InfuSystem Holdings, Inc

Previous wording

•Wound Care: in 2020, we added Negative Pressure Wound Therapy ("NPWT") to our portfolio of DME devices offered to patients for home healthcare. Similar to our capabilities surrounding infusion pumps, we offer these devices to patients for third party payer reimbursement and sales, rentals and leases of the equipment and related disposable supplies directly to other healthcare providers. Our fleet off NPWT devices include devices manufactured by Smith and Nephew, Cork Medical LLC (“Cork”) and Genadyne Biotechnologies Inc. In 2024, we added Advanced Wound Care dressings to our wound care product portfolio. We take patient referrals for wound care disposable supplies directly and indirectly from wound care clinics and other sites of care. The products are generally shipped directly from our suppliers to the patients and we receive reimbursement from the patient's health care plan carrier. In 2025, we added Pneumatic Compression Devices ("PCD") to our portfolio of DME devices offered to patients and added Other Compression Devices (“OCD”) supplied by a second manufacture in early 2026.

Current wording

•Wound Care: in 2020, we added Negative Pressure Wound Therapy ("NPWT") to our portfolio of DME devices offered to patients for home healthcare. Similar to our capabilities surrounding infusion pumps, we offer these devices to patients for third party payer reimbursement and sales, rentals and leases of the equipment and related disposable supplies directly to other healthcare providers. Our fleet of NPWT devices include devices manufactured by Smith and Nephew, Cork Medical LLC (“Cork”) and Genadyne Biotechnologies Inc. In 2024, we added Advanced Wound Care dressings to our wound care product portfolio. We take patient referrals for wound care disposable supplies directly and indirectly from wound care clinics and other sites of care. The products are generally shipped directly from our suppliers to the patients and we receive reimbursement from the patient's health care plan carrier. In 2025, we added Pneumatic Compression Devices ("PCD") to our portfolio of DME devices offered to patients and added Other Compression Devices (“OCD”) supplied by a second manufacturer in early 2026.

Previous wording

Net revenues for the quarter ended June 30, 2026 (“second quarter of 2026”) were $36.9 million, an increase of $0.9 million, or 2.6%, compared to $36.0 million for the quarter ended June 30, 2025 (“second quarter of 2025”). The increase included higher net revenues for the Patient Services segment partially offset by lower net revenues for the Device Solutions segment.

Current wording

Net revenues for the quarter ended September 30, 2026 (“third quarter of 2026”) were $37.6 million, an increase of $1.1 million, or 3.0%, compared to $36.5 million for the quarter ended September 30, 2025 (“third quarter of 2025”). The increase included higher net revenues for the Patient Services segment partially offset by lower net revenues for the Device Solutions segment.

Previous wording

Patient Services net revenue of $24.8 million increased $3.3 million, or 15.2%, during the second quarter of 2026 compared to the prior year period. This increase was primarily attributable to additional treatment volume and increased third-party payer collections in Oncology and Wound Care. The improved volume and collections benefited Oncology revenue by $1.2 million, or 6.4% and Wound Care by $2.1 million, or 154%. The Wound Care net revenues included sales of Pneumatic

Current wording

Patient Services net revenue of $25.8 million increased $3.4 million, or 15.4%, during the third quarter of 2026 compared to the prior year period. This increase was primarily attributable to additional treatment volume and increased third-party payer collections in Oncology and Wound Care. The improved volume and collections benefited Oncology revenue by $1.4 million, or 7.2% and Wound Care by $2.0 million, or 112%. The Wound Care net revenues included sales of Pneumatic

Previous wording

Compression Devices (PCDs) and Adjustable Compression Wraps (ACW’s) stemming from two new supplier relationships. There was no PCD or ACW revenue in the second quarter of 2025 because the new products launched during the third quarter of 2025, with the first manufacturer, and during the first quarter of 2026, with the second manufacturer.

