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TCMD Tactile Systems Technology

Document and Entity Information

Document and Entity Information - shares3 Months Ended
Mar. 31, 2021Apr. 29, 2021
Document and Entity Information
Document Type10-Q
Document Quarterly Reporttrue
Document Period End DateMar. 31,
2021
Document Transition Reportfalse
Entity File Number001-37799
Entity Registrant NameTactile Systems Technology, Inc.
Entity Incorporation, State or Country CodeDE
Entity Tax Identification Number41-1801204
Entity Address, Address Line One3701 Wayzata Blvd, Suite 300
Entity Address, City or TownMinneapolis
Entity Address, State or ProvinceMN
Entity Address, Postal Zip Code55416
City Area Code612
Local Phone Number355-5100
Title of 12(b) SecurityCommon Stock
Trading SymbolTCMD
Security Exchange NameNASDAQ
Entity Current Reporting StatusYes
Entity Interactive Data CurrentYes
Entity Filer CategoryLarge Accelerated Filer
Entity Small Businessfalse
Entity Emerging Growth Companyfalse
Entity Shell Companyfalse
Entity Common Stock, Shares Outstanding19,650,900
Entity Central Index Key0001027838
Current Fiscal Year End Date--12-31
Document Fiscal Year Focus2021
Document Fiscal Period FocusQ1
Amendment Flagfalse

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in ThousandsMar. 31, 2021Dec. 31, 2020
Current assets
Cash and cash equivalents $ 46,925 $ 47,855
Accounts receivable40,043 43,849
Net investment in leases11,254 10,708
Inventories22,042 18,563
Prepaid expenses and other current assets2,235 2,638
Total current assets122,499 123,613
Non-current assets
Property and equipment, net6,746 6,957
Right of use operating lease assets19,565 20,132
Intangible assets, net1,683 1,680
Accounts receivable, non-current10,727 9,433
Deferred income taxes12,026 10,198
Other non-current assets2,030 2,074
Total non-current assets52,777 50,474
Total assets175,276 174,087
Current liabilities
Accounts payable9,352 4,197
Accrued payroll and related taxes8,547 11,588
Accrued expenses3,227 4,423
Income taxes payable2,658 2,658
Operating lease liabilities1,966 2,006
Other current liabilities2,235 1,842
Total current liabilities27,985 26,714
Non-current liabilities
Accrued warranty reserve, non-current3,259 3,235
Operating lease liabilities, non-current18,910 19,388
Total non-current liabilities22,169 22,623
Total liabilities50,154 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, 202020 19
Additional paid-in capital107,312 104,675
Retained earnings17,790 20,056
Total stockholders' equity125,122 124,750
Total liabilities and stockholders' equity $ 175,276 $ 174,087

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / sharesMar. 31, 2021Dec. 31, 2020
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized50,000,000 50,000,000
Preferred stock, shares issued0 0
Preferred stock, shares outstanding0 0
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common shares authorized300,000,000 300,000,000
Common stock, shares, issued19,639,113 19,492,718
Common stock, shares, outstanding19,639,113 19,492,718

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) $ in Thousands3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Total revenue $ 42,772 $ 43,675
Total cost of revenue12,542 12,602
Gross profit30,230 31,073
Operating expenses
Sales and marketing18,785 22,970
Research and development1,270 1,684
Reimbursement, general and administrative14,259 10,870
Total operating expenses34,314 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 revenue10,691 10,922
Gross profit25,434 26,701
Rental revenue
Total revenue6,647 6,052
Total cost of revenue1,851 1,680
Gross profit $ 4,796 $ 4,372

Consolidated Statements of Comp

Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Condensed Consolidated Statements of Comprehensive Loss
Net loss $ (2,266) $ (1,307)
Other comprehensive income:
Unrealized gain on marketable securities30
Income tax related to items of other comprehensive income(18)
Total other comprehensive income12
Comprehensive loss $ (2,266) $ (1,295)

Consolidated Statements of Stoc

Consolidated Statements of Stockholders' Equity - USD ($) $ in ThousandsCommon StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive (Loss) IncomeTotal
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, 201919,152,715
Increase (Decrease) in Stockholders' Equity
Stock-based compensation2,728 2,728
Exercise of common stock options and vesting of performance and restricted stock units172 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, 202019,226,665
Balances at the beginning at Dec. 31, 2020 $ 19 104,675 20,056 124,750
Balances at the beginning (in shares) at Dec. 31, 202019,492,718
Increase (Decrease) in Stockholders' Equity
Stock-based compensation2,457 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, 202119,639,113

