TCMD

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this report. 24 Table of Contents Overview We are a medical technology company that develops and commercializes medical devices in the United States. Our mission is to help people suffering from chronic diseases live better and care for themselves at home. We focus our efforts on advancing the standard of care in treating underserved chronic diseases in the home to improve patient outcomes and quality of life and help control rising healthcare expenditures. Our areas of therapeutic focus are (1) vascular disease, with a goal of advancing the standard of care in treating lymphedema and chronic venous insufficiency, (2) oncology, where lymphedema is a common consequence among cancer survivors and (3) providing airway clearance therapy for those suffering from chronic respiratory conditions. We possess a unique, scalable platform to deliver at-home healthcare solutions throughout the United States. This evolving home care delivery model is recognized by policymakers and insurance payers as a key for controlling rising healthcare costs. Our solutions deliver cost-effective, clinically proven, long-term treatment for people with these chronic diseases. We generally employ a direct-to-patient and -provider model within our lymphedema portfolio, through which we obtain patient referrals from clinicians, manage insurance claims on behalf of our patients and their clinicians, deliver our solutions directly to patients and train them on the proper use of our solutions. This model allows us to engage directly with patients and clinicians, which are both critical audiences to which we can provide clinical evidence and education. For our respiratory therapy product, we have a durable medical equipment (“DME”) distribution model, through which we sell the AffloVest product to accredited DME providers, whose representatives gather and submit documentation for payer reimbursement, train patients on use of the device, and provide ongoing patient support. Our current lymphedema products are the Flexitouch Plus, Entre Plus and Nimbl pneumatic compression pump systems and our airway clearance product is a High-Frequency Chest Wall Oscillation (“HFCWO”) device called AffloVest. The Flexitouch system product line is considered an advanced pneumatic compression device. The first generation Flexitouch system received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) in July 2002, introducing a medical device technology to address the many limitations of self-administered home-based manual lymphatic drainage therapy. A second generation Flexitouch system received 510(k) clearance from the FDA in October 2006. In September 2016, we received 510(k) clearance from the FDA for the Flexitouch system in treating lymphedema of the head and neck. A third generation, Flexitouch Plus, received 510(k) clearance from the FDA in June 2017. In December 2020, we received 510(k) clearance from the FDA for two new indications for our Flexitouch Plus system: phlebolymphedema and lipedema. The Entre system product line and Nimbl product line are considered basic, or simple, pneumatic compression devices. These systems are sold or rented to patients who need a simple pump or who do not yet qualify for insurance reimbursement for an advanced compression device e.g., a Flexitouch Plus system. We introduced the Entre system in the United States in February 2013, this device was manufactured by Thermotek, Inc. and received FDA clearance in 2010. In 2015, we received FDA clearance for our own first generation Entre system and the second generation, Entre Plus, was released in March 2023. Nimbl, our next-generation pneumatic compression platform, received 510(k) clearance in June 2024 and was commercially launched for upper extremity lymphedema in October 2024 and was commercially launched for lower extremity lymphedema in February 2025. Nimbl has replaced most orders for our Entre system and we expect will continue to do so. Sales and rentals of our lymphedema products represented 84% and 83% of our revenue in the six months ended June 30, 2026 and 2025, respectively. On April 24, 2026, we entered into a 3-year