Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 29, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
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 | 19,650,900 | |
Entity Central Index Key | 0001027838 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 46,925 | $ 47,855 |
Accounts receivable | 40,043 | 43,849 |
Net investment in leases | 11,254 | 10,708 |
Inventories | 22,042 | 18,563 |
Prepaid expenses and other current assets | 2,235 | 2,638 |
Total current assets | 122,499 | 123,613 |
Non-current assets | ||
Property and equipment, net | 6,746 | 6,957 |
Right of use operating lease assets | 19,565 | 20,132 |
Intangible assets, net | 1,683 | 1,680 |
Accounts receivable, non-current | 10,727 | 9,433 |
Deferred income taxes | 12,026 | 10,198 |
Other non-current assets | 2,030 | 2,074 |
Total non-current assets | 52,777 | 50,474 |
Total assets | 175,276 | 174,087 |
Current liabilities | ||
Accounts payable | 9,352 | 4,197 |
Accrued payroll and related taxes | 8,547 | 11,588 |
Accrued expenses | 3,227 | 4,423 |
Income taxes payable | 2,658 | 2,658 |
Operating lease liabilities | 1,966 | 2,006 |
Other current liabilities | 2,235 | 1,842 |
Total current liabilities | 27,985 | 26,714 |
Non-current liabilities | ||
Accrued warranty reserve, non-current | 3,259 | 3,235 |
Operating lease liabilities, non-current | 18,910 | 19,388 |
Total non-current liabilities | 22,169 | 22,623 |
Total liabilities | 50,154 | 49,337 |
Commitments and Contingencies (see Note 10) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued and outstanding as of March 31, 2021 and December 31, 2020 | ||
Common stock, $0.001 par value, 300,000,000 shares authorized; 19,639,113 shares issued and outstanding as of March 31, 2021; 19,492,718 shares issued and outstanding as of December 31, 2020 | 20 | 19 |
Additional paid-in capital | 107,312 | 104,675 |
Retained earnings | 17,790 | 20,056 |
Total stockholders' equity | 125,122 | 124,750 |
Total liabilities and stockholders' equity | $ 175,276 | $ 174,087 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Condensed 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 | 19,639,113 | 19,492,718 |
Common stock, shares, outstanding | 19,639,113 | 19,492,718 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total revenue | $ 42,772 | $ 43,675 |
Total cost of revenue | 12,542 | 12,602 |
Gross profit | 30,230 | 31,073 |
Operating expenses | ||
Sales and marketing | 18,785 | 22,970 |
Research and development | 1,270 | 1,684 |
Reimbursement, general and administrative | 14,259 | 10,870 |
Total operating expenses | 34,314 | 35,524 |
Loss from operations | (4,084) | (4,451) |
Other (expense) income | (10) | 266 |
Loss before income taxes | (4,094) | (4,185) |
Income tax benefit | (1,828) | (2,878) |
Net loss | $ (2,266) | $ (1,307) |
Net loss per common share | ||
Basic (in dollars per share) | $ (0.12) | $ (0.07) |
Diluted (in dollars per share) | $ (0.12) | $ (0.07) |
Weighted-average common shares used to compute net loss per common share | ||
Basic (in shares) | 19,545,558 | 19,173,580 |
Diluted (in shares) | 19,545,558 | 19,173,580 |
Sales revenue | ||
Total revenue | $ 36,125 | $ 37,623 |
Total cost of revenue | 10,691 | 10,922 |
Gross profit | 25,434 | 26,701 |
Rental revenue | ||
Total revenue | 6,647 | 6,052 |
Total cost of revenue | 1,851 | 1,680 |
Gross profit | $ 4,796 | $ 4,372 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Condensed Consolidated Statements of Comprehensive Loss | ||
Net loss | $ (2,266) | $ (1,307) |
Other comprehensive income: | ||
Unrealized gain on marketable securities | 30 | |
Income tax related to items of other comprehensive income | (18) | |
Total other comprehensive income | 12 | |
Comprehensive loss | $ (2,266) | $ (1,295) |
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, 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 performance and restricted stock units | 172 | 172 | |||
Exercise of common stock options and vesting of performance and restricted stock units (in shares) | 96,186 | ||||
Taxes paid for net share settlement of performance and restricted stock units | (1,160) | (1,160) | |||
Taxes paid for net share settlement of performance and restricted stock units (in shares) | (22,236) | ||||
Comprehensive loss 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 | ||||
Balances at the beginning at Dec. 31, 2020 | $ 19 | 104,675 | 20,056 | 124,750 | |
Balances at the beginning (in shares) at Dec. 31, 2020 | 19,492,718 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 2,457 | 2,457 | |||
Exercise of common stock options and vesting of performance and restricted stock units | $ 1 | 1,295 | 1,296 | ||
Exercise of common stock options and vesting of performance and restricted stock units (in shares) | 167,375 | ||||
Taxes paid for net share settlement of performance and restricted stock units | (1,115) | (1,115) | |||
Taxes paid for net share settlement of performance and restricted stock units (in shares) | (20,980) | ||||
Comprehensive loss for the period | (2,266) | (2,266) | |||
Balances at the end at Mar. 31, 2021 | $ 20 | $ 107,312 | $ 17,790 | $ 125,122 | |
Balances at the end (in shares) at Mar. 31, 2021 | 19,639,113 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities | ||
Net loss | $ (2,266) | $ (1,307) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 652 | 730 |
Net amortization of premiums and discounts on securities available-for-sale | (43) | |
Deferred income taxes | (1,828) | 979 |
Stock-based compensation expense | 2,457 | 2,728 |
Changes in assets and liabilities: | ||
Accounts receivable | 3,806 | 2,663 |
Net investment in leases | (546) | (735) |
Inventories | (3,479) | (3,304) |
Income taxes | (4,153) | |
Prepaid expenses and other assets | 447 | 192 |
Right of use operating lease assets | 49 | 151 |
Medicare accounts receivable, non-current | (1,294) | (973) |
Accounts payable | 5,022 | 4,741 |
Accrued payroll and related taxes | (3,041) | (1,804) |
Accrued expenses and other liabilities | (779) | 1,044 |
Net cash (used in) provided by operating activities | (800) | 909 |
Cash flows from investing activities | ||
Proceeds from maturities of securities available-for-sale | 10,000 | |
Purchases of property and equipment | (249) | (358) |
Intangible assets costs | (62) | (36) |
Net (used in) provided by investing activities | (311) | 9,606 |
Cash flows from financing activities | ||
Taxes paid for net share settlement of performance and restricted stock units | (1,115) | (1,160) |
Proceeds from exercise of common stock options | 1,296 | 172 |
Net cash provided by (used in) financing activities | 181 | (988) |
Net (decrease) increase in cash and cash equivalents | (930) | 9,527 |
Cash and cash equivalents - beginning of period | 47,855 | |
Cash and cash equivalents - end of period | 46,925 | 32,297 |
Supplemental cash flow disclosure | ||
Cash paid for taxes | 13 | 311 |
Capital expenditures incurred but not yet paid | $ 133 | $ 155 |
Nature of Business and Operatio
Nature of Business and Operations | 3 Months Ended |
Mar. 31, 2021 | |
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. We provide our products for use in the home and sell or rent them through 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. 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 2021 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, 2021 | |