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands3 Months Ended
Mar. 31, 2021Mar. 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 amortization652 730
Net amortization of premiums and discounts on securities available-for-sale(43)
Deferred income taxes(1,828)979
Stock-based compensation expense2,457 2,728
Changes in assets and liabilities:
Accounts receivable3,806 2,663
Net investment in leases(546)(735)
Inventories(3,479)(3,304)
Income taxes(4,153)
Prepaid expenses and other assets447 192
Right of use operating lease assets49 151
Medicare accounts receivable, non-current(1,294)(973)
Accounts payable5,022 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-sale10,000
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 options1,296 172
Net cash provided by (used in) financing activities181 (988)
Net (decrease) increase in cash and cash equivalents(930)9,527
Cash and cash equivalents - beginning of period47,855
Cash and cash equivalents - end of period46,925 32,297
Supplemental cash flow disclosure
Cash paid for taxes13 311
Capital expenditures incurred but not yet paid $ 133 $ 155

Nature of Business and Operatio

Nature of Business and Operations3 Months Ended
Mar. 31, 2021
Nature of Business and Operations
Nature of Business and OperationsNote 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 Presentation3 Months Ended
Mar. 31, 2021
Basis of Presentation
Basis of PresentationNote 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 Policies3 Months Ended
Mar. 31, 2021
Summary of Significant Accounting Policies
Summary of Significant Accounting PoliciesNote 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 Securities3 Months Ended
Mar. 31, 2021
Marketable Securities
Marketable SecuritiesNote 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

Inventories3 Months Ended
Mar. 31, 2021
Inventories
InventoriesNote 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 Assets3 Months Ended
Mar. 31, 2021
Intangible Assets
Intangible AssetsNote 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 Expenses3 Months Ended
Mar. 31, 2021
Accrued Expenses
Accrued ExpensesNote 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 Reserves3 Months Ended
Mar. 31, 2021
Warranty Reserves
Warranty ReservesNote 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 Agreement3 Months Ended
Mar. 31, 2021
Credit Agreement
Credit AgreementNote 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 Contingencies3 Months Ended
Mar. 31, 2021
Commitments and Contingencies
Commitments and ContingenciesNote 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' Equity3 Months Ended
Mar. 31, 2021
Stockholders' Equity
Stockholders' EquityNote 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

Revenue3 Months Ended
Mar. 31, 2021
Revenue
RevenueNote 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 Taxes3 Months Ended
Mar. 31, 2021
Income Taxes
Income TaxesNote 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 Share3 Months Ended
Mar. 31, 2021
Net loss Per Share
Net loss Per ShareNote 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 Measurements3 Months Ended
Mar. 31, 2021
Fair Value Measurements
Fair Value MeasurementsNote 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 Event3 Months Ended
Mar. 31, 2021
Subsequent Event.
Subsequent EventNote 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 PresentationThe 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 ConsolidationPrinciples 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 UncertaintiesRisks 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 EstimatesUse 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 LossComprehensive 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 PronouncementsRecently 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 MillionsAug. 02, 2016USD ($)$ / sharesshares
Subsidiary, Sale of Stock
Number of shares of common stock sold | shares4,120,000
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 ($)itemDec. 31, 2020USD ($)
Marketable Securities
Marketable securities $ 0 $ 0
Net pre-tax unrealized gains for marketable securities0
Marketable securities sold $ 0
Number of marketable securities in an unrealized loss position | item0

Inventories (Details)

Inventories (Details) - USD ($) $ in ThousandsMar. 31, 2021Dec. 31, 2020
Inventories
Finished goods $ 10,169 $ 7,129
Component parts and work-in-process11,873 11,434
Total inventories $ 22,042 $ 18,563

Intangible Assets (Details)

Intangible Assets (Details) - USD ($) $ in Thousands3 Months Ended12 Months Ended
Mar. 31, 2021Mar. 31, 2020Dec. 31, 2020
Patents and Intangibles
Gross Carrying Amount $ 1,663 $ 1,663
Accumulated Amortization608 549
Total1,055 1,114
Total intangible assets (Gross)2,291 2,229
Total intangible assets (Net)1,683 1,680
Amortization expense100 $ 100
Future Amortization
2021 (April 1 - December 31)177
2022236
2023205
2024184
202594
Thereafter159
Total1,055 1,114
Patents
Patents and Intangibles
Patents pending $ 628 $ 566
Patents
Patents and Intangibles
Weighted Average Amortization Period11 years11 years
Gross Carrying Amount $ 413 $ 413
Accumulated Amortization74 65
Total339 348
Future Amortization
Total $ 339 $ 348
Defensive intangible assets
Patents and Intangibles
Weighted Average Amortization Period4 years4 years
Gross Carrying Amount $ 1,125 $ 1,125
Accumulated Amortization464 421
Total661 704
Future Amortization
Total $ 661 $ 704
Customer accounts
Patents and Intangibles
Weighted Average Amortization Period2 years2 years
Gross Carrying Amount $ 125 $ 125
Accumulated Amortization70 63
Total55 62
Future Amortization
Total $ 55 $ 62