exclusive distribution agreement with ElastiMed, Inc. to bring MyoSleeve, a discreet, wearable non-pneumatic compression device for the lower leg, to Department of Veterans Affairs (“VA”) and Department of Defense (“DoD”) patients across the United States. Under the agreement, we received exclusive rights to distribute MyoSleeve through the VA and DoD channels and limited non-exclusive distribution rights in the broader U.S. commercial market, subject to certain contractual conditions. In exchange for these rights, we made a $3.0 million upfront payment in the second quarter of 2026, which was recorded as an intangible asset and will be amortized on a straight-line basis beginning on the date the product is commercially available for sale, which is expected to be in the second half of 2026. On February 17, 2026, we acquired all outstanding equity interests of LymphaTech, Inc. (“LymphaTech”). LymphaTech is a medical technology company pioneering a digital, three-dimensional (the “3D”) full body measurement and monitoring platform designed specifically for lymphedema. 25 Table of Contents On September 8, 2021, we acquired the assets of the AffloVest airway clearance product line. AffloVest is a portable, wearable vest that provides airway clearance to treat patients with chronic respiratory conditions such as bronchiectasis or conditions resulting from neuromuscular disorders. In April 2026, we received FDA 510(k) clearance for our AffloVest Gen 6 and it was commercially launched in June 2026. For the six months ended June 30, 2026 and 2025, sales of AffloVest represented 16% and 17% of our revenue, respectively. To support the growth of our business, we continue to invest in our commercial infrastructure, consisting of a lymphedema and respiratory sales force, marketing team including clinical education programs, patient education team, reimbursement capabilities and clinical expertise. We market our lymphedema products using a direct-to-patient and -clinician model. The AffloVest device is sold through respiratory durable medical equipment providers throughout the United States that service patients and bill third-party payers for the product. We employ a small group of respiratory specialists, who educate DME representatives, provide product demonstrations for targeted clinicians and support technical questions related to the AffloVest. As of June 30, 2026, we employed 169 account managers and 163 specialists for our lymphedema products and a team of 19 specialists supporting our airway clearance products. This compares to 161 account managers and 132 specialists for our lymphedema products and a team of 19 specialists supporting our airway clearance products as of June 30, 2025. We invest in our reimbursement function to improve operational efficiencies and enhance individual payer expertise, while continuing our strategic focus of payer development. Our payer relations function focuses on payer policy development, education, contract negotiations, and data analysis. Our reimbursement operations function is responsible for verifying patient insurance benefits, individual patient case development, prior authorization submissions, case follow-up, and appeals when necessary. We also have a clinical team, consisting of a scientific advisory board, in-house therapists and nurses, and a Chief Medical Officer, that serves as a resource to clinicians and patients and guides the development of clinical evidence in support of our products. Most clinical studies require observation and interaction with clinicians and patients to monitor results and progress. We rely on third-party contract manufacturers for the sourcing of parts, the assembly of our controllers and the manufacturing of the garments used with our systems. We conduct final assembly of the garments used with our products, perform quality assurance and ship our products from our facility in Minnesota. We also manufacture and ship the AffloVest device from our Minnesota-based facility. In July 2022, we launched Kylee™ a free mobile app that makes it easier for patients to manage their conditions by tracking treatments and symptoms, as well as having direct access to