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, 2021, are not necessarily indicative of results to be expected for the year ending December 31, 2021, 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, 2020. 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. We have seen adverse impacts as it relates to the decline in the number of patients that healthcare facilities and clinics are able to treat due to enhanced safety protocols. 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. Since the onset of COVID-19, we have remained proactive to ensure we continue to adapt to the needs of our employees, clinicians and patients. 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. We continue to evaluate and, if appropriate, will adopt other measures in the future related to the ongoing safety of our employees, clinicians and patients. 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 Loss Comprehensive loss 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 loss represents net loss 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, 2021 | |
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, 2021. 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, 2020, for information regarding our significant accounting policies. Recently Adopted Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740) — Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which is intended to simplify various aspects of the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. We adopted ASU 2019-12 as of January 1, 2021, and it did not have an impact on the condensed consolidated financial statements . |
Marketable Securities
Marketable Securities | 3 Months Ended |
Mar. 31, 2021 | |
Marketable Securities | |
Marketable Securities | Note 4. Marketable Securities There were no investments in marketable securities at March 31, 2021 and December 31, 2020. There were no net pre-tax unrealized gains for marketable securities at March 31, 2021. There were no sales of marketable securities during the three months ended March 31, 2021. There were no marketable securities in an unrealized loss position at March 31, 2021 and December 31, 2020. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2021 | |
Inventories | |
Inventories | Note 5. Inventories Inventories consisted of the following: (In thousands) At March 31, 2021 At December 31, 2020 Finished goods $ 10,169 $ 7,129 Component parts and work-in-process 11,873 11,434 Total inventories $ 22,042 $ 18,563 |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2021 | |
Intangible Assets | |
Intangible Assets | Note 6. Intangible Assets Our patents and other intangible assets are summarized as follows: Weighted- At March 31, 2021 Average Gross Amortization Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Patents 11 years $ 413 $ 74 $ 339 Defensive intangible assets 4 years 1,125 464 661 Customer accounts 2 years 125 70 55 Total amortizable intangible assets 1,663 608 1,055 Patents pending 628 — 628 Total intangible assets $ 2,291 $ 608 $ 1,683 Weighted- At December 31, 2020 Average Gross Amortization Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Patents 11 years $ 413 $ 65 $ 348 Defensive intangible assets 4 years 1,125 421 704 Customer accounts 2 years 125 63 62 Total amortizable intangible assets 1,663 549 1,114 Patents pending 566 — 566 Total intangible assets $ 2,229 $ 549 $ 1,680 Amortization expense was $0.1 million for each of the three months ended March 31, 2021 and 2020. Future amortization expenses are expected as follows: (In thousands) 2021 (April 1 - December 31) $ 177 2022 236 2023 205 2024 184 2025 94 Thereafter 159 Total $ 1,055 |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2021 | |
Accrued Expenses | |
Accrued Expenses | Note 7. Accrued Expenses Accrued expenses consisted of the following: (In thousands) At March 31, 2021 At December 31, 2020 Warranty $ 1,610 $ 1,606 Legal and consulting 373 882 In-transit inventory 422 634 Travel and business 314 545 Sales and use tax 164 193 Clinical studies 86 67 Other 258 496 Total $ 3,227 $ 4,423 |
Warranty Reserves
Warranty Reserves | 3 Months Ended |
Mar. 31, 2021 | |
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) 2021 2020 Beginning balance $ 4,841 $ 3,759 Warranty provision 612 905 Processed warranty claims (584) (422) Ending balance $ 4,869 $ 4,242 Accrued warranty reserve, current $ 1,610 $ 1,358 Accrued warranty reserve, non-current 3,259 2,884 Total accrued warranty reserve $ 4,869 $ 4,242 |
Credit Agreement
Credit Agreement | 3 Months Ended |
Mar. 31, 2021 | |
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 “2018 Credit Agreement”), which expires on August 3, 2021. The 2018 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 2018 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 2018 Credit Agreement (including under the revolving credit facility) does not exceed $35.0 million. As of March 31, 2021, and the date on which we filed this report, we did no t have any outstanding borrowings under the 2018 Credit Agreement. Our obligations under the 2018 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 2018 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, 2021, we were in compliance with all financial covenants under the 2018 Credit Agreement. On April 30, 2021, we entered into an Amended and Restated Credit Agreement (the “Restated Credit Agreement”) with Wells Fargo Bank, National Association. The Restated Credit Agreement amends and restates in its entirety the 2018 Credit Agreement. For additional information on the Restated Credit Agreement, see Note 16 – “Subsequent Event”. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
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 right of use (“ROU”) operating lease asset reflects rental escalation clauses, as well as renewal options and/or termination options. The exercise of lease renewal and/or termination options are at our discretion and are included in the determination of the lease term and lease payment obligations when it is deemed reasonably certain that the option will be exercised. When available, we use the rate implicit in the lease to discount lease payments to present value; however, certain leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. 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, 2021. We entered into a lease (“initial lease”) in October 2018, for approximately 80,000 square feet of office space for our new corporate headquarters in Minneapolis, Minnesota. In December 2018, we amended the initial lease to add approximately 29,000 square feet of additional office space, which is accounted for as a separate lease (“second lease”) in accordance with ASU No. 2016-02, “Leases” (Topic 842) (“ASC 842”). In December 2019, we further amended the lease which extended the expiration date of the initial lease, extended the expiration date of and added approximately 4,000 square feet to the second lease, as well as added approximately 37,000 square feet of additional office space, accounted for as a separate lease (“third lease”) in accordance with ASC 842. The portion of the space covered under the initial lease was placed in service in September 2019. This portion was recognized as an operating lease and included in the ROU operating lease assets and operating lease liabilities on the Condensed Consolidated Balance Sheets. The portion of the space covered under the second lease commenced on September 1, 2020. Finally, 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, 2021, we had approximately 50 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, 2021, ranged from less than one year to approximately five 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, 2021 At