually. ● Postponing large medical education programs and conducting virtual meetings whenever possible, including virtual patient demonstrations and trainings. ● When in-person visits are required, we are supporting clinicians and patients by using rigorous infection control practices. We cannot assure you that these changes to our processes and practices will be successful in mitigating the impact of COVID-19 on our business. |
Use of Estimates | 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. |
Comprehensive Income | Comprehensive Income Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Our comprehensive income represents net income adjusted for unrealized gains and losses on available-for-sale marketable securities and the related taxes. |
Marketable Securities (Tables)
Marketable Securities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Marketable Securities | |
Schedule of marketable securities | At March 31, 2020 Amortized Unrealized Fair (In thousands) Cost Gains Losses Value U.S. government and agency obligations $ 10,988 $ 51 $ — $ 11,039 Corporate debt securities 1,498 — — 1,498 Marketable securities $ 12,486 $ 51 $ — $ 12,537 At December 31, 2019 Amortized Unrealized Fair (In thousands) Cost Gains Losses Value U.S. government and agency obligations $ 19,950 $ 14 $ 1 $ 19,963 Corporate debt securities 2,493 8 — 2,501 Marketable securities $ 22,443 $ 22 $ 1 $ 22,464 |
Schedule of unrealized losses on investment | At December 31, 2019 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Losses Value Losses Value Losses U.S. government and agency obligations $ 5,997 $ 1 $ — $ — $ 5,997 $ 1 Corporate debt securities — — — — — — Marketable securities $ 5,997 $ 1 $ — $ — $ 5,997 $ 1 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventories | |
Schedule of inventories | (In thousands) At March 31, 2020 At December 31, 2019 Finished goods $ 8,178 $ 6,508 Component parts and work-in-process 14,185 12,551 Total inventories $ 22,363 $ 19,059 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Intangible Assets | |
Schedule of finite lived intangible assets | Weighted- At March 31, 2020 Average Gross Amortization Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Patents 11 years $ 4,386 $ 539 $ 3,847 Defensive intangible assets 5 years 1,125 292 833 Customer accounts 3 years 125 44 81 Total amortizable intangible assets 5,636 875 4,761 Patents pending 445 — 445 Total intangible assets $ 6,081 $ 875 $ 5,206 Weighted- At December 31, 2019 Average Gross Amortization Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Patents 11 years $ 4,386 $ 447 $ 3,939 Defensive intangible assets 5 years 1,125 250 875 Customer accounts 3 years 125 37 88 Total amortizable intangible assets 5,636 734 4,902 Patents pending 410 — 410 Total intangible assets $ 6,046 $ 734 $ 5,312 |
Schedule of future amortization expense | (In thousands) 2020 (April 1 - December 31) $ 430 2021 567 2022 567 2023 537 2024 529 Thereafter 2,131 Total $ 4,761 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accrued Expenses | |
Schedule of Accrued Expenses | (In thousands) At March 31, 2020 At December 31, 2019 Warranty $ 1,358 $ 1,218 Lease termination costs 1,200 1,200 Travel and business 629 776 Legal and consulting 812 617 In-transit inventory 352 106 Sales and use tax 177 200 Clinical studies 142 85 Other 360 296 Total $ 5,030 $ 4,498 |
Warranty Reserves (Tables)
Warranty Reserves (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Warranty Reserves | |
Schedule of warranty reserves | Three Months Ended March 31, (In thousands) 2020 2019 Beginning balance $ 3,759 $ 2,566 Warranty provision 905 418 Processed warranty claims (422) (257) Ending balance $ 4,242 $ 2,727 Accrued warranty reserve, current $ 1,358 $ 873 Accrued warranty reserve, non-current 2,884 1,854 Total accrued warranty reserve $ 4,242 $ 2,727 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies | |
Summary of lease-related assets and liabilities | (In thousands) At March 31, 2020 At December 31, 2019 Right of use operating lease assets $ 15,289 $ 15,885 Operating lease liabilities: Current $ 1,585 $ 1,454 Non-current 14,846 15,134 Total $ 16,431 $ 16,588 Operating leases: Weighted average remaining lease term 9.8 years 10.1 years Weighted average discount rate (1) 4.6% 4.6% Three Months Ended March 31, 2020 2019 Supplemental cash flow information for our operating leases: Cash paid for operating lease liabilities $ 463 $ 341 Non-cash right of use assets obtained in exchange for new operating lease obligations $ 295 $ 553 (1) Discount rates were established as of January 1, 2019, the adoption date of ASC 842, September 16, 2019, the commencement date of the initial lease for our new headquarters and December 31, 2019, the date of our new headquarters lease modification. |
Summary of undiscounted cash flows | (In thousands) 2020 (April 1 - December 31) $ 1,793 2021 1,939 2022 1,936 2023 1,893 2024 1,901 Thereafter 11,025 Total minimum lease payments 20,487 Less: Amount of lease payments representing interest (4,056) Present value of future minimum lease payments 16,431 Less: Current obligations under operating lease liabilities (1,585) Non-current obligations under operating lease liabilities $ 14,846 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Schedule of allocation of stock-based compensation expense | Three Months Ended March 31, (In thousands) 2020 2019 Cost of revenue $ 82 $ 98 Sales and marketing expenses 1,246 1,166 Research and development expenses 88 80 Reimbursement, general and administrative expenses 1,312 1,439 Total stock-based compensation expense $ 2,728 $ 2,783 |
Schedule of stock option activity | 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 (2) Balance at December 31, 2019 866,955 $ 28.76 6.1 years $ 33,957 Granted 221,983 $ 50.41 Exercised (13,117) $ 13.09 $ 390 Forfeited (7,331) $ 61.63 Cancelled (1,388) $ 62.40 Balance at March 31, 2020 1,067,102 $ 33.19 6.0 years $ 14,740 Options exercisable at March 31, 2020 529,219 $ 17.88 4.9 years $ 13,095 (1) The exercise price of each option granted during the period shown was equal to the market price of the underlying stock on the date of grant. (2) The aggregate intrinsic value of options exercised represents the difference between the exercise price of the option and the closing stock price of our common stock on the date of exercise. The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period. |
Time-Based Restricted Stock Units | |
Schedule of stock-settled restricted stock unit activity | 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, 2019 171,687 $ 43.74 $ 11,591 Granted 110,723 $ 50.38 Vested (50,636) $ 39.19 Cancelled (330) $ 75.73 Balance at March 31, 2020 231,444 $ 47.87 $ 9,295 Deferred and unissued at March 31, 2020 (2) 6,389 $ 40.40 $ 257 (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. (2) For the three months ended March 31, 2020, there were 280 restricted stock units granted to non-employee directors in lieu of their quarterly cash retainer payments. These restricted stock units were fully vested upon grant and represent the right to receive one share of common stock, per unit, upon the earlier of the director’s termination of service as a director of ours or the occurrence of a change of control of us. These restricted stock units are included in the “Granted” line in the table above and are also included in the “Vested” line in the table above due to their being fully vested upon grant. As of March 31, 2020, there were 6,389 outstanding restricted stock units that have been previously granted to non-employee directors in lieu of their quarterly director retainer payments. |
Performance-based stock-settled restricted stock units | |
Schedule of stock-settled restricted stock unit activity | Performance- Weighted- Based 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, 2019 91,151 $ 44.63 $ 6,154 Granted 31,731 $ 50.41 Vested (21,589) $ 33.62 Balance at March 31, 2020 101,293 $ 48.79 $ 4,068 (1) The aggregate intrinsic value of performance-based restricted stock units outstanding was based on our closing stock price on the last trading day of the period. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue | |
Summary of revenue disaggregated by product | Three Months Ended March 31, (In thousands) 2020 2019 Revenue Flexitouch system $ 38,586 $ 34,109 Other products (1) 5,089 3,508 Total $ 43,675 $ 37,617 Percentage of total revenue Flexitouch system 88 % 91 % Other products (1) 12 % 9 % Total 100 % 100 % |
Summary of revenues from third-party payers | Three Months Ended March 31, (In thousands) 2020 2019 Private insurers and other payers $ 30,237 $ 25,882 Veterans Administration 7,058 7,670 Medicare 6,380 4,065 Total $ 43,675 $ 37,617 |
Sales-type lease revenue and the associated cost of goods sold | Three Months Ended March 31, (In thousands) 2020 2019 Sales-type lease revenue $ 6,052 $ 3,965 Cost of sales-type lease revenue 1,680 1,543 Gross profit $ 4,372 $ 2,422 |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Net Income (Loss) Per Share Attributable to Common Stockholders | |
Schedule of computation of the basic and diluted net income (loss) per common share | Three Months Ended March 31, (In thousands, except share and per share data) 2020 2019 Net (loss) income $ (1,307) $ 1,472 Weighted-average shares outstanding 19,173,580 18,746,751 Dilutive effect of stock-based awards — 833,096 Weighted-average shares used to compute diluted net (loss) income per share 19,173,580 19,579,847 Net (loss) income per share - Basic $ (0.07) $ 0.08 Net (loss) income per share - Diluted $ (0.07) $ 0.08 |
Schedule of potentially dilutive securities outstanding | Three Months Ended March 31, 2020 2019 Restricted stock units 237,709 42,691 Common stock options 1,071,148 165,638 Performance stock units 123,212 — Employee stock purchase plan 44,607 — Total 1,476,676 208,329 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Schedule of fair value measurements for our cash equivalents and marketable securities | At March 31, 2020 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: Money market mutual funds $ 8,583 $ — $ — $ 8,583 U.S. government and agency obligations 15,035 — — 15,035 Corporate debt securities — 1,498 — 1,498 Total $ 23,618 $ 1,498 $ — $ 25,116 At December 31, 2019 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: Money market mutual funds $ 481 $ — $ — $ 481 U.S. government and agency obligations 25,954 — — 25,954 Corporate debt securities — 2,501 — 2,501 Total $ 26,435 $ 2,501 $ — $ 28,936 |
Nature of Business and Operat_2
Nature of Business and Operations (Details) - IPO $ / shares in Units, $ in Millions | Aug. 02, 2016USD ($)$ / sharesshares |
Subsidiary, Sale of Stock | |
Number of shares of common stock sold | shares | 4,120,000 |
IPO price per share (in dollars per share) | $ / shares | $ 10 |
Proceeds from IPO | $ 35.4 |
Expense Relating To Initial Public Offering | $ 2.9 |
Marketable Securities (Details)
Marketable Securities (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Marketable Securities | ||
Amortized Cost | $ 12,486,000 | $ 22,443,000 |
Unrealized Gains | 51,000 | 22,000 |
Unrealized Losses | 1,000 | |
Fair Value | 12,537,000 | 22,464,000 |
Fair value less than 12 months | 5,997,000 | |
Unrealized losses, less than 12 months | 1,000 | |
Fair value, Total | 5,997,000 | |
Unrealized loss, Total | 1,000 | |
Marketable securities sold | $ 0 | |
Minimum | ||
Marketable Securities | ||
Contractual maturities of marketable securities | 10 months | |
Maximum | ||
Marketable Securities | ||
Contractual maturities of marketable securities | 24 months | |
U.S. government and agency obligations | ||
Marketable Securities | ||
Amortized Cost | $ 10,988,000 | 19,950,000 |
Unrealized Gains | 51,000 | 14,000 |
Unrealized Losses | 1,000 | |
Fair Value | 11,039,000 | 19,963,000 |
Fair value less than 12 months | 5,997,000 | |
Unrealized losses, less than 12 months | 1,000 | |
Fair value, Total | 5,997,000 | |
Unrealized loss, Total | 1,000 | |
Corporate debt securities | ||
Marketable Securities | ||