educational resources. Flexitouch Plus and Nimbl devices include Bluetooth technology, which is viewable using Kylee. For the three months ended June 30, 2026, we generated revenue of $85.7 million and had net income of $7.8 million, compared to revenue of $78.9 million and net income of $3.2 million for the three months ended June 30, 2025. For the six months ended June 30, 2026, we generated revenue of $161.0 million and had net income of $6.0 million, compared to revenue of $140.2 million and net income of $0.2 million for the six months ended June 30, 2025. Our primary sources of capital since our initial public offering in 2016 have been from operating income, bank financing and our public offering in February 2023. We operate in one segment for financial reporting purposes. ​ 26 Table of Contents Results of Operations Comparison of the Three and Six Months Ended June 30, 2026 and 2025 The following table presents our results of operations for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ Change (In thousands) ​ 2026 ​ 2025 ​ $ ​ % Condensed Consolidated Statement ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ of Operations Data: ​ ​ ​ ​ revenue ​ ​ ​ ​ revenue ​ ​ ​ ​ ​ ​ Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales revenue ​ $ 76,489 ​ 89 % ​ $ 70,531 ​ 89 % ​ $ 5,958 ​ 8 % Rental revenue ​ ​ 9,209 ​ 11 % ​ ​ 8,374 ​ 11 % ​ ​ 835 ​ 10 % Total revenue ​ ​ 85,698 ​ 100 % ​ ​ 78,905 ​ 100 % ​ ​ 6,793 ​ 9 % Cost of revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales revenue ​ ​ 17,628 ​ 21 % ​ ​ 17,483 ​ 22 % ​ ​ 145 ​ 1 % Cost of rental revenue ​ ​ 2,721 ​ 3 % ​ ​ 2,629 ​ 3 % ​ ​ 92 ​ 3 % Total cost of revenue ​ ​ 20,349 ​ 24 % ​ ​ 20,112 ​ 25 % ​ ​ 237 ​ 1 % Gross profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit - sales revenue ​ ​ 58,861 ​ 68 % ​ ​ 53,048 ​ 67 % ​ ​ 5,813 ​ 11 % Gross profit - rental revenue ​ ​ 6,488 ​ 8 % ​ ​ 5,745 ​ 8 % ​ ​ 743 ​ 13 % Gross profit ​ ​ 65,349 ​ 76 % ​ ​ 58,793 ​ 75 % ​ ​ 6,556 ​ 11 % Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales and marketing ​ ​ 32,012 ​ 37 % ​ ​ 30,039 ​ 38 % ​ ​ 1,973 ​ 7 % Research and development ​ ​ 2,501 ​ 3 % ​ ​ 2,018 ​ 3 % ​ ​ 483 ​ 24 % Reimbursement, general and administrative ​ ​ 23,360 ​ 27 % ​ ​ 22,034 ​ 28 % ​ ​ 1,326 ​ 6 % Intangible asset amortization ​ ​ 650 ​ 1 % ​ ​ 619 ​ 1 % ​ ​ 31 ​ 5 % Total operating expenses ​ ​ 58,523 ​ 68 % ​ ​ 54,710 ​ 70 % ​ ​ 3,813 ​ 7 % Income from operations ​ ​ 6,826 ​ 8 % ​ ​ 4,083 ​ 5 % ​ ​ 2,743 ​ 67 % Interest income ​ ​ 561 ​ 1 % ​ ​ 850 ​ 1 % ​ ​ (289) ​ (34) % Interest expense ​ ​ (19) ​ — % ​ ​ (410) ​ — % ​ ​ 391 ​ (95) % Other income ​ ​ — ​ — % ​ ​ 1 ​ — % ​ ​ (1) ​ (100) % Income before income taxes ​ ​ 7,368 ​ 9 % ​ ​ 4,524 ​ 6 % ​ ​ 2,844 ​ 63 % Income tax (benefit) expense ​ ​ (417) ​ — % ​ ​ 1,307 ​ 2 % ​ ​ (1,724) ​ (132) % Net income ​ $ 7,785 ​ 9 % ​ $ 3,217 ​ 4 % ​ $ 4,568 ​ 142 % ​ ​ 27 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ Change (In thousands) ​ 2026 ​ 2025 ​ $ ​ % Condensed Consolidated Statement ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ of Operations Data: ​ ​ ​ ​ revenue ​ ​ ​ ​ revenue ​ ​ ​ ​ ​ ​ Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales revenue ​ $ 143,455 ​ 89 % ​ $ 123,000 ​ 88 % ​ $ 20,455 ​ 17 % Rental revenue ​ ​ 17,510 ​ 11 % ​ ​ 17,173 ​ 12 % ​ ​ 337 ​ 2 % Total revenue ​ ​ 160,965 ​ 100 % ​ ​ 140,173 ​ 100 % ​ ​ 20,792 ​ 15 % Cost of revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales revenue ​ ​ 32,887 ​ 20 % ​ ​ 31,374 ​ 22 % ​ ​ 1,513 ​ 5 % Cost of rental revenue ​ ​ 5,115 ​ 4 % ​ ​ 4,660 ​ 3 % ​ ​ 455 ​ 10 % Total cost of revenue ​ ​ 38,002 ​ 24 % ​ ​ 36,034 ​ 25 % ​ ​ 1,968 ​ 5 % Gross profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit - sales revenue ​ ​ 110,568 ​ 69 % ​ ​ 91,626 ​ 66 % ​ ​ 18,942 ​ 21 % Gross profit - rental revenue ​ ​ 12,395 ​ 7 % ​ ​ 12,513 ​ 9 % ​ ​ (118) ​ (1) % Gross profit ​ ​ 122,963 ​ 76 % ​ ​ 104,139 ​ 75 % ​ ​ 18,824 ​ 18 % Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales and marketing ​ ​ 64,744 ​ 40 % ​ ​ 57,555 ​ 41 % ​ ​ 7,189 ​ 12 % Research and development ​ ​ 5,277 ​ 3 % ​ ​ 3,759 ​ 3 % ​ ​ 1,518 ​ 40 % Reimbursement, general