Current wording

Compression Devices (PCD’s) and Adjustable Compression Wraps (ACW’s) stemming from two new supplier relationships. In the third quarter of 2025, PCD shipments were limited to initial shipments following the launch with the manufacturer that quarter, while ACW’s generated no revenue because the launch with that manufacturer did not occur until the first quarter of 2026.

Previous wording

Device Solutions net revenue of $12.1 million decreased $2.3 million, or 16.1%, during the second quarter of 2026 compared to the prior year period. This decrease included a $1.8 million, or 39.4%, decrease in biomedical services revenue and decreased medical equipment sales of $1.0 million, or 49.0%. These decreases were partially offset by an increase in disposable medical supplies of $0.3 million and an increase in equipment rental revenue of $0.1 million. A portion of the decrease in biomedical services revenue totaling $1.6 million reflected a reduction in the volume and service level of devices on contract with GE Healthcare which was restructured during the third quarter of 2025. The decrease in equipment sales is related to a large customer rental buyout that began in the prior year period. The buyout, which started during the prior year’s first quarter, elevated the amount of equipment sales in the prior year and reduced quarterly rental revenues during the subsequent quarters including the current three-month period. Rental revenues increased during the quarter despite the unfavorable impact from the rental buyout.

Current wording

Device Solutions net revenue of $11.8 million decreased $2.3 million, or 16.6%, during the third quarter of 2026 compared to the prior year period. This decrease included a $1.9 million, or 41.3%, decrease in biomedical services revenue, a decrease in medical equipment sales of $0.4 million, or 27.2% and a decrease in disposable medical supplies of $0.3 million, or 13.5% . These decreases were partially offset by an increase in equipment rental revenue of $0.3 million, or 6.4%. The decrease in biomedical services revenue refelcted a $2.4 million reduction in the volume and service level of devices on contract with GE Healthcare which was restructured during the third quarter of 2025. Additionally, biomedical services revenue during the third quarter of 2025 included a non-recurring $0.6 million adjustment associated with a price increase agreed to in conjunction with the contract restructuring. The price increase was effective for services already rendered but not fully invoiced based on the agreed billing structure. The decrease in equipment sales and disposable medical supplies is related to a large customer rental buyout that began in the prior year period. The buyout, which started during the prior year’s first quarter and continued in stages throughout 2025, elevated the amount of equipment sales in the prior year and reduced quarterly rental revenues during the subsequent quarters including the current three-month period. Rental revenues increased during the quarter despite the unfavorable impact from the lost rental revenue due to the rental equipment buyout.

Previous wording

Gross profit for the second quarter of 2026 of $21.4 million increased by $1.5 million, or 7.7%, compared to the second quarter of 2025. This increase was due to the increase in net revenues and by a higher gross profit percentage of net revenue (“gross margin”). Gross margin was 58.0% during the second quarter of 2026 compared to 55.2% during the prior year period, an increase of 2.8%. Gross profit was higher in both the Patient Services and Device Solutions segments. Gross margin was higher for the Device Solutions segment and was lower for the Patient Services segment.

Current wording

Gross profit for the third quarter of 2026 of $21.7 million increased by $0.9 million, or 4.4%, compared to the third quarter of 2025. This increase was due to the increase in net revenues and by a higher gross profit percentage of net revenue (“gross margin”). Gross margin was 57.8% during the third quarter of 2026 compared to 57.1% during the prior year period, an increase of 0.7%. Gross profit was higher in the Patient Services segment and was lower in the Device Solutions segment. Gross margin was higher for the Device Solutions segment and was lower for the Patient Services segment.

Previous wording

Patient Services gross profit was $15.3 million during the second quarter of 2026, representing an increase of $1.5 million, or 10.9%, compared to the prior year period. The increase reflected the higher net revenue offset partially by lower gross margin, which decreased from the prior year by 2.4% to 61.8%. The decrease in gross margin reflected an unfavorable product mix change toward lower gross margin revenue categories and higher pump maintenance expenses. These impacts were offset partially by improved coverage of fixed costs from higher net revenue. The unfavorable revenue mix impacting gross margin was mainly related to the increase in revenue related to the higher Wound Care net revenue, which has a lower average gross margin than other Patient Services revenue categories. Pump maintenance expenses include annual preventative maintenance certification and repairs and are performed by the Device Solutions segment.