Amortized Cost | 1,498,000 | 2,493,000 |
Unrealized Gains | 8,000 | |
Fair Value | $ 1,498,000 | $ 2,501,000 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventories | ||
Finished goods | $ 8,178 | $ 6,508 |
Component parts and work-in-process | 14,185 | 12,551 |
Total inventories | $ 22,363 | $ 19,059 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2019 | |
Patents and Intangibles | ||||
Gross Carrying Amount | $ 5,636 | $ 5,636 | ||
Accumulated Amortization | 875 | 734 | ||
Total | 4,761 | 4,902 | ||
Total intangible assets (Gross) | 6,081 | 6,046 | ||
Total intangible assets (Net) | 5,206 | 5,312 | ||
Amortization expense | $ 100 | $ 100 | ||
Future Amortization | ||||
2020 (April 1 - December 31) | 430 | |||
2021 | 567 | |||
2022 | 567 | |||
2023 | 537 | |||
2024 | 529 | |||
Thereafter | 2,131 | |||
Total | 4,761 | 4,902 | ||
Patents | ||||
Patents and Intangibles | ||||
Patents pending | $ 445 | $ 410 | ||
Patents | ||||
Patents and Intangibles | ||||
Weighted Average Amortization Period | 11 years | 11 years | ||
Gross Carrying Amount | $ 4,386 | $ 4,386 | ||
Accumulated Amortization | 539 | 447 | ||
Total | 3,847 | 3,939 | ||
Future Amortization | ||||
Total | $ 3,847 | $ 3,939 | ||
Defensive intangible assets | ||||
Patents and Intangibles | ||||
Weighted Average Amortization Period | 5 years | 5 years | ||
Gross Carrying Amount | $ 1,125 | $ 1,125 | ||
Accumulated Amortization | 292 | 250 | ||
Total | 833 | 875 | ||
Future Amortization | ||||
Total | $ 833 | $ 875 | ||
Customer accounts | ||||
Patents and Intangibles | ||||
Weighted Average Amortization Period | 3 years | 3 years | ||
Gross Carrying Amount | $ 125 | $ 125 | ||
Accumulated Amortization | 44 | 37 | ||
Total | 81 | 88 | ||
Future Amortization | ||||
Total | $ 81 | $ 88 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Accrued Expenses | |||
Warranty | $ 1,358 | $ 1,218 | $ 873 |
Lease termination costs | 1,200 | 1,200 | |
Travel and business | 629 | 776 | |
Legal and consulting | 812 | 617 | |
In-transit inventory | 352 | 106 | |
Sales and use tax | 177 | 200 | |
Clinical studies | 142 | 85 | |
Other | 360 | 296 | |
Total | $ 5,030 | $ 4,498 |
Warranty Reserves (Details)
Warranty Reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Beginning balance | $ 3,759 | $ 2,566 | |
Warranty provision | 905 | 418 | |
Processed warranty claims | (422) | (257) | |
Ending balance | 4,242 | 2,727 | |
Accrued warranty reserve, current | 1,358 | 873 | $ 1,218 |
Accrued warranty reserve, non-current | 2,884 | 1,854 | $ 2,541 |
Total accrued warranty reserve | $ 4,242 | $ 2,727 |
Credit Agreement (Details)
Credit Agreement (Details) - USD ($) | Aug. 03, 2018 | Mar. 31, 2020 |
Credit Agreement | ||
Line of credit | $ 10,000,000 | |
Aggregate Borrowings | 25,000,000 | |
Total aggregate principal amount of loans | $ 35,000,000 | |
Credit facility outstanding amount | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Lease Obligations (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2020item | Dec. 31, 2019USD ($)ft² | Jan. 01, 2019 | Dec. 31, 2018ft² | Oct. 31, 2018ft² | |
Lessee, Lease, Description [Line Items] | |||||
Lease Termination Fee | $ | $ 1.2 | ||||
Total net loss on termination of lease | $ | $ 1.1 | ||||
Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Remaining lease terms | 12 months | ||||
Building | Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Remaining lease terms | 1 year | ||||
Building | Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Remaining lease terms | 10 years | ||||
Vehicles | |||||
Lessee, Lease, Description [Line Items] | |||||
Remaining lease terms | 367 days | ||||
Number of vehicles with agreements within the initial, noncancelable lease term | item | 84 | ||||
Equipment | |||||
Lessee, Lease, Description [Line Items] | |||||
Option to renew | true | ||||
Equipment | Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Remaining lease terms | 4 years | ||||
Initial lease | |||||
Lessee, Lease, Description [Line Items] | |||||