and administrative ​ ​ 46,404 ​ 29 % ​ ​ 42,032 ​ 30 % ​ ​ 4,372 ​ 10 % Intangible asset amortization ​ ​ 1,246 ​ 1 % ​ ​ 1,252 ​ 1 % ​ ​ (6) ​ (0) % Total operating expenses ​ ​ 117,671 ​ 73 % ​ ​ 104,598 ​ 75 % ​ ​ 13,073 ​ 12 % Income (loss) from operations ​ ​ 5,292 ​ 3 % ​ ​ (459) ​ — % ​ ​ 5,751 ​ N.M. % Interest income ​ ​ 1,227 ​ 1 % ​ ​ 1,745 ​ 1 % ​ ​ (518) ​ (30) % Interest expense ​ ​ (47) ​ — % ​ ​ (834) ​ (1) % ​ ​ 787 ​ (94) % Other income ​ ​ — ​ — % ​ ​ 1 ​ — % ​ ​ (1) ​ (100) % Income before income taxes ​ ​ 6,472 ​ 4 % ​ ​ 453 ​ — % ​ ​ 6,019 ​ N.M. % Income tax expense ​ ​ 450 ​ — % ​ ​ 210 ​ — % ​ ​ 240 ​ 114 % Net income ​ $ 6,022 ​ 4 % ​ $ 243 ​ — % ​ $ 5,779 ​ N.M. % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue Revenue increased $6.8 million, or 9%, to $85.7 million in the three months ended June 30, 2026, compared to $78.9 million in the three months ended June 30, 2025. The increase in total revenue was attributable to an increase of $7.7 million, or 12%, in sales and rentals of the lymphedema product line in the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was partially offset by a decrease of $0.9 million, or 7%, in sales of the airway clearance product line in the three months ended June 30, 2026, compared to the three months ended June 30, 2025. Revenue increased $20.8 million, or 15%, to $161.0 million in the six months ended June 30, 2026, compared to $140.2 million in the six months ended June 30, 2025. The increase in total revenue was attributable to an increase of $19.3 million, or 17%, in sales and rentals of the lymphedema product line and an increase of $1.5 million, or 6%, in sales of the airway clearance product line in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase in the lymphedema product line revenue in the three and six months ended June 30, 2026, was driven by accelerating commercial momentum from our strong partnerships, execution of our go-to-market commercial strategy and disciplined focus on sales force productivity. The decrease in the airway clearance product line revenue for the three months ended June 30, 2026 was primarily driven by inventory timing dynamics among a few large DME providers. The increase in the airway clearance product line revenue for the six months ended June 30, 2026 was primarily driven by strong partnerships and prioritized placement agreements with our top 10 respiratory DME providers. 28 Table of Contents The following tables summarize our revenue by product line for the three and six months ended June 30, 2026 and 2025, both in dollars and percentage of total revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ ​ ​ ​ June 30, ​ Change (In thousands) ​ ​ ​ 2026 ​ 2025 ​ $ ​ % Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lymphedema products ​ $ 73,630 ​ $ 65,969 ​ $ 7,661 ​ 12% Airway clearance products ​ ​ 12,068 ​ ​ 12,936 ​ ​ (868) ​ (7)% Total ​ $ 85,698 ​ $ 78,905 ​ $ 6,793 ​ 9% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of total revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lymphedema products ​ 86% ​ 84% ​ ​ ​ ​ Airway clearance products ​ ​ 14% ​ ​ 16% ​ ​ ​ ​ ​ Total ​ 100% ​ 100% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended ​ ​ ​ ​ ​ ​ ​ June 30, ​ Change (In thousands) ​ ​ ​ 2026 ​ 2025 ​ $ ​ % Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lymphedema products ​ $ 135,851 ​ $ 116,524 ​ $ 19,327 ​ 17% Airway clearance products ​ ​ 25,114 ​ ​ 23,649 ​ ​ 1,465 ​ 6% Total ​ $ 160,965 ​ $ 140,173 ​ $ 20,792 ​ 15% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of total revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lymphedema products ​ 84% ​ 83% ​ ​ ​ ​ Airway clearance products ​ ​ 16% ​ ​ 17% ​ ​ ​ ​ ​ Total ​ 100% ​ 100% ​ ​ ​ ​ ​ Our business is affected by seasonality. In the first quarter of each year, when most patients have started a new insurance year and have not yet met their annual out-of-pocket payment obligations, we experience substantially reduced demand for our products. We typically experience higher revenue in the third and fourth quarters of the year when patients have met their annual insurance deductibles, thereby reducing