December 31, 2020 Right of use operating lease assets $ 19,565 $ 20,132 Operating lease liabilities: Current $ 1,966 $ 2,006 Non-current 18,910 19,388 Total $ 20,876 $ 21,394 Operating leases: Weighted average remaining lease term 9.2 years 9.4 years Weighted average discount rate 4.4% 4.4% Three Months Ended March 31, 2021 2020 Supplemental cash flow information for our operating leases: Cash paid for operating lease liabilities $ 789 $ 463 Non-cash right of use assets obtained in exchange for new operating lease obligations $ 124 $ 295 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) 2021 (April 1 - December 31) $ 2,171 2022 2,598 2023 2,612 2024 2,581 2025 2,660 Thereafter 12,692 Total minimum lease payments 25,314 Less: Amount of lease payments representing interest (4,438) Present value of future minimum lease payments 20,876 Less: Current obligations under operating lease liabilities (1,966) Non-current obligations under operating lease liabilities $ 18,910 As of March 31, 2021, we have additional lease commitments of $7.1 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 $0.8 million and $0.7 million for the three months ended March 31, 2021 and 2020, respectively. Major Vendors We had purchases from two vendors that accounted for 33% of our total purchases for the three months ended March 31, 2021, and from two vendors that accounted for 32% of our total purchases for the three months ended March 31, 2020. Purchase Commitments We issued purchase orders prior to March 31, 2021, totaling $19.8 million for goods that we expect to receive within the next year. Retirement Plan We maintain a 401(k) retirement plan for our employees in which eligible employees can contribute a percentage of their pre-tax compensation. We recorded an expense related to our discretionary contr ibutions to the 401(k) plan of $0.3 million and $0.1 million for the three months ended March 31, 2021 and 2020, respectively. Legal Proceedings From time to time, we are subject to various claims and legal proceedings arising in the ordinary course of business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. On February 13, 2019, we were served with a sealed amended complaint venued in the United States District Court for the Southern District of Texas, Houston Division, captioned United States ex rel Veterans First Medical Supply, LLC vs. Tactile Medical Systems Technology, Inc., Case No. 18-2871, which had been filed on January 23, 2019. The complaint is a qui tam action on behalf of the United States brought by one of our competitors. The United States has declined to intervene in this action. The complaint alleges that we violated the Federal Anti-Kickback Statute and the Federal False Claims Act, claiming that we submitted false claims and made false statements in connection with the Medicare and Medicaid programs, and that we engaged in unlawful retaliation in violation of the Federal False Claims Act. The complaint seeks damages, statutory penalties, attorneys’ fees, treble damages and costs. We filed a motion to dismiss on April 5, 2019. This motion was denied on February 21, 2020. On March 6, 2020, we filed our answer to the complaint and asserted counterclaims. On May 7, 2020, the plaintiff filed a motion to dismiss our counterclaims. On September 8, 2020, we filed a motion for Partial Summary Judgment. On January 2, 2021, the plaintiff filed a motion for Partial Summary Judgment. These motions were decided on March 29, 2021, wherein the court denied plaintiff’s motion to dismiss our counterclaims; granted our motion for Partial Summary Judgment and dismissed Counts I (standalone/direct violation of the Federal Anti-Kickback Statute) and III (violation of the retaliation provision of the Federal False Claims Act) of the complaint; and denied plaintiff’s motion for Partial Summary Judgment. As a result, the remaining allegations consist of those in Count II (violations of the Federal False Claims Act) of the complaint. We believe the plaintiff’s remaining allegations are without merit and we intend to continue to vigorously defend against the lawsuit. We and certain of our present or former officers were sued in a purported securities class action lawsuit that was filed in the United States District Court for the District of Minnesota on September 29, 2020, and that is pending under the caption Brian Mart v. Tactile Systems Technology, Inc., et al., File No. 0:20-cv-02074-NEB-BRT. On April 19, 2021, the plaintiff filed an Amended Complaint against us and eight of our present and former officers and directors. Plaintiff seeks to represent a class consisting of investors who purchased our common stock in the market during the time period from May 7, 2018 through June 8, 2020 (“alleged class period”). The Amended Complaint alleges the following claims under the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (1) that we and certain officer defendants made materially false or misleading public statements about our business, operational and compliance policies, and results during the alleged class period in violation of Section 10(b) of the Exchange Act; (2) that we and the individual defendants engaged in a scheme to defraud investors in order to allow the individual defendants to sell our stock in violation of Section 10(b) of the Exchange Act; (3) that the individual defendants engaged in improper insider trading of our stock in violation of Section 20A of the Exchange Act; and (4) that we and the individual defendants are liable under Section 20(a) of the Exchange Act because each defendant is a controlling person. Defendants’ response to the Amended Complaint is due on June 18, 2021. We intend to move to dismiss the action. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2021 | |
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, 972,591 and 952,697 shares were added as available for issuance thereunder on January 1, 2021 and 2020, respectively. As of March 31, 2021, 6,345,847 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. In the second fiscal quarter of 2020, our Board of Directors appointed a new President and Chief Executive Officer (“CEO”), effective June 8, 2020. In conjunction with the acceptance of the written offer, our CEO received both restricted stock units and stock option awards under our 2016 Plan during the third fiscal quarter of 2020 and the stock options have a seven year term. A portion of the awards will vest on June 30, 2021, with the remaining portion of the awards vesting over a period of three years from the date of grant. Further, all of the stock options included in these awards required that our stock price exceeded $40.15 for 20 consecutive trading days during the term of the option in order to vest, which was met in the first quarter of 2021 The fair value of stock options subject to the market condition was estimated, at the date of grant, using the Monte Carlo Simulation model. We recorded stock-based compensation expense of $2.5 million and $2.7 million for the three months ended March 31, 2021 and 2020, respectively. This expense was allocated as follows: Three Months Ended March 31, (In thousands) 2021 2020 Cost of revenue $ 111 $ 82 Sales and marketing expenses 978 1,246 Research and development expenses 97 88 Reimbursement, general and administrative expenses 1,271 1,312 Total stock-based compensation expense $ 2,457 $ 2,728 Stock Options Stock options issued to participants other than non-employees typically vest over three or four years and typically have a contractual term of seven or ten years . Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $1.2 million and $ 0.9 million for the three months ended March 31, 2021 and 2020, respectively. At March 31, 2021, there was approximately $8.8 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 2.1 years. Our stock option activity for the three months ended March 31, 2021, 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, 2020 1,039,709 $ 36.43 5.6 years $ 13,381 Granted 132,606 $ 51.60 Exercised (53,967) $ 24.00 $ 1,516 Forfeited (10,866) $ 46.28 Cancelled/Expired (5,982) $ 46.18 Balance at March 31, 2021 1,101,500 $ 38.72 5.6 years $ 18,893 Options exercisable at March 31, 2021 546,067 $ 30.27 4.7 years $ 14,229 (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 529,219 as of March 31, 2020, had a weighted-average exercise price of $17.88 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 $1.3 million and $1.2 million for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, there was approximately $7.9 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 2.1 years. Our time-based restricted stock unit activity for the three months ended March 31, 2021, 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, 2020 211,469 $ 48.29 $ 9,503 Granted 48,893 $ 51.60 Vested (61,682) $ 49.49 Cancelled (3,382) $ 54.25 Balance at March 31, 2021 195,298 $ 48.63 $ 10,642 Deferred and unissued at March 31, 2021 (2) 6,469 $ 38.94 $ 352 (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, 2021, there were no restricted stock units granted to non-employee directors in lieu of their quarterly cash retainer payments. As of March 31, 2021, there were 6,469 outstanding restricted stock units that had been previously granted to non-employee directors in lieu of their quarterly cash 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 would have been earned to the extent performance goals based on revenue and adjusted EBITDA were achieved in 2020, but none were so earned. 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 PSUs granted in 2021 will be earned if and to the extent performance goals based on revenue and adjusted EBITDA are achieved in 2022. 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 was a benefit of $0.3 million and an expense of $0.4 million for the three months ended March 31, 2021 and 2020, respectively. The stock-based compensation benefit for the three months ended March 31, 2021 reflected a $0.5 million benefit due to a change in the estimated payout associated with PSUs granted in 2020 being below the minimum performance target threshold level, as defined, partially offset by an expense of $0.2 million related to the PSUs granted in 2018 and 2021. As of March 31, 2021, there was approximately $1.8 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.9 years. Our performance-based restricted stock unit activity for the three months ended March 31, 2021, 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, 2020 79,303 $ 47.83 $ 3,564 Granted 35,929 $ 51.60 Vested (34,159) $ 33.98 Cancelled (19,032) $ 69.17 Balance at March 31, 2021 62,041 $ 51.10 $ 3,381 (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, 194,518 and 190,539 shares were added as available for issuance thereunder on January 1, 2021 and 2020, respectively. As of March 31, 2021, 1,782,422 shares were available for future issuance under the ESPP. We recognized stock-based compensation expense associated with the ESPP of $ 0.3 million and $0.2 million for the three months ended March 31, 2021 and 2020, respectively. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2021 | |
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) 2021 2020 Revenue Flexitouch system $ 37,437 $ 38,586 Other products (1) 5,335 5,089 Total $ 42,772 $ 43,675 Percentage of total revenue Flexitouch system 88% 88% Other products (1) 12% 12% 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 each of the three months ended March 31, 2021 and 2020. Rental revenue for the three months ended March 31, 2021 and 2020, was primarily from private insurers. Our revenue from third-party payers, inclusive of sales and rental revenue, for the three months ended March 31, 2021 and 2020, are summarized in the following table: Three Months Ended March 31, (In thousands) 2021 2020 Private insurers and other payers $ 28,283 $ 30,237 Veterans Administration 5,846 7,058 Medicare 8,643 6,380 Total $ 42,772 $ 43,675 Our rental revenue is derived from rent-to-purchase arrangements that typically range from three to ten months. Under ASC 840 (the previous guidance for lease accounting), 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. 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, 2021 and 2020, was: Three Months Ended March 31, (In thousands) 2021 2020 Sales-type lease revenue $ 6,647 $ 6,052 Cost of sales-type lease revenue 1,851 1,680 Gross profit $ 4,796 $ 4,372 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
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, 2021 was a benefit of 44.7% , compared to a benefit of 68.8% for the three months ended March 31, 2020. The primary drivers of the change in our effective tax rate is attributable to a change in the deductibility of business meals to 100% in 2021 from 50% in 2020. We also recorded additional tax benefit in the first quarter of 2020 related to a tax refund for a net operating loss carryback claim. We recorded an income tax benefit of $1.8 million and a benefit of $2.9 million for the three months ended March 31, 2021 and 2020, 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. 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 Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Net loss Per Share | |
Net loss Per Share | Note 14. Net Loss Per Share The following table sets forth the computation of our basic and diluted net loss per share: Three Months Ended March 31, (In thousands, except share and per share data) 2021 2020 Net loss $ (2,266) $ (1,307) Weighted-average shares outstanding 19,545,558 19,173,580 Dilutive effect of stock-based awards — — Weighted-average shares used to compute diluted net loss per share 19,545,558 19,173,580 Net loss per share - Basic $ (0.12) $ (0.07) Net loss per share - Diluted $ (0.12) $ (0.07) The following common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive: Three Months Ended March 31, 2021 2020 Restricted stock units 201,767 237,709 Common stock options 1,101,500 1,071,148 Performance stock units 62,041 123,212 Employee stock purchase plan 41,278 44,607 Total 1,406,586 1,476,676 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2021 | |
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 as of March 31, 2021, and December 31, 2020, according to the three-level fair value hierarchy: At March 31, 2021 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 $ 16,189 $ — $ — $ 16,189 Total $ 16,189 $ — $ — $ 16,189 At December 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 $ 16,188 $ — $ — $ 16,188 Total $ 16,188 $ — $ — $ 16,188 During the three months ended March 31, 2021, 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 value of our money market mutual funds is 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. As of June 30, 2020, we re-measured the value of our intangible assets related to the Airwear wrap product line to their fair value, which was deemed to be $0 . |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Event. | |