Area of office space | 80,000 | ||||
Second lease | |||||
Lessee, Lease, Description [Line Items] | |||||
Area of office space | 29,000 | ||||
Additional office space added to the lease | 4,000 | ||||
Third lease | |||||
Lessee, Lease, Description [Line Items] | |||||
Additional office space added to the lease | 37,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Lease related assets and liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Lease-related assets and liabilities | |||
Right of use operating lease assets | $ 15,289 | $ 15,885 | $ 15,885 |
Operating lease liabilities, current | 1,585 | 1,454 | 1,454 |
Non-current obligations under operating lease liabilities | 14,846 | 15,134 | $ 15,134 |
Present value of future minimum lease payments | $ 16,431 | $ 16,588 | |
Weighted average remaining lease term | 9 years 9 months 18 days | ||
Weighted average discount rate | 4.60% | 4.60% | |
Cash paid for operating lease liabilities | $ 463 | $ 341 | |
Non-cash right of use assets obtained in exchange for new operating lease obligations | $ 295 | $ 553 |
Commitments and Contingencies_3
Commitments and Contingencies - Undiscounted cash flows (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Undiscounted cash flows | |||
2020 (April 1 - December 31) | $ 1,793 | ||
2021 | 1,939 | ||
2022 | 1,936 | ||
2023 | 1,893 | ||
2024 | 1,901 | ||
Thereafter | 11,025 | ||
Total minimum lease payments | 20,487 | ||
Less: Amount of lease payments representing interest | (4,056) | ||
Present value of future minimum lease payments | 16,431 | $ 16,588 | |
Less: Current obligations under operating lease liabilities | (1,585) | $ (1,454) | (1,454) |
Non-current obligations under operating lease liabilities | $ 14,846 | $ 15,134 | $ 15,134 |
Commitments and Contingencies_4
Commitments and Contingencies - Lease commitments and operating lease cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Commitments and Contingencies | ||
Additional lease commitments | $ 14,300 | |
Operating lease cost | 700 | $ 300 |
Cash paid for operating lease liabilities | $ 463 | $ 341 |
Commitments and Contingencies_5
Commitments and Contingencies - Major Vendors (Details) - item | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Commitments and Contingencies | ||
Number of vendors | 2 | |
Purchases | Vendor | ||
Commitments and Contingencies | ||
Accounts Receivable (in percentage) | 32.00% | 40.00% |
Commitments and Contingencies_6
Commitments and Contingencies - Purchase Commitments (Details) $ in Millions | Mar. 31, 2020USD ($) |
Purchase commitments | |
Purchase orders issued | $ 33.8 |
Commitments and Contingencies_7
Commitments and Contingencies - Retirement Plan (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
401(k) | ||
Retirement Plan | ||
Discretionary contributions | $ 0.1 | $ 0.1 |
Stockholders' Equity - Stock-Ba
Stockholders' Equity - Stock-Based Compensation General Information (Details) | Mar. 31, 2020shares |
2016 Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares authorized | 4,800,000 |
Stockholders' Equity - Stock-_2
Stockholders' Equity - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
Stock-based compensation | |||
Compensation expense | $ 2,728 | $ 2,783 | |
Cost of revenue | |||
Stock-based compensation | |||
Compensation expense | 82 | 98 | |
Sales and marketing | |||
Stock-based compensation | |||
Compensation expense | 1,246 | 1,166 | |
Research and development | |||
Stock-based compensation | |||
Compensation expense | 88 | 80 | |
Reimbursement, general and administrative | |||
Stock-based compensation | |||
Compensation expense | $ 1,312 | 1,439 | |
2016 Plan | |||
Stock-based compensation | |||
Shares available for future issuance | 4,696,923 | ||
Automatic annual increase to the number of shares reserved and available for issuance as a percentage of outstanding common stock (as a percent) | 5.00% | ||
Automatic annual increase to the number of shares reserved and available for issuance | 2,500,000 | ||
Increase in number of shares reserved and available for issuance | 952,697 | ||