their out-of-pocket costs for our products, and have an increasing desire to exhaust their flexible spending accounts at year end. This seasonality applies only to purchases and rentals of our products by patients covered by commercial insurance and is not relevant to Medicare, Medicaid or the Veterans Administration, as those payers either do not have plans that have declining deductibles over the course of the plan year and/or do not have plans that include patient deductibles for purchases or rentals of our products. Cost of Revenue and Gross Margin Cost of revenue increased $0.2 million, or 1%, to $20.3 million in the three months ended June 30, 2026, compared to $20.1 million in the three months ended June 30, 2025. Cost of revenue increased $2.0 million, or 5%, to $38.0 million in the six months ended June 30, 2026, compared to $36.0 million in the six months ended June 30, 2025. The increase in cost of revenue in both periods was primarily attributable to the increase in revenue. Gross margin was 76% and 75% in the three months ended June 30, 2026 and 2025, respectively, and 76% and 75% in the six months ended June 30, 2026 and 2025, respectively. Sales and Marketing Expenses Sales and marketing expenses increased $2.0 million, or 7%, to $32.0 million in the three months ended June 30, 2026, compared to $30.0 million in the three months ended June 30, 2025. The increase was primarily attributable to a $2.9 million increase in personnel-related compensation expenses (including travel and 29 Table of Contents entertainment expenses) and a $0.2 million increase in expenses for professional services, partially offset by a $1.4 million decrease in expenses related to meetings and seminars. Sales and marketing expenses increased $7.2 million, or 12%, to $64.7 million in the six months ended June 30, 2026, compared to $57.6 million in the six months ended June 30, 2025. The increase was primarily attributable to a $6.8 million increase in personnel-related compensation expenses, a $0.2 million increase in expenses for demo units and a $0.1 million increase in educational grants. Research and Development Expenses Research and development (“R&D”) expenses increased $0.5 million, or 24%, to $2.5 million in the three months ended June 30, 2026, compared to $2.0 million in the three months ended June 30, 2025. The increase was primarily attributable to a $0.2 million increase in IT-related expenses and a $0.2 million increase in personnel-related compensation expenses. R&D expenses increased $1.5 million, or 40%, to $5.3 million in the six months ended June 30, 2026, compared to $3.8 million in the six months ended June 30, 2025. The increase was primarily attributable to a $0.8 million increase in personnel-related compensation expenses and $0.6 million increase in IT and other professional fees related expenses. IT-related expenses reflected in both R&D expenses and Reimbursement, general and administrative expenses in both periods primarily related to the ongoing implementation of new technology across the entire order process, replacing legacy systems, which we expect to continue through the remainder of 2026. Reimbursement, General and Administrative Expenses Reimbursement, general and administrative expenses increased $1.3 million, or 6%, to $23.4 million in the three months ended June 30, 2026, compared to $22.0 million in the three months ended June 30, 2025. This increase was primarily attributable to a $2.2 million increase in personnel-related compensation expenses, a $0.3 million increase in IT-related expenses and a $0.2 million increase in acquisition and integration costs related to the LymphaTech acquisition, partially offset by a $1.6 million decrease in occupancy costs. Reimbursement, general and administrative expenses increased $4.4 million, or 10%, to $46.4 million in the six months ended June 30, 2026, compared to $42.0 million in the six months ended June 30, 2025. This increase was primarily attributable to a $3.3 million increase in personnel-related compensation expenses, a $1.0 million increase in acquisition and integration costs related to the LymphaTech acquisition and a $0.7 million increase in