Subsequent Event | Note 16. Subsequent Event On April 30, 2021, we entered into the Restated Credit Agreement with the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative Agent. The Restated Credit Agreement amends and restates in its entirety the 2018 Credit Agreement. The Restated Credit Agreement provides for a $25 million revolving credit facility. The revolving credit facility matures on April 30, 2024. Subject to satisfaction of certain conditions, we may increase the amount of the revolving loans available under the Restated Credit Agreement and/or add one or more term loan facilities in an amount not to exceed $30 million in the aggregate, such that the total aggregate principal amount of loans available under the Restated Credit Agreement (including under the revolving credit facility) does not exceed $55 million. Amounts drawn under the revolving credit facility will bear interest, at our option, at a rate equal to (a) the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) LIBOR for an interest period of one month plus 1% (the “Base Rate”) plus an applicable margin or (b) LIBOR plus the applicable margin. The applicable margin is 0.65% to 1.40% on loans bearing interest at the Base Rate and 1.65% to 2.40% on loans bearing interest at LIBOR, in each case depending on our consolidated total leverage ratio. Undrawn portions of the revolving credit facility are subject to an unused line fee at a rate per annum from 0.300% to 0.375% , depending on our consolidated total leverage ratio. Our obligations under the Restated Credit Agreement are secured by a security interest in substantially all of our assets and those of our subsidiaries and will also be guaranteed by our subsidiaries. The Restated Credit Agreement limits our ability to make capital expenditures during a fiscal year in excess of the amounts set forth in the Restated Credit Agreement, and requires that we (i) not permit, as of the last day of each fiscal quarter, our consolidated total leverage ratio to exceed 3.00 to 1.00 and (ii) maintain minimum cash and cash equivalents, measured on the last day of each fiscal quarter, of not less than $5 million. The Restated Credit Agreement also contains certain other restrictions and covenants, which, among other things, restrict our ability to acquire or merge with another entity, dispose of our assets, make investments, loans or guarantees, incur additional indebtedness, create liens or other encumbrances, or pay dividends or make other distributions. Amounts due under the Restated Credit Agreement may be accelerated upon an Event of Default (as defined in the Restated Credit Agreement), such as breach of a representation, covenant or agreement of ours, defaults with respect to certain of our other material indebtedness or the occurrence of bankruptcy if not otherwise waived or cured. We may use the proceeds from advances under the revolving credit facility (i) to finance capital expenditures, (ii) to pay fees, commissions and expenses in connection with the Restated Credit Agreement and (iii) for working capital and general corporate purposes. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
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, 2021, are not necessarily indicative of results to be expected for the year ending December 31, 2021, 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, 2020. |
Principles of Consolidation | 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 | 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. We have seen adverse impacts as it relates to the decline in the number of patients that healthcare facilities and clinics are able to treat due to enhanced safety protocols. 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. Since the onset of COVID-19, we have remained proactive to ensure we continue to adapt to the needs of our employees, clinicians and patients. 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. We continue to evaluate and, if appropriate, will adopt other measures in the future related to the ongoing safety of our employees, clinicians and patients. |
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 Loss | Comprehensive Loss Comprehensive loss 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 loss represents net loss adjusted for unrealized gains and losses on available-for-sale marketable securities and the related taxes . |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740) — Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which is intended to simplify various aspects of the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. We adopted ASU 2019-12 as of January 1, 2021, and it did not have an impact on the condensed consolidated financial statements . |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Inventories | |
Schedule of inventories | (In thousands) At March 31, 2021 At December 31, 2020 Finished goods $ 10,169 $ 7,129 Component parts and work-in-process 11,873 11,434 Total inventories $ 22,042 $ 18,563 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Intangible Assets | |
Schedule of finite lived intangible assets | Weighted- At March 31, 2021 Average Gross Amortization Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Patents 11 years $ 413 $ 74 $ 339 Defensive intangible assets 4 years 1,125 464 661 Customer accounts 2 years 125 70 55 Total amortizable intangible assets 1,663 608 1,055 Patents pending 628 — 628 Total intangible assets $ 2,291 $ 608 $ 1,683 Weighted- At December 31, 2020 Average Gross Amortization Carrying Accumulated Net (In thousands) Period Amount Amortization Amount Patents 11 years $ 413 $ 65 $ 348 Defensive intangible assets 4 years 1,125 421 704 Customer accounts 2 years 125 63 62 Total amortizable intangible assets 1,663 549 1,114 Patents pending 566 — 566 Total intangible assets $ 2,229 $ 549 $ 1,680 |
Schedule of future amortization expense | (In thousands) 2021 (April 1 - December 31) $ 177 2022 236 2023 205 2024 184 2025 94 Thereafter 159 Total $ 1,055 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accrued Expenses | |
Schedule of Accrued Expenses | (In thousands) At March 31, 2021 At December 31, 2020 Warranty $ 1,610 $ 1,606 Legal and consulting 373 882 In-transit inventory 422 634 Travel and business 314 545 Sales and use tax 164 193 Clinical studies 86 67 Other 258 496 Total $ 3,227 $ 4,423 |
Warranty Reserves (Tables)
Warranty Reserves (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Warranty Reserves | |
Schedule of warranty reserves | Three Months Ended March 31, (In thousands) 2021 2020 Beginning balance $ 4,841 $ 3,759 Warranty provision 612 905 Processed warranty claims (584) (422) Ending balance $ 4,869 $ 4,242 Accrued warranty reserve, current $ 1,610 $ 1,358 Accrued warranty reserve, non-current 3,259 2,884 Total accrued warranty reserve $ 4,869 $ 4,242 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies | |
Summary of lease-related assets and liabilities | (In thousands) At March 31, 2021 At December 31, 2020 Right of use operating lease assets $ 19,565 $ 20,132 Operating lease liabilities: Current $ 1,966 $ 2,006 Non-current 18,910 19,388 Total $ 20,876 $ 21,394 Operating leases: Weighted average remaining lease term 9.2 years 9.4 years Weighted average discount rate 4.4% 4.4% Three Months Ended March 31, 2021 2020 Supplemental cash flow information for our operating leases: Cash paid for operating lease liabilities $ 789 $ 463 Non-cash right of use assets obtained in exchange for new operating lease obligations $ 124 $ 295 |