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in ThousandsMar. 31, 2021Dec. 31, 2020Mar. 31, 2020
Accrued Expenses
Warranty $ 1,610 $ 1,606 $ 1,358
Legal and consulting373 882
In-transit inventory422 634
Travel and business314 545
Sales and use tax164 193
Clinical studies86 67
Other258 496
Total $ 3,227 $ 4,423

Warranty Reserves (Details)

Warranty Reserves (Details) - USD ($) $ in Thousands3 Months Ended
Mar. 31, 2021Mar. 31, 2020Dec. 31, 2020
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning balance $ 4,841 $ 3,759
Warranty provision612 905
Processed warranty claims(584)(422)
Ending balance4,869 4,242
Accrued warranty reserve, current1,610 1,358 $ 1,606
Accrued warranty reserve, non-current3,259 2,884 $ 3,235
Total accrued warranty reserve $ 4,869 $ 4,242

Credit Agreement (Details)

Credit Agreement (Details) - USD ($) $ in MillionsAug. 03, 2018Mar. 31, 2021
Credit Agreement
Line of credit $ 10
Aggregate Borrowings25
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, 2021itemDec. 31, 2019ft²Dec. 31, 2018ft²Oct. 31, 2018ft²
Minimum
Commitments and Contingencies
Remaining lease terms12 months
Building | Minimum
Commitments and Contingencies
Remaining lease terms1 year
Building | Maximum
Commitments and Contingencies
Remaining lease terms10 years
Vehicles
Commitments and Contingencies
Remaining lease terms367 days
Number of vehicles with agreements within the initial, noncancelable lease term | item50
Equipment
Commitments and Contingencies
Option to renewtrue
Equipment | Minimum
Commitments and Contingencies
Remaining lease terms1 year
Equipment | Maximum
Commitments and Contingencies
Remaining lease terms5 years
Initial lease
Commitments and Contingencies
Area of office space80,000
Second lease
Commitments and Contingencies
Area of office space29,000
Additional office space added to the lease4,000
Third lease
Commitments and Contingencies
Additional office space added to the lease37,000

Commitments and Contingencies_2

Commitments and Contingencies - Lease related assets and liabilities (Details) - USD ($) $ in Thousands3 Months Ended
Mar. 31, 2021Mar. 31, 2020Dec. 31, 2020
Lease-related assets and liabilities
Right of use operating lease assets $ 19,565 $ 20,132
Operating lease liabilities, Current1,966 2,006
Operating lease liabilities, non-current18,910 19,388
Present value of future minimum lease payments $ 20,876 $ 21,394
Weighted average remaining lease term9 years 2 months 12 days9 years 4 months 24 days
Weighted average discount rate4.40%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 ThousandsMar. 31, 2021Dec. 31, 2020
Undiscounted cash flows
2021 (April 1 - December 31) $ 2,171
20222,598
20232,612
20242,581
20252,660
Thereafter12,692
Total minimum lease payments25,314
Less: Amount of lease payments representing interest(4,438)
Present value of future minimum lease payments20,876 $ 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 Millions3 Months Ended
Mar. 31, 2021Mar. 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) - item3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Commitments and Contingencies
Number of vendors2 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 MillionsMar. 31, 2021USD ($)
Purchase commitments
Purchase orders issued $ 19.8

Commitments and Contingencies_7

Commitments and Contingencies - Retirement Plan (Details) $ in Millions3 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 authorized4,800,000

Stockholders' Equity - Stock-_2

Stockholders' Equity - Stock-Based Compensation Expense (Details) - USD ($) $ in ThousandsJan. 01, 2021Jan. 01, 2020Mar. 31, 2021Mar. 31, 2020
Stock-based compensation
Compensation expense $ 2,457 $ 2,728
Cost of revenue.
Stock-based compensation
Compensation expense111 82
Sales and marketing
Stock-based compensation
Compensation expense978 1,246
Research and development
Stock-based compensation
Compensation expense97 88
Reimbursement, general and administrative
Stock-based compensation
Compensation expense $ 1,271 1,312
2016 Plan
Stock-based compensation
Shares available for future issuance6,345,847
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 issuance2,500,000
Increase in number of shares reserved and available for issuance972,591 952,697
Common stock options
Stock-based compensation
Compensation expense $ 1,200 $ 900
Unrecognized stock-based compensation
Unrecognized stock-based compensation expense, period for recognition2 years 1 month 6 days