IT-related expenses, partially offset by a $0.7 million decrease in occupancy costs, depreciation expense and professional fees. Intangible Asset Amortization Intangible asset amortization was $0.7 and $0.6 million for the three months ended June 30, 2026 and 2025, respectively. Intangible asset amortization was $1.2 and $1.3 million for the six months ended June 30, 2026 and 2025, respectively. Interest Income and Interest Expense Interest income decreased $0.3 million, or 34%, to $0.6 million in the three months ended June 30, 2026, compared to $0.9 million in the three months ended June 30, 2025, primarily due to a lower cash balance in an Institutional Insured Liquid Deposit demand account due to funds being utilized for the LymphaTech acquisition. Interest expense decreased $0.4 million, or 95%, to $19,000 in the three months ended June 30, 2026, compared to $0.4 million in the three months ended June 30, 2025, primarily due to the repayment of debt. 30 Table of Contents Interest income decreased $0.5 million, or 30%, to $1.2 million in the six months ended June 30, 2026, compared to $1.7 million in the six months ended June 30, 2025, primarily due to a lower cash balance in an Institutional Insured Liquid Deposit demand account due to funds being utilized for the LymphaTech acquisition. Interest expense decreased $0.8 million, or 94%, to $47,000 in the six months ended June 30, 2026, compared to $0.8 million in the six months ended June 30, 2025, primarily due to the repayment of debt. Income Taxes We recorded an income tax benefit of $0.4 million and an income tax expense of $1.3 million for the three months ended June 30, 2026 and 2025, respectively. The primary driver of the change in our effective tax rate was attributable to the Company recording stock-based compensation discrete items when compared to the prior year period. We recorded an income tax expense of $0.5 million and an income tax expense of $0.2 million for the six months ended June 30, 2026 and 2025, respectively. The primary driver of the change in our effective tax rate was attributable to the Company recording stock-based compensation discrete items when compared to the prior year period. ​ ​ 31 Table of Contents Liquidity and Capital Resources Cash Flows On June 30, 2026, we had cash of $69.9 million and net accounts receivable of $43.1 million. This compares to cash of $81.5 million and net accounts receivable of $33.1 million at June 30, 2025. The following table summarizes our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended ​ ​ June 30, (In thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 Net cash provided by (used in): ​ ​ ​ ​ ​ ​ Operating activities $ 2,915 ​ $ 15,174 Investing activities ​ ​ (11,380) ​ ​ (804) Financing activities ​ ​ (5,128) ​ ​ (27,209) Net decrease in cash $ (13,593) ​ $ (12,839) ​ ​ Operating Activities Net cash provided in operating activities during the six months ended June 30, 2026 was $2.9 million, resulting from non-cash net income adjustments of $7.6 million, net income of $6.0 million and a net decrease in operating assets and liabilities of $10.7 million. The positive non-cash net income adjustments consisted primarily of $4.0 million of stock-based compensation expense, $3.5 million of depreciation and amortization, and a loss on disposal of property and equipment and intangibles of $0.1 million. Cash provided relating to the change in operating assets and liabilities primarily consisted of an increase in prepaid expenses and other assets of $5.2 million, a decrease in accrued payroll and related taxes of $3.8 million, an increase in inventories of $2.8 million, a $2.2 million decrease in income taxes payable, a $0.8 million decrease in accrued expenses and other liabilities and an increase in right of use operating lease assets of $0.4 million, partially offset by a $2.9 million increase in accounts payable, a decrease of $0.8 million in net investment in leases and a decrease in net accounts receivable of $0.8 million. Net cash provided by operating activities during the six months ended June 30, 2025 was $15.2 million, resulting from a net increase in operating assets and liabilities of $7.5 million, non-cash net income adjustments of $7.4 million, and net income of $0.2 million. Cash provided relating to the change in operating assets and liabilities primarily consisted of a decrease in net accounts receivable of $11.9 million, a $2.6 million increase in accrued expenses and other liabilities, a $2.3 million increase in accounts payable, a decrease in inventories of $1.5 million, and a decrease in net investment in leases of $0.1 million, partially offset by a decrease in accrued payroll and related taxes of $5.2 million, an increase in prepaid expenses and other assets of $4.7 million, a decrease in income taxes payable of $0.6 million and an increase in right of use operating lease assets of $0.3 million. The positive non-cash net income adjustments consisted primarily of $4.0 million of stock-based compensation expense, $3.4 million of depreciation and amortization, and $0.1 million of loss on disposals. Investing Activities Net cash used in investing activities during the six months ended June 30, 2026, was $11.4 million, primarily consisting of $6.2 million of net payments related to the acquisition of LymphaTech, a $3.0 million payment for the exclusive distribution agreement for MyoSleeve, $2.1 million of purchases of property and equipment and $0.1 million of patent costs. Net cash used in investing activities during the six months ended June 30, 2025, was $0.8 million, consisting of purchases of property and equipment and patent costs. 32 Table of Contents Financing Activities Net cash used in financing activities during the six months ended June 30, 2026, was $5.1 million, primarily consisting of payments of $6.4 million for the repurchase of our common stock, partially offset by $1.0 million in proceeds from the issuance of common stock under the ESPP and $0.2 million in proceeds from the exercise of common stock options. Net cash used in financing activities during the six months ended June 30, 2025, was $27.2 million, primarily consisting of payments of $26.6 million for the repurchase of our common stock and a payment of $1.5 million made on our term loan, partially offset by $0.8 million in proceeds from the issuance of common stock under the ESPP. Credit Agreement On July 31, 2025, we entered into an Amended and Restated Credit Agreement with the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrative agent (the “2025 Credit Agreement”), which amended and restated the credit agreement that we had in place prior to that time (the “Prior Credit Agreement”). The 2025 Credit Agreement provides for a $40.0 million revolving credit facility with a scheduled maturity date of July 31, 2028. In connection with the entry into the 2025 Credit Agreement, on July 31, 2025, we paid off the full amount outstanding under the term loan that was outstanding under the Prior Credit Agreement, which was $24.4 million (inclusive of principal and interest), using cash on hand. The term loan had been reflected on our condensed consolidated financial statements as a note payable. The 2025 Credit Agreement removed the provisions from the Prior Credit Agreement related to a committed term loan, such that the only term loan related provisions in the 2025 Credit Agreement relate to our ability to request uncommitted incremental term loan facilities and/or an increase in the amount of the revolving loans available under the 2025 Credit Agreement in an amount not to exceed $25.0 million in the aggregate, subject to the satisfaction of certain conditions. Amounts drawn under the revolving credit facility bear interest, at our option, at a rate equal to (a) the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) Adjusted Term SOFR (defined as term Secured Overnight Financing Rate) for a one-month tenor plus 1% (the “Base Rate”) plus an applicable margin or (b) Adjusted Term SOFR for an interest period of one, three or six months, at our option, plus the applicable margin. The applicable margin is 0.75% to 1.75% on loans bearing interest at the Base Rate and 1.75% to 2.75% on loans bearing interest at Adjusted Term SOFR, in each case depending on our consolidated total leverage ratio. The 2025 Credit Agreement provides