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| PART I |
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| Item 1. | | Business | | 5 |
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| Item 1A. | | Risk Factors | | 30 |
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| Item 1B. | | Unresolved Staff Comments | | 68 |
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| Item 1C. | | Cybersecurity | | 68 |
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| Item 2. | | Properties | | 69 |
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| Item 3. | | Legal Proceedings | | 69 |
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| Item 4. | | Mine Safety Disclosures | | 69 |
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| | | PART II | | |
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| Item 5. | | Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | 70 |
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| Item 6. | | Selected Financial Data | | 72 |
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| Item 7. | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 72 |
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| Item 7A. | | Quantitative and Qualitative Disclosures About Market Risk | | 84 |
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| Item 8. | | Financial Statements and Supplementary Data | | 86 |
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| Item 9. | | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | | 118 |
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| Item 9A. | | Controls and Procedures | | 118 |
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| Item 9B. | | Other Information | | 121 |
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| Item 9C. | | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | | 121 |
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| | PART III | | |
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| Item 10. | | Directors, Executive Officers and Corporate Governance | | 122 |
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| Item 11. | | Executive Compensation | | 123 |
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| Item 12. | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 123 |
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| Item 13. | | Certain Relationships and Related Transactions, and Director Independence | | 123 |
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| Item 14. | | Principal Accountant Fees and Services | | 123 |
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| | | PART IV | | |
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| Item 15. | | Exhibits, Financial Statement Schedules | | 124 |
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i
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K contains forward-looking statements regarding us, our business prospects and our results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described in Part I, Item 1A. “Risk Factors” and elsewhere in this report. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission, or the SEC, that advise interested parties of the risks and factors that may affect our business.
All statements, other than statements of historical facts, contained in this Annual Report on Form 10-K, including statements regarding our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition, are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "ongoing," "plan," "potential," "predict," "project," "should," "target," "will," "would," or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Annual Report on Form 10-K. These risks, uncertainties and other factors include, but are not limited to:
| ● | the impacts of inflation, rising interest rates or a recession; |
| ● | the adequacy of our liquidity to pursue our business objectives; |
| ● | our ability to obtain reimbursement from third-party payers for our products; |
| ● | adverse economic conditions or intense competition; |
| ● | price increases for supplies and components; |
| ● | wage and component price inflation; |
| ● | entry of new competitors and products; |
| ● | compliance with and changes in federal, state and local government regulation; |
| ● | loss or retirement of key executives, including prior to identifying a successor; |
| ● | technological obsolescence of our products; |
| ● | technical problems with our research and products; |
| ● | our ability to expand our business through strategic acquisitions; |
| ● | our ability to integrate acquisitions and related businesses; |
| ● | the effects of current and future U.S. and foreign trade policy and tariff actions; and |
| ● | the inability to carry out research, development and commercialization plans. |
You should read the matters described in Part I, Item 1A. "Risk Factors" and the other cautionary statements made in this Annual Report on Form 10-K. We cannot assure you that the forward-looking statements in this report will prove to be accurate and therefore you are encouraged not to place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. You are urged to carefully review and consider the various disclosures made by us in this report and in other filings with the SEC that advise of the risks and factors that may affect our business. Other than as required by law, we expressly disclaim any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.
RISK FACTORS SUMMARY
Our business, financial condition, and operating results may be affected by a number of factors, whether currently known or unknown. Any one or more of such factors could directly or indirectly cause our actual results of operations and financial condition to vary materially from past or anticipated future results of operations and financial condition. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, results of operations, and stock price. We have provided a summary of some of these risks below, with a more detailed explanation of the risks applicable to us in Part I, Item 1A. “Risk Factors” and elsewhere in this report:
Risks Related to Our Business, Operations and Strategy
| - | Current or worsening economic conditions, including inflation, rising interest rates or a recession, could adversely affect our business and financial condition. |
| - | If we are unable to achieve and maintain adequate levels of coverage or reimbursement for our products, our business and results of operations will be adversely affected. |
| - | Changes to the level of Medicare coverage or coverage criteria for our products could have an adverse effect on our business and results of operations. |
| - | We utilize third-party, single-source suppliers for some components and materials used in our products, and the loss of any of these suppliers could have an adverse impact on our business. |
| - | Our revenue is primarily generated from our lymphedema products and we are therefore highly dependent on these products. |
| - | We are increasingly dependent on sophisticated information technology and if we fail to effectively maintain or protect our information systems or data, including from cyber-attacks or data breaches, our business could be adversely affected. |
| - | Consolidation in the healthcare industry could lead to demands for price concessions, which may impact our ability to sell our products at prices necessary to support our current business strategies. |
| - | Our long-term growth depends on awareness and adoption of our products. |
| - | If we are unable to expand, manage and maintain our direct sales and marketing organizations, as well as our relationships with distributors, we may not be able to generate anticipated revenue. |
| - | Physicians and payers may require additional clinical studies prior to prescribing our products or prior to providing or maintaining coverage and reimbursement for our products. Any subsequent clinical studies that are conducted and published may not be positive or consistent with our existing data, which would adversely affect the rate of adoption of our products. |
| - | Our business, financial condition and results of operations may be negatively impacted by health epidemics or other disease outbreaks, such as the COVID-19 pandemic. |
Government Regulation, Compliance and Legal Risks
| - | We are subject to extensive federal and state regulation, and if we fail to comply with applicable regulations, we could be required to repay amounts previously received, and could suffer severe criminal or civil sanctions or be required to make significant changes to our operations that could adversely affect our business, financial condition and operating results. |
| - | We are subject to significant regulation by numerous government agencies, including the FDA. We cannot market or commercially distribute our products without obtaining and maintaining necessary regulatory clearances or approvals. |
| - | If clinical studies of our future products do not produce results necessary to support regulatory clearance or approval in the United States or, with respect to our current or future products, elsewhere, we will be unable to expand the indications for or commercialize these products. |
| - | If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as contractually required or expected, we may not be able to obtain regulatory clearance or approval for or commercialize our products. |
| - | If we fail to comply with state and federal fraud and abuse laws, including anti-kickback, false claims and anti-inducement laws, we could face substantial penalties and our business, operations and financial condition could be adversely affected. |
| - | Failure to maintain the licenses and accreditations necessary to operate under our direct-to-patient and -provider model would adversely affect our business. |
| - | Our products are currently made available to authorized users of the Department of Veterans Affairs Federal Supply Schedule and if we were no longer eligible to sell our products through such channel, our business may be adversely affected. |
Financial Condition, Credit and Tax Risks
| - | If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, investors' views of us and, as a result, the value of our common stock. |
| - | The level of our indebtedness under our credit facility may adversely impact us |
| - | Our credit facility contains covenants that restrict our business and financing activities, and the property that secures our obligations under the credit facility may be subject to foreclosure. |
Risks Related to Ownership of Our Common Stock
| - | The trading price of the shares of our common stock has been and could continue to be highly volatile, and purchasers of our common stock may not be able to resell their shares of our common stock at or above the price at which they purchased their shares and could incur substantial losses. |
Part I
