0001558370-21-005528 | 10-Q | XBRL Viewer | Tactile Systems Technology INC

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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	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 - 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 (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 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 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)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

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

- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

+ References + Details

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 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

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 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

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

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

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

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

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

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 not 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

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 contributions 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

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

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

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Name Accounting Standards Codification
-Topic 606
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-Section 50
-Paragraph 10
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-SubTopic 10
-Section 50
-Paragraph 13
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-Subparagraph (b)
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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+ Details

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.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

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

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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

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 Accounting Policies (Policies)	3 Months Ended
Summary of Significant Accounting Policies (Policies)	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)

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)

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)

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)

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 (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)

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)

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)

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)

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)

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)

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 Operations (Details) - IPO $ / shares in Units, $ in Millions	Aug. 02, 2016 USD ($) $ / shares shares
Subsidiary, Sale of Stock
Number of shares of common stock sold \| shares	4,120,000
IPO price per share (in dollars per share) \| $ / shares	$ 10.00
Proceeds from IPO	$ 35.4
Expense Relating To Initial Public Offering	$ 2.9

Marketable Securities (Details)	3 Months Ended
Marketable Securities (Details)	Mar. 31, 2021 USD ($) item	Dec. 31, 2020 USD ($)
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) - 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) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
Intangible Assets (Details) - USD ($) $ in Thousands	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) - 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) - USD ($) $ in Thousands	3 Months Ended
Warranty Reserves (Details) - USD ($) $ in Thousands	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) - USD ($) $ in Millions	Aug. 03, 2018	Mar. 31, 2021
Credit Agreement
Line of credit	$ 10.0
Aggregate Borrowings	25.0
Total aggregate principal amount of loans	$ 35.0
Credit facility outstanding amount		$ 0.0

- Definition

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

Commitments and Contingencies - Lease Obligations (Details)	3 Months Ended
	Mar. 31, 2021 item	Dec. 31, 2019 ft²	Dec. 31, 2018 ft²	Oct. 31, 2018 ft²
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 - 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 - 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 - 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 - 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 - Purchase Commitments (Details) $ in Millions	Mar. 31, 2021 USD ($)
Purchase commitments
Purchase orders issued	$ 19.8

Commitments and Contingencies - Retirement Plan (Details) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($)
401(k)
Retirement Plan
Discretionary contributions	$ 0.1

Stockholders' Equity - Stock-Based Compensation General Information (Details)	Mar. 31, 2021 shares
2016 Plan
Stockholders' Equity
Number of shares authorized	4,800,000

Stockholders' Equity - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands			3 Months Ended
	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 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	24.00
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 Stock Purchase Plan (Details) - USD ($) $ in Thousands			3 Months Ended
	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) - USD ($) $ in Thousands	3 Months Ended
Revenue (Details) - USD ($) $ in Thousands	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) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	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)

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

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)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

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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 (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) - USD ($) $ in Millions	Apr. 30, 2021	Aug. 03, 2018
Subsequent Event [Line Items]
Line of credit		$ 10.0
Aggregate Borrowings		25.0
Total aggregate principal amount of loans		$ 35.0
Revolving credit facility \| Wells Fargo Bank \| Subsequent Event
Subsequent Event [Line Items]
Line of credit	$ 25.0
Aggregate Borrowings	30.0
Total aggregate principal amount of loans	$ 55.0
Maximum leverage Ratio	3.00%
Minimum cash and cash equivalents	$ 5.0
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%