for a commitment fee at a rate per annum ranging from 0.125% to 0.250% for the unused portion of the revolving credit facility, depending on our consolidated total leverage ratio. The 2025 Credit Agreement includes financial covenants consisting of a maximum consolidated total leverage ratio covenant and a minimum fixed charge coverage ratio covenant. In addition, the 2025 Credit Agreement includes customary negative covenants, including a restricted payment covenant that permits the Company to repurchase shares of its common stock and make certain other payments, as long as the Company is not in default under the 2025 Credit Agreement, has a consolidated total leverage ratio of no greater than 1.75 to 1.00, and has liquidity of not less than $30.0 million, in each case both before and after giving effect to such stock repurchases or the making of such payments. As of June 30, 2026, we were in compliance with all covenants under the 2025 Credit Agreement. Our obligations under the 2025 Credit Agreement are secured by a security interest in substantially all of our and our subsidiary’s assets and are also guaranteed by our subsidiary. As of June 30, 2026, we had no outstanding borrowings under the 2025 Credit Agreement. 33 Table of Contents Share Repurchase Program ​ On October 16, 2025, our Board of Directors authorized a new program to repurchase up to $25.0 million of our common stock. Under the program, purchases may be made from time to time in the open market, in privately negotiated purchases, or both. The timing and number of shares to be purchased will be based on the price of the Company's common stock, general business and market conditions and other investment considerations and factors. This share repurchase program expires on November 3, 2027. The program does not obligate the Company to repurchase any specific number of shares and may be suspended or discontinued at any time without prior notice. During the six months ended June 30, 2026, we repurchased 249,150 shares for approximately $6.4 million. We used cash on hand to fund these repurchases. Future Cash Requirements For a discussion of our material estimated future cash requirements under our contractual obligations and commercial commitments, in total and disaggregated into current and long-term, see “Future Cash Requirements” included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes since December 31, 2025. Adequacy of Resources Our future cash requirements may vary significantly from those now planned and will depend on many factors, including: ● the impacts of inflation, rising interest rates or a recession on our business; ● sales and marketing resources needed to further penetrate our market; ● expansion of our operations; ● IT investments to scale our business; ● response of competitors to our solutions and applications; ● costs associated with clinical research activities; ● increases in interest rates; ● labor shortages and wage inflation; ● component price inflation; ● costs to develop and implement new products and revisions to existing products; and ● use of capital for acquisitions or licenses, if any. Historically, we have experienced increases in our expenditures consistent with the growth in our revenue, operations and personnel, and we anticipate that our expenditures will continue to increase as we expand our business. We believe our cash and cash flows from operations will be sufficient to meet our working capital, capital expenditure, debt repayment and related interest, and other cash requirements for at least the next twelve months. 34 Table of Contents Recent Accounting Pronouncements Refer to Note 3 – “Summary of Significant Accounting Policies” of the condensed consolidated financial statements contained in this report for a description of recently issued accounting pronouncements that are applicable to our business. Critical Accounting Estimates Critical accounting estimates are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. For additional information, please see the discussion of our most critical accounting estimates under “Critical Accounting Estimates” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2025.