Summary of undiscounted cash flows | (In thousands) 2021 (April 1 - December 31) $ 2,171 2022 2,598 2023 2,612 2024 2,581 2025 2,660 Thereafter 12,692 Total minimum lease payments 25,314 Less: Amount of lease payments representing interest (4,438) Present value of future minimum lease payments 20,876 Less: Current obligations under operating lease liabilities (1,966) Non-current obligations under operating lease liabilities $ 18,910 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Schedule of allocation of total stock-based compensation expense | Three Months Ended March 31, (In thousands) 2021 2020 Cost of revenue $ 111 $ 82 Sales and marketing expenses 978 1,246 Research and development expenses 97 88 Reimbursement, general and administrative expenses 1,271 1,312 Total stock-based compensation expense $ 2,457 $ 2,728 |
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, 2020 1,039,709 $ 36.43 5.6 years $ 13,381 Granted 132,606 $ 51.60 Exercised (53,967) $ 24.00 $ 1,516 Forfeited (10,866) $ 46.28 Cancelled/Expired (5,982) $ 46.18 Balance at March 31, 2021 1,101,500 $ 38.72 5.6 years $ 18,893 Options exercisable at March 31, 2021 546,067 $ 30.27 4.7 years $ 14,229 (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, 2020 211,469 $ 48.29 $ 9,503 Granted 48,893 $ 51.60 Vested (61,682) $ 49.49 Cancelled (3,382) $ 54.25 Balance at March 31, 2021 195,298 $ 48.63 $ 10,642 Deferred and unissued at March 31, 2021 (2) 6,469 $ 38.94 $ 352 (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, 2021, there were no restricted stock units granted to non-employee directors in lieu of their quarterly cash retainer payments. As of March 31, 2021, there were 6,469 outstanding restricted stock units that had been previously granted to non-employee directors in lieu of their quarterly cash 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, 2020 79,303 $ 47.83 $ 3,564 Granted 35,929 $ 51.60 Vested (34,159) $ 33.98 Cancelled (19,032) $ 69.17 Balance at March 31, 2021 62,041 $ 51.10 $ 3,381 (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, 2021 | |
Revenue | |
Summary of revenue disaggregated by product | Three Months Ended March 31, (In thousands) 2021 2020 Revenue Flexitouch system $ 37,437 $ 38,586 Other products (1) 5,335 5,089 Total $ 42,772 $ 43,675 Percentage of total revenue Flexitouch system 88% 88% Other products (1) 12% 12% 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 each of the three months ended March 31, 2021 and 2020. |
Summary of revenue from third-party payers | Three Months Ended March 31, (In thousands) 2021 2020 Private insurers and other payers $ 28,283 $ 30,237 Veterans Administration 5,846 7,058 Medicare 8,643 6,380 Total $ 42,772 $ 43,675 |
Sales-type lease revenue and the associated cost of goods sold | Three Months Ended March 31, (In thousands) 2021 2020 Sales-type lease revenue $ 6,647 $ 6,052 Cost of sales-type lease revenue 1,851 1,680 Gross profit $ 4,796 $ 4,372 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Net loss Per Share | |
Schedule of computation of the basic and diluted net loss per share | Three Months Ended March 31, (In thousands, except share and per share data) 2021 2020 Net loss $ (2,266) $ (1,307) Weighted-average shares outstanding 19,545,558 19,173,580 Dilutive effect of stock-based awards — — Weighted-average shares used to compute diluted net loss per share 19,545,558 19,173,580 Net loss per share - Basic $ (0.12) $ (0.07) Net loss per share - Diluted $ (0.12) $ (0.07) |
Schedule of potentially dilutive securities outstanding | Three Months Ended March 31, 2021 2020 Restricted stock units 201,767 237,709 Common stock options 1,101,500 1,071,148 Performance stock units 62,041 123,212 Employee stock purchase plan 41,278 44,607 Total 1,406,586 1,476,676 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Measurements | |
Schedule of fair value measurements for our cash equivalents and marketable securities | At March 31, 2021 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 $ 16,189 $ — $ — $ 16,189 Total $ 16,189 $ — $ — $ 16,189 At December 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 $ 16,188 $ — $ — $ 16,188 Total $ 16,188 $ — $ — $ 16,188 |
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) | 3 Months Ended | |
Mar. 31, 2021USD ($)item | Dec. 31, 2020USD ($) | |
Marketable Securities | ||
Marketable securities | $ 0 | $ 0 |
Net pre-tax unrealized gains for marketable securities | 0 | |
Marketable securities sold | $ 0 | |
Number of marketable securities in an unrealized loss position | item | 0 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Inventories | ||
Finished goods | $ 10,169 | $ 7,129 |
Component parts and work-in-process | 11,873 | 11,434 |
Total inventories | $ 22,042 | $ 18,563 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Patents and Intangibles | |||
Gross Carrying Amount | $ 1,663 | $ 1,663 | |
Accumulated Amortization | 608 | 549 | |
Total | 1,055 | 1,114 | |
Total intangible assets (Gross) | 2,291 | 2,229 | |
Total intangible assets (Net) | 1,683 | 1,680 | |
Amortization expense | 100 | $ 100 | |
Future Amortization | |||
2021 (April 1 - December 31) | 177 | ||
2022 | 236 | ||
2023 | 205 | ||
2024 | 184 | ||
2025 | 94 | ||
Thereafter | 159 | ||
Total | 1,055 | 1,114 | |
Patents | |||
Patents and Intangibles | |||
Patents pending | $ 628 | $ 566 | |
Patents | |||
Patents and Intangibles | |||
Weighted Average Amortization Period | 11 years | 11 years | |
Gross Carrying Amount | $ 413 | $ 413 | |
Accumulated Amortization | 74 | 65 | |
Total | 339 | 348 | |
Future Amortization | |||
Total | $ 339 | $ 348 | |
Defensive intangible assets | |||
Patents and Intangibles | |||
Weighted Average Amortization Period | 4 years | 4 years | |
Gross Carrying Amount | $ 1,125 | $ 1,125 | |
Accumulated Amortization | 464 | 421 | |
Total | 661 | 704 | |
Future Amortization | |||
Total | $ 661 | $ 704 | |
Customer accounts | |||
Patents and Intangibles | |||
Weighted Average Amortization Period | 2 years | 2 years | |
Gross Carrying Amount | $ 125 | $ 125 | |
Accumulated Amortization | 70 | 63 | |
Total | 55 | 62 | |
Future Amortization | |||
Total | $ 55 | $ 62 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Accrued Expenses | |||
Warranty | $ 1,610 | $ 1,606 | $ 1,358 |
Legal and consulting | 373 | 882 | |
In-transit inventory | 422 | 634 | |
Travel and business | 314 | 545 | |
Sales and use tax | 164 | 193 | |
Clinical studies | 86 | 67 | |
Other | 258 | 496 | |
Total | $ 3,227 | $ 4,423 |
Warranty Reserves (Details)
Warranty Reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Beginning balance | $ 4,841 | $ 3,759 | |
Warranty provision | 612 | 905 | |
Processed warranty claims | (584) | (422) | |
Ending balance | 4,869 | 4,242 | |
Accrued warranty reserve, current | 1,610 | 1,358 | $ 1,606 |
Accrued warranty reserve, non-current | 3,259 | 2,884 | $ 3,235 |
Total accrued warranty reserve | $ 4,869 | $ 4,242 |
Credit Agreement (Details)
Credit Agreement (Details) - USD ($) $ in Millions | Aug. 03, 2018 | Mar. 31, 2021 |
Credit Agreement | ||
Line of credit | $ 10 | |
Aggregate Borrowings | 25 | |
Total aggregate principal amount of loans | $ 35 | |
Credit facility outstanding amount | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Lease Obligations (Details) | 3 Months Ended | |||
Mar. 31, 2021item | Dec. 31, 2019ft² | Dec. 31, 2018ft² | Oct. 31, 2018ft² | |
Minimum | ||||
Commitments and Contingencies | ||||
Remaining lease terms | 12 months | |||
Building | Minimum | ||||
Commitments and Contingencies | ||||
Remaining lease terms | 1 year | |||
Building | Maximum | ||||
Commitments and Contingencies | ||||
Remaining lease terms | 10 years | |||