Common stock options | |||
Stock-based compensation | |||
Compensation expense | $ 900 | $ 700 | |
Unrecognized stock-based compensation | |||
Unrecognized stock-based compensation expense, period for recognition | 2 years 6 months |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Options and Restricted Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | |
Stock-based compensation, general disclosures | |||||
Stock-based compensation expense | $ 2,728 | $ 2,783 | |||
Common stock options | |||||
Stock-based compensation, general disclosures | |||||
Stock-based compensation expense | $ 900 | $ 700 | |||
Total unrecognized pre-tax compensation expense related to nonvested stock option awards | $ 9,600 | ||||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 2 years 6 months | ||||
Options | |||||
Outstanding at beginning of period | 866,955 | ||||
Granted | 221,983 | ||||
Exercised | (13,117) | ||||
Forfeited | (7,331) | ||||
Cancelled | (1,388) | ||||
Outstanding at end of period | 1,067,102 | 866,955 | |||
Weighted Average Exercise Price ($/share) | |||||
Outstanding at beginning of period | $ 28.76 | ||||
Granted | 50.41 | ||||
Exercised | 13.09 | ||||
Forfeited | 61.63 | ||||
Cancelled | 62.40 | ||||
Outstanding at end of period | $ 33.19 | $ 28.76 | |||
Other information | |||||
Options exercisable Number of Exercisable | 586,039 | 529,219 | |||
Options exercisable, weighted-average exercise price | $ 8.57 | $ 17.88 | |||
Options outstanding | $ 14,740 | $ 33,957 | |||
Options exercisable | $ 13,095 | ||||
Exercised | $ 390 | ||||
Weighted Average Grant Date Fair Value Per Share | |||||
Weighted average remaining contractual life (in years) | 6 years | 6 years 1 month 6 days | |||
Options exercisable, weighted-average remaining contractual life | 4 years 10 months 24 days | ||||
Restricted stock unit awards, Average Intrinsic Value | |||||
Number of option outstanding | 1,067,102 | 866,955 | 1,067,102 | 866,955 | |
Options Outstanding, weighted average exercise price | $ 33.19 | $ 28.76 | $ 33.19 | $ 28.76 | |
Options exercisable Number of Exercisable | 586,039 | 529,219 | |||
Options exercisable, weighted-average exercise price | $ 8.57 | $ 17.88 | |||
Common stock options | Minimum | |||||
Stock-based compensation, general disclosures | |||||
Vesting period (in years) | 3 years | ||||
Term (in years) | 7 years | ||||
Common stock options | Maximum | |||||
Stock-based compensation, general disclosures | |||||
Vesting period (in years) | 4 years | ||||
Term (in years) | 10 years | ||||
Time-Based Restricted Stock Units | |||||
Number of Stock-Settled Restricted Stock Unit Awards Outstanding | |||||
Number of share of common stock that restricted stock unit has the right to convert to | 1 | ||||
Time-Based Restricted Stock Units | Non-employee Directors | |||||
Number of Stock-Settled Restricted Stock Unit Awards Outstanding | |||||
Granted (in shares) | 280 | ||||
Number of granted and vested restricted stock units | 6,389 | ||||
2016 Plan | Time-Based Restricted Stock Units | |||||
Stock-based compensation, general disclosures | |||||
Stock-based compensation expense | $ 1,200 | $ 800 | |||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 2 months 12 days | ||||
Total unrecognized pre-tax compensation expense related to awards | $ 9,200 | ||||
Number of Stock-Settled Restricted Stock Unit Awards Outstanding | |||||
Restricted stock unit awards outstanding at the beginning of the period (in shares) | 171,687 | ||||
Granted (in shares) | 110,723 | ||||
Vested (in shares) | (50,636) | ||||
Cancelled (in shares) | (330) | ||||
Restricted stock unit awards outstanding at the end of the period (in shares) | 231,444 | 171,687 | |||
Deferred and unissued (in shares) | 6,389 | ||||
Weighted Average Grant Date Fair Value Per Share | |||||
Restricted stock unit awards outstanding at the beginning of the period (in dollars per share) | $ 43.74 | ||||
Granted (in dollars per share) | 50.38 | ||||
Vested (in dollars per share) | 39.19 | ||||