Current wording

Patient Services gross profit was $15.9 million during the third quarter of 2026, representing an increase of $1.4 million, or 9.6%, compared to the prior year period. The increase reflected the higher net revenue offset partially by lower gross margin, which decreased from the prior year by 3.3% to 61.5%. The decrease in gross margin reflected an unfavorable product mix change toward lower gross margin revenue categories. These impacts were offset partially by improved coverage of fixed costs from higher net revenue and lower pump maintenance expenses. The unfavorable revenue mix impacting gross margin was mainly related to the increase in revenue related to the higher Wound Care net revenue, which has a lower average gross margin than other Patient Services revenue categories. Pump maintenance expenses include annual preventative maintenance certification and repairs and are performed by the Device Solutions segment.

Previous wording

Device Solutions gross profit during the second quarter of 2026 was $6.1 million, which was the same as the prior year despite the decrease in net revenue due to an increase in the gross margin. The Device Solutions gross margin was 50.2% during the current period, which was 8.3% higher than the same prior year period. This increase in gross margin was primarily due to the aforementioned restructuring of the biomedical services contract with GE Healthcare which resulted in reduced expenses greater than the related reduction in net revenue. Reduced contract expenses included a reduction in biomedical personnel, a reduced amount of medical device replacement parts and lower travel expenses. These impacts improved the gross margin for the device solutions segment by 4.8%. Additionally, improved product mix impacts favoring higher gross margin revenues, such as rental revenue, increased gross margin by 1.7%. The increased gross margin also included improvements totaling 2.7% attributable to ongoing initiatives focused on improved procurement costs of materials and increased biomedical productivity. These benefits in gross margin were partially offset by cost inflation impacts from increased employee wage rates and higher healthcare expenses, which on a combined basis, reduced the Device Solutions segment gross margin by 1.0%. Higher wages were the result of typical annual merit and cost of living increases, however, the increase in the cost of health care benefits were significantly higher than amounts experienced in prior years.

Current wording

Device Solutions gross profit during the third quarter of 2026 was $5.9 million, which represented a decrease of $0.5 million, or 7.6% due to the decrease in net revenue partially offset by a an increase in the gross margin. The Device Solutions gross margin was 49.7% during the current period, which was 4.8% higher than the same prior year period. This increase in gross margin was primarily due to the aforementioned restructuring of the biomedical services contract with GE Healthcare which resulted in reduced expenses greater than the related reduction in net revenue. Reduced contract expenses included a reduction in biomedical personnel, a reduced amount of medical device replacement parts and lower travel expenses. These impacts improved the gross margin for the Device Solutions segment by 5.4%. This benefit was partially offset by the aforementioned 2025 non-recurring $0.6 million price increase adjustment, reducing the gross margin by 2.3%. Additionally, unfavorable product mix weighting, which shifted more to lower gross margin revenues, decreased gross margin by 0.6%. The increased gross margin also included improvements totaling 3.4% attributable to ongoing initiatives focused on improved procurement costs of materials and increased biomedical productivity. These benefits in gross margin were partially offset by cost inflation impacts from increased employee wage rates and higher healthcare expenses, which on a combined basis, reduced the Device Solutions segment gross margin by 1.0%. Higher wages were the result of typical annual merit and cost of living increases, however, the increase in the cost of health care benefits were significantly higher than amounts experienced in prior years.