Vehicles | ||||
Commitments and Contingencies | ||||
Remaining lease terms | 367 days | |||
Number of vehicles with agreements within the initial, noncancelable lease term | item | 50 | |||
Equipment | ||||
Commitments and Contingencies | ||||
Option to renew | true | |||
Equipment | Minimum | ||||
Commitments and Contingencies | ||||
Remaining lease terms | 1 year | |||
Equipment | Maximum | ||||
Commitments and Contingencies | ||||
Remaining lease terms | 5 years | |||
Initial lease | ||||
Commitments and Contingencies | ||||
Area of office space | 80,000 | |||
Second lease | ||||
Commitments and Contingencies | ||||
Area of office space | 29,000 | |||
Additional office space added to the lease | 4,000 | |||
Third lease | ||||
Commitments and Contingencies | ||||
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, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Lease-related assets and liabilities | |||
Right of use operating lease assets | $ 19,565 | $ 20,132 | |
Operating lease liabilities, Current | 1,966 | 2,006 | |
Operating lease liabilities, non-current | 18,910 | 19,388 | |
Present value of future minimum lease payments | $ 20,876 | $ 21,394 | |
Weighted average remaining lease term | 9 years 2 months 12 days | 9 years 4 months 24 days | |
Weighted average discount rate | 4.40% | 4.40% | |
Cash paid for operating lease liabilities | $ 789 | $ 463 | |
Non-cash right of use assets obtained in exchange for new operating lease obligations | $ 124 | $ 295 |
Commitments and Contingencies_3
Commitments and Contingencies - Undiscounted cash flows (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Undiscounted cash flows | ||
2021 (April 1 - December 31) | $ 2,171 | |
2022 | 2,598 | |
2023 | 2,612 | |
2024 | 2,581 | |
2025 | 2,660 | |
Thereafter | 12,692 | |
Total minimum lease payments | 25,314 | |
Less: Amount of lease payments representing interest | (4,438) | |
Present value of future minimum lease payments | 20,876 | $ 21,394 |
Less: Current obligations under operating lease liabilities | (1,966) | (2,006) |
Non-current obligations under operating lease liabilities | $ 18,910 | $ 19,388 |
Commitments and Contingencies_4
Commitments and Contingencies - Lease commitments and operating lease cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Commitments and Contingencies | ||
Additional lease commitments | $ 7.1 | |
Operating lease cost | $ 0.8 | $ 0.7 |
Commitments and Contingencies_5
Commitments and Contingencies - Major Vendors (Details) - item | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Commitments and Contingencies | ||
Number of vendors | 2 | 2 |
Purchases | Vendor | ||
Commitments and Contingencies | ||
Total purchases (in percentage) | 33.00% | 32.00% |
Commitments and Contingencies_6
Commitments and Contingencies - Purchase Commitments (Details) $ in Millions | Mar. 31, 2021USD ($) |
Purchase commitments | |
Purchase orders issued | $ 19.8 |
Commitments and Contingencies_7
Commitments and Contingencies - Retirement Plan (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
401(k) | |
Retirement Plan | |
Discretionary contributions | $ 0.1 |
Stockholders' Equity - Stock-Ba
Stockholders' Equity - Stock-Based Compensation General Information (Details) | Mar. 31, 2021shares |
2016 Plan | |
Stockholders' Equity | |
Number of shares authorized | 4,800,000 |
Stockholders' Equity - Stock-_2
Stockholders' Equity - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | Jan. 01, 2021 | Jan. 01, 2020 | Mar. 31, 2021 | Mar. 31, 2020 |
Stock-based compensation | ||||
Compensation expense | $ 2,457 | $ 2,728 | ||
Cost of revenue. | ||||
Stock-based compensation | ||||
Compensation expense | 111 | 82 | ||
Sales and marketing | ||||
Stock-based compensation | ||||
Compensation expense | 978 | 1,246 | ||
Research and development | ||||
Stock-based compensation | ||||
Compensation expense | 97 | 88 | ||
Reimbursement, general and administrative | ||||
Stock-based compensation | ||||
Compensation expense | $ 1,271 | 1,312 | ||
2016 Plan | ||||
Stock-based compensation | ||||
Shares available for future issuance | 6,345,847 | |||
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 | 972,591 | 952,697 | ||
Common stock options | ||||
Stock-based compensation | ||||
Compensation expense | $ 1,200 | $ 900 | ||
Unrecognized stock-based compensation | ||||
Unrecognized stock-based compensation expense, period for recognition | 2 years 1 month 6 days |
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, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Stock-based compensation, general disclosures. | |||
Stock-based compensation expense | $ 2,457 | $ 2,728 | |
Common stock options | |||
Stock-based compensation, general disclosures. | |||
Stock-based compensation expense | 1,200 | $ 900 | |
Total unrecognized pre-tax compensation expense related to nonvested stock option awards | $ 8,800 | ||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 2 years 1 month 6 days | ||
Options Outstanding | |||
Outstanding at beginning of period | 1,039,709 | ||
Granted | 132,606 | ||
Exercised | (53,967) | ||
Forfeited | (10,866) | ||
Cancelled/Expired | (5,982) | ||
Outstanding at end of period | 1,101,500 | 1,039,709 | |
Weighted Average Exercise Price Per Share | |||
Outstanding at beginning of period | $ 36.43 | ||
Granted | 51.60 | ||
Exercised | 24 | ||
Forfeited | 46.28 | ||
Cancelled/Expired | 46.18 | ||
Outstanding at end of period | $ 38.72 | $ 36.43 | |
Other information | |||
Options exercisable number of shares exercisable | 546,067 | 529,219 | |
Options exercisable, weighted-average exercise price | $ 30.27 | $ 17.88 | |
Weighted average remaining contractual life (in years) | 5 years 7 months 6 days | 5 years 7 months 6 days | |
Options exercisable, weighted-average remaining contractual life | 4 years 8 months 12 days | ||
Aggregate Intrinsic Value, Options outstanding | $ 18,893 | $ 13,381 | |
Aggregate Intrinsic Value, Exercised | 1,516 | ||
Aggregate Intrinsic Value, Options exercisable | $ 14,229 | ||
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 | ||
Common stock options | Chief Executive Officer [Member] | |||
Stock-based compensation, general disclosures. | |||
Share-based payment award, term | 7 years | ||
Vesting period (in years) | 3 years | ||
Number of consecutive trading days | 20 days | ||
Common stock options | Chief Executive Officer [Member] | Minimum | |||
Stock-based compensation, general disclosures. | |||
Stock price | $ 40.15 | ||
Time-Based Restricted Stock Units | Non-employee Directors | |||
Units Outstanding | |||
Granted (in shares) | 0 | ||
Number of granted and vested restricted stock units | 6,469 | ||
2018 and 2021 PSUs | |||
Stock-based compensation, general disclosures. | |||
Stock-based compensation expense | $ 200 | ||
2016 Plan | Time-Based Restricted Stock Units | |||
Stock-based compensation, general disclosures. | |||
Stock-based compensation expense | 1,300 | $ 1,200 | |
Total unrecognized pre-tax compensation expense related to awards | $ 7,900 | ||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 2 months 3 days | ||
Units Outstanding | |||
Restricted stock unit awards outstanding at the beginning of the period (in shares) | 211,469 | ||
Granted (in shares) | 48,893 | ||
Vested (in shares) | 61,682 | ||
Cancelled (in shares) | (3,382) | ||
Restricted stock unit awards outstanding at the end of the period (in shares) | 195,298 | 211,469 | |
Deferred and unissued (in shares) | 6,469 | ||
Weighted Average Grant Date Fair Value Per Unit | |||