Stockholders' Equity - Stock Op

Stockholders' Equity - Stock Options and Restricted Stock (Details) - USD ($) $ / shares in Units, $ in Thousands3 Months Ended12 Months Ended
Mar. 31, 2021Mar. 31, 2020Dec. 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 expense1,200 $ 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 recognized2 years 1 month 6 days
Options Outstanding
Outstanding at beginning of period1,039,709
Granted132,606
Exercised(53,967)
Forfeited(10,866)
Cancelled/Expired(5,982)
Outstanding at end of period1,101,500 1,039,709
Weighted Average Exercise Price Per Share
Outstanding at beginning of period $ 36.43
Granted51.60
Exercised24
Forfeited46.28
Cancelled/Expired46.18
Outstanding at end of period $ 38.72 $ 36.43
Other information
Options exercisable number of shares exercisable546,067 529,219
Options exercisable, weighted-average exercise price $ 30.27 $ 17.88
Weighted average remaining contractual life (in years)5 years 7 months 6 days5 years 7 months 6 days
Options exercisable, weighted-average remaining contractual life4 years 8 months 12 days
Aggregate Intrinsic Value, Options outstanding $ 18,893 $ 13,381
Aggregate Intrinsic Value, Exercised1,516
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, term7 years
Vesting period (in years)3 years
Number of consecutive trading days20 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 units6,469
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 expense1,300 $ 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 recognized2 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 expense300 $ 400
Total unrecognized pre-tax compensation expense related to awards $ 1,800
Weighted-average period over which unrecognized compensation cost is expected to be recognized2 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 units50.00%
2016 Plan | Performance-based stock-settled restricted stock units | Maximum
Units Outstanding
Percentage to earn or vest the performance-based stock-settled restricted stock units150.00%
2016 Plan | Tranche one | Performance-based stock-settled restricted stock units
Stock-based compensation, general disclosures.
Compensation arrangement33.33%
2016 Plan | Tranche two | Performance-based stock-settled restricted stock units
Stock-based compensation, general disclosures.
Compensation arrangement66.67%

Stockholders' Equity - Employee

Stockholders' Equity - Employee Stock Purchase Plan (Details) - USD ($) $ in ThousandsJan. 01, 2021Jan. 01, 2020Mar. 31, 2021Mar. 31, 2020Apr. 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 reserved1,782,422 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 issuance194,518 190,539
Stock-based compensation expense $ 300 $ 200

Revenue (Details)

Revenue (Details) - USD ($) $ in Thousands3 Months Ended
Mar. 31, 2021Mar. 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 revenue1,851 1,680
Gross profit4,796 4,372
Private insurers and other payers
Revenue
Revenue28,283 30,237
Veterans Administration
Revenue
Revenue5,846 7,058
Medicare
Revenue
Revenue8,643 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 Thousands3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Income Taxes
Net effective rate44.70%68.80%
Change in effective tax rate100.00%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 Thousands3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Net loss Per Share
Net loss $ (2,266) $ (1,307)
Weighted-average shares outstanding19,545,558 19,173,580
Weighted-average shares used to compute diluted net loss per share19,545,558 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) - shares3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Net loss Per Share
Antidilutive securities excluded from computation of earnings per share1,406,586 1,476,676
Common stock options
Net loss Per Share
Antidilutive securities excluded from computation of earnings per share1,101,500 1,071,148
Performance stock units
Net loss Per Share
Antidilutive securities excluded from computation of earnings per share62,041 123,212
Restricted Stock Units
Net loss Per Share
Antidilutive securities excluded from computation of earnings per share201,767 237,709
Employee stock purchase plan
Net loss Per Share
Antidilutive securities excluded from computation of earnings per share41,278 44,607

Fair Value Measurements (Detail

Fair Value Measurements (Details) - USD ($) $ in ThousandsMar. 31, 2021Dec. 31, 2020Jun. 30, 2020
Fair Value Measurements
Amount of transfers of marketable securities within the three level hierarchy $ 0
Intangible assets1,683 $ 1,680
Recurring
Fair Value Measurements
Available for sale debt securities16,189 16,188
Recurring | Money market mutual funds
Fair Value Measurements
Money market mutual funds16,189 16,188
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value Measurements
Available for sale debt securities16,189 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 MillionsApr. 30, 2021Aug. 03, 2018
Subsequent Event [Line Items]
Line of credit $ 10
Aggregate Borrowings25
Total aggregate principal amount of loans $ 35
Revolving credit facility | Wells Fargo Bank | Subsequent Event
Subsequent Event [Line Items]
Line of credit $ 25
Aggregate Borrowings30
Total aggregate principal amount of loans $ 55
Maximum leverage Ratio3.00%
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%