Cancelled (in dollars per share) | 75.73 | ||||
Restricted stock unit awards outstanding at the end of the period (in dollars per share) | $ 47.87 | $ 43.74 | |||
Deferred and unissued (in dollars per share) | $ 40.40 | ||||
Restricted stock unit awards, Average Intrinsic Value | |||||
Restricted stock unit awards, Average Intrinsic Value | $ 9,295 | $ 11,591 | |||
Restricted stock unit awards deferred and unissued, Average Intrinsic Value | 257 | ||||
2016 Plan | Time-Based Restricted Stock Units | Minimum | |||||
Stock-based compensation, general disclosures | |||||
Vesting period (in years) | 1 year | ||||
2016 Plan | Time-Based Restricted Stock Units | Maximum | |||||
Stock-based compensation, general disclosures | |||||
Vesting period (in years) | 3 years | ||||
2016 Plan | Performance-based stock-settled restricted stock units | |||||
Stock-based compensation, general disclosures | |||||
Stock-based compensation expense | $ 400 | $ 700 | |||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 2 years 2 months 12 days | ||||
Total unrecognized pre-tax compensation expense related to awards | 3,200 | ||||
Number of Stock-Settled Restricted Stock Unit Awards Outstanding | |||||
Restricted stock unit awards outstanding at the beginning of the period (in shares) | 91,151 | ||||
Granted (in shares) | 31,731 | ||||
Vested (in shares) | (21,589) | ||||
Restricted stock unit awards outstanding at the end of the period (in shares) | 101,293 | 91,151 | |||
Weighted Average Grant Date Fair Value Per Share | |||||
Restricted stock unit awards outstanding at the beginning of the period (in dollars per share) | $ 44.63 | ||||
Granted (in dollars per share) | 50.41 | ||||
Vested (in dollars per share) | 33.62 | ||||
Restricted stock unit awards outstanding at the end of the period (in dollars per share) | $ 48.79 | $ 44.63 | |||
Restricted stock unit awards, Average Intrinsic Value | |||||
Restricted stock unit awards, Average Intrinsic Value | $ 4,068 | $ 6,154 | |||
2016 Plan | Performance-based stock-settled restricted stock units | Minimum | |||||
Number of Stock-Settled Restricted Stock Unit Awards Outstanding | |||||
Percentage to earn or vest the performance-based stock-settled restricted stock units | 50.00% | ||||
2016 Plan | Performance-based stock-settled restricted stock units | Maximum | |||||
Number of Stock-Settled Restricted Stock Unit Awards Outstanding | |||||
Percentage to earn or vest the performance-based stock-settled restricted stock units | 150.00% | ||||
2016 Plan | Tranche one | Performance-based stock-settled restricted stock units | |||||
Stock-based compensation, general disclosures | |||||
Compensation arrangement | 33.33% | ||||
2016 Plan | Tranche two | Performance-based stock-settled restricted stock units | |||||
Stock-based compensation, general disclosures | |||||
Compensation arrangement | 66.67% |
Stockholders' Equity - Employee
Stockholders' Equity - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Apr. 27, 2017 |
Stockholders' Equity | ||||
Stock-based compensation expense | $ 2,728 | $ 2,783 | ||
Employee Stock Purchase Plan | ||||
Stockholders' Equity | ||||
Purchase price of common stock under plan (as a percent) | 85.00% | |||
Offering period (in months) | 6 months | |||
Incremental share increase (as a percent) | 1.00% | |||
Incremental share increase (in shares) | 500,000 | |||
Increase in number of shares reserved and available for issuance | 190,539 | |||
Shares reserved | 1,661,988 | 1,600,000 | ||
Stock-based compensation expense | $ 200 | $ 300 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue | ||
Revenues | $ 43,675 | $ 37,617 |
Percentage of total revenues (in percent) | 100.00% | 100.00% |
Operating lease revenue | $ 2,800 | |
Revenues from sale type lease | ||
Sales-type lease revenue | $ 6,052 | 3,965 |
Cost of sales-type lease revenue | 1,680 | 1,543 |
Gross profit | 4,372 | 2,422 |
Private insurers and other payers | ||
Revenue | ||
Revenues | 30,237 | 25,882 |
Veterans Administration | ||
Revenue | ||
Revenues | 7,058 | 7,670 |