Restricted stock unit awards outstanding at the beginning of the period (in dollars per share) | $ 48.29 | ||
Granted (in dollars per share) | 51.60 | ||
Vested (in dollars per share) | 49.49 | ||
Cancelled (in dollars per share) | 54.25 | ||
Restricted stock unit awards outstanding at the end of the period (in dollars per share) | 48.63 | $ 48.29 | |
Deferred and unissued (in dollars per share) | $ 38.94 | ||
Aggregate Intrinsic Value | |||
Restricted stock unit awards, Average Intrinsic Value | $ 10,642 | $ 9,503 | |
Restricted stock unit awards deferred and unissued, Average Intrinsic Value | $ 352 | ||
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. | |||
Estimated payout | $ 500 | ||
Stock-based compensation expense | 300 | $ 400 | |
Total unrecognized pre-tax compensation expense related to awards | $ 1,800 | ||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 2 years 10 months 24 days | ||
Units Outstanding | |||
Restricted stock unit awards outstanding at the beginning of the period (in shares) | 79,303 | ||
Granted (in shares) | 35,929 | ||
Vested (in shares) | 34,159 | ||
Cancelled (in shares) | (19,032) | ||
Restricted stock unit awards outstanding at the end of the period (in shares) | 62,041 | 79,303 | |
Weighted Average Grant Date Fair Value Per Unit | |||
Restricted stock unit awards outstanding at the beginning of the period (in dollars per share) | $ 47.83 | ||
Granted (in dollars per share) | 51.60 | ||
Vested (in dollars per share) | 33.98 | ||
Cancelled (in dollars per share) | 69.17 | ||
Restricted stock unit awards outstanding at the end of the period (in dollars per share) | $ 51.10 | $ 47.83 | |
Aggregate Intrinsic Value | |||
Restricted stock unit awards, Average Intrinsic Value | $ 3,381 | $ 3,564 | |
2016 Plan | Performance-based stock-settled restricted stock units | Minimum | |||
Units 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 | |||
Units 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, 2021 | Jan. 01, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Apr. 27, 2017 |
Stockholders' Equity | |||||
Stock-based compensation expense | $ 2,457 | $ 2,728 | |||
Employee Stock Purchase Plan | |||||
Stockholders' Equity | |||||
Purchase price of common stock under plan (as a percent) | 85.00% | ||||
Offering period (in months) | 6 months | ||||
Shares reserved | 1,782,422 | 1,600,000 | |||
Incremental share increase (in shares) | 500,000 | ||||
Incremental share increase (as a percent) | 1.00% | ||||
Increase in number of shares reserved and available for issuance | 194,518 | 190,539 | |||
Stock-based compensation expense | $ 300 | $ 200 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue | ||
Revenue | $ 42,772 | $ 43,675 |
Percentage of total revenue (in percent) | 100.00% | 100.00% |
Revenue from sale type lease | ||
Sales-type lease revenue | $ 6,647 | $ 6,052 |
Cost of sales-type lease revenue | 1,851 | 1,680 |
Gross profit | 4,796 | 4,372 |
Private insurers and other payers | ||
Revenue | ||
Revenue | 28,283 | 30,237 |
Veterans Administration | ||
Revenue | ||
Revenue | 5,846 | 7,058 |
Medicare | ||
Revenue | ||
Revenue | 8,643 | 6,380 |
Flexitouch system | ||
Revenue | ||
Revenue | $ 37,437 | $ 38,586 |
Percentage of total revenue (in percent) | 88.00% | 88.00% |
Other products | ||
Revenue | ||
Revenue | $ 5,335 | $ 5,089 |
Percentage of total revenue (in percent) | 12.00% | 12.00% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Taxes | ||
Net effective rate | 44.70% | 68.80% |
Change in effective tax rate | 100.00% | 50.00% |
Income tax benefit | $ (1,828) | $ (2,878) |
Net Loss Per Share - Basic and
Net Loss Per Share - Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Net loss Per Share | ||
Net loss | $ (2,266) | $ (1,307) |
Weighted-average shares outstanding | 19,545,558 | 19,173,580 |
Weighted-average shares used to compute diluted net loss per share | 19,545,558 | 19,173,580 |
Net loss per share - Basic | $ (0.12) | $ (0.07) |
Net loss per share - Diluted | $ (0.12) | $ (0.07) |
Net Loss Per Share - Antidiluti
Net Loss Per Share - Antidilutive Securities Excluded From Computation of Earnings Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Net loss Per Share | ||
Antidilutive securities excluded from computation of earnings per share | 1,406,586 | 1,476,676 |
Common stock options | ||
Net loss Per Share | ||
Antidilutive securities excluded from computation of earnings per share | 1,101,500 | 1,071,148 |
Performance stock units | ||
Net loss Per Share | ||
Antidilutive securities excluded from computation of earnings per share | 62,041 | 123,212 |
Restricted Stock Units | ||
Net loss Per Share | ||
Antidilutive securities excluded from computation of earnings per share | 201,767 | 237,709 |
Employee stock purchase plan | ||
Net loss Per Share | ||
Antidilutive securities excluded from computation of earnings per share | 41,278 | 44,607 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2020 |
Fair Value Measurements | |||
Amount of transfers of marketable securities within the three level hierarchy | $ 0 | ||
Intangible assets | 1,683 | $ 1,680 | |
Recurring | |||
Fair Value Measurements | |||
Available for sale debt securities | 16,189 | 16,188 | |
Recurring | Money market mutual funds | |||
Fair Value Measurements | |||
Money market mutual funds | 16,189 | 16,188 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Value Measurements | |||
Available for sale debt securities | 16,189 | 16,188 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market mutual funds | |||
Fair Value Measurements | |||
Money market mutual funds | $ 16,189 | $ 16,188 | |
Non-recurring | Significant Unobservable Inputs (Level 3) | Airwear Product | |||
Fair Value Measurements | |||
Intangible assets | $ 0 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) $ in Millions | Apr. 30, 2021 | Aug. 03, 2018 |
Subsequent Event [Line Items] | ||
Line of credit | $ 10 | |
Aggregate Borrowings | 25 | |
Total aggregate principal amount of loans | $ 35 | |
Revolving credit facility | Wells Fargo Bank | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Line of credit | $ 25 | |
Aggregate Borrowings | 30 | |
Total aggregate principal amount of loans | $ 55 | |
Maximum leverage Ratio | 3.00% | |
Minimum cash and cash equivalents | $ 5 | |
Revolving credit facility | Wells Fargo Bank | Subsequent Event | Federal Funds | ||
Subsequent Event [Line Items] | ||
Basis spread (as a percent) | 0.50% | |
Revolving credit facility | Wells Fargo Bank | Subsequent Event | Base Rate | ||
Subsequent Event [Line Items] | ||
Basis spread (as a percent) | 1.00% | |
Revolving credit facility | Wells Fargo Bank | Subsequent Event | Maximum | ||
Subsequent Event [Line Items] | ||
Unused line fee (as a percent) | 0.375% | |
Revolving credit facility | Wells Fargo Bank | Subsequent Event | Maximum | Base Rate | ||
Subsequent Event [Line Items] | ||
Basis spread (as a percent) | 1.40% | |
Revolving credit facility | Wells Fargo Bank | Subsequent Event | Maximum | LIBOR | ||
Subsequent Event [Line Items] | ||
Basis spread (as a percent) | 2.40% | |
Revolving credit facility | Wells Fargo Bank | Subsequent Event | Minimum | ||
Subsequent Event [Line Items] | ||
Unused line fee (as a percent) | 0.30% | |
Revolving credit facility | Wells Fargo Bank | Subsequent Event | Minimum | Base Rate | ||
Subsequent Event [Line Items] | ||
Basis spread (as a percent) | 0.65% | |
Revolving credit facility | Wells Fargo Bank | Subsequent Event | Minimum | LIBOR | ||
Subsequent Event [Line Items] | ||
Basis spread (as a percent) | 1.65% |