Previous wording

Selling and marketing expenses were $3.0 million for the second quarter of 2026, representing an increase of $0.3 million, or 10.5%, compared to the prior year. Selling and marketing expenses as a percentage of net revenues increased to 8.1% compared to 7.5% in the prior year period. This increase reflected an increase in sales team headcount, increased travel expenses and inflationary impacts including an increase in employee healthcare expenses. The selling and marketing expenses during these periods consisted of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, travel and entertainment and other miscellaneous expenses.

Current wording

Selling and marketing expenses were $2.7 million for the third quarter of 2026, representing an increase of $0.3 million, or 14.3%, compared to the prior year. Selling and marketing expenses as a percentage of net revenues increased to 7.2% compared to 6.5% in the prior year period. This increase reflected an increase in commissions, increased travel expenses and inflationary impacts including an increase in employee healthcare expenses. The increase in commissions expense reflected the increase in revenue and a change in revenue mix favoring commission based revenue categories. The selling and marketing expenses during these periods consisted of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, travel and entertainment and other miscellaneous expenses.

Previous wording

General and administrative (“G&A”) expenses for the second quarter of 2026 were $14.1 million, an increase of $1.0 million, or 7.2%, from the second quarter of 2025. G&A expenses during these periods consisted primarily of accounting, administrative, third-party payer billing and contract services, customer service, nurses on staff, new product services, service center personnel salaries, fringe benefits and other payroll-related items, professional fees, legal fees, stock-based compensation, insurance and other miscellaneous items. The increase over the prior year included $0.1 million in additional personnel directly related to the increased Patient Services net revenue including revenue cycle personnel, a $0.6 million increase in stock-based compensation expenses, cost inflation impacts from increased employee wage rates and higher healthcare expenses totaling $0.5 million and a $0.2 million increase in the company's bad debt accrual which was a benefit in the prior year but an expense amount during 2026. These increases were partially offset by a $0.3 million reduction in the accrual for management bonuses and a $0.3 million decrease in expenses related to information technology and business applications upgrades including the replacement of the Company’s enterprise resource planning system (“ERP”). The ERP system upgrade project expenses were lower during the current period due to a lower intensity of activities after the system go-live event on March 1, 2026. While additional costs are expected to be incurred during the ongoing post go-live phase to support system stabilization and enhancement activities, project expenses are expected to continue to taper down during future quarterly periods. Similar to impacts to gross margin and selling and marketing expenses, higher wages were the result of typical annual merit and cost of living increases, however, the increase in the cost of health care benefits were significantly higher than amounts experienced in prior years.

Current wording

General and administrative (“G&A”) expenses for the third quarter of 2026 were $14.1 million, a decrease of $0.3 million, or 2.2%, from the third quarter of 2025. G&A expenses during these periods consisted primarily of accounting, administrative, third-party payer billing and contract services, customer service, nurses on staff, new product services, service center personnel salaries, fringe benefits and other payroll-related items, professional fees, legal fees, stock-based compensation, insurance and other miscellaneous items. The decrease over the prior year included a $0.6 million reduction in the accrual for management bonuses and a $0.5 million decrease in expenses related to information technology and business applications upgrades including the replacement of the Company’s enterprise resource planning system (“ERP”). The ERP system upgrade project expenses were lower during the current period due to a lower intensity of activities after the system go-live event on March 1, 2026. While additional costs are expected to be incurred during the ongoing post go-live phase to support system stabilization and enhancement activities, project expenses have and are expected to continue to taper down during future quarterly periods. These decreases were partially offset by cost inflation impacts from increased employee wage rates and higher healthcare expenses totaling $0.5 million and a $0.3 million increase in the Company's bad debt accrual. Similar to impacts to gross margin and selling and marketing expenses, higher wages were the result of typical annual merit and cost of living increases, however, the increase in the cost of health care benefits were significantly higher than amounts experienced in prior years.

Previous wording

During the second quarter of 2026, other expense included interest expense of $0.3 million, which was $0.1 million lower than interest expense for the second quarter of 2025. Interest expense includes interest and other fees paid in relation to borrowings under the 