Medicare | ||
Revenue | ||
Revenues | 6,380 | 4,065 |
Flexitouch system | ||
Revenue | ||
Revenues | $ 38,586 | $ 34,109 |
Percentage of total revenues (in percent) | 88.00% | 91.00% |
Other products | ||
Revenue | ||
Revenues | $ 5,089 | $ 3,508 |
Percentage of total revenues (in percent) | 12.00% | 9.00% |
Rental revenue | ||
Revenue | ||
Revenues | $ 6,052 | $ 6,786 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Taxes | ||
Unrecognized tax benefit | $ 27,000 | |
Total provision (benefit) for income taxes | $ (2,878,000) | $ (3,113,000) |
Effective Income Tax Rate Reconciliation, Percent | ||
Net effective rate | 68.80% | 189.70% |
Net Income Per Common Share (De
Net Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net Income (Loss) Per Share Attributable to Common Stockholders | ||
Net (loss) income | $ (1,307) | $ 1,472 |
Weighted-average shares outstanding | 19,173,580 | 18,746,751 |
Dilutive effect of stock-based awards | 833,096 | |
Weighted-average shares used to compute diluted net (loss) income per share | 19,173,580 | 19,579,847 |
Net (loss) income per share - Basic | $ (0.07) | $ 0.08 |
Net (loss) income per share - Diluted | $ (0.07) | $ 0.08 |
Net Income Per Common Share (_2
Net Income Per Common Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net Income (Loss) Per Share Attributable to Common Stockholders | ||
Antidilutive securities excluded from computation of earnings per share | 1,476,676 | 208,329 |
Common stock options | ||
Net Income (Loss) Per Share Attributable to Common Stockholders | ||
Antidilutive securities excluded from computation of earnings per share | 1,071,148 | 165,638 |
Performance stock units | ||
Net Income (Loss) Per Share Attributable to Common Stockholders | ||
Antidilutive securities excluded from computation of earnings per share | 123,212 | |
Restricted Stock Units | ||
Net Income (Loss) Per Share Attributable to Common Stockholders | ||
Antidilutive securities excluded from computation of earnings per share | 237,709 | 42,691 |
Employee stock purchase plan | ||
Net Income (Loss) Per Share Attributable to Common Stockholders | ||
Antidilutive securities excluded from computation of earnings per share | 44,607 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value Measurements | ||
Available for sale debt securities | $ 12,537 | $ 22,464 |
Amount of transfers of marketable securities within the three level hierarchy | 0 | |
Intangible assets | 5,206 | 5,312 |
U.S. government and agency obligations | ||
Fair Value Measurements | ||
Available for sale debt securities | 11,039 | 19,963 |
Corporate debt securities | ||
Fair Value Measurements | ||
Available for sale debt securities | 1,498 | 2,501 |
Recurring | ||
Fair Value Measurements | ||
Available for sale debt securities | 25,116 | 28,936 |
Recurring | Money market mutual funds | ||
Fair Value Measurements | ||
Money market mutual funds | 8,583 | 481 |
Recurring | U.S. government and agency obligations | ||
Fair Value Measurements | ||
Available for sale debt securities | 15,035 | 25,954 |
Recurring | Corporate debt securities | ||
Fair Value Measurements | ||
Available for sale debt securities | 1,498 | 2,501 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value Measurements | ||
Available for sale debt securities | 23,618 | 26,435 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market mutual funds | ||
Fair Value Measurements | ||
Money market mutual funds | 8,583 | 481 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government and agency obligations | ||
Fair Value Measurements | ||
Available for sale debt securities | 15,035 | 25,954 |
Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Available for sale debt securities | 1,498 | 2,501 |
Recurring | Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Fair Value Measurements | ||
Available for sale debt securities | 1,498 | $ 2,501 |
Non-recurring | Significant Unobservable Inputs (Level 3) | Entre/Actitouch systems | ||
Fair Value Measurements | ||
Intangible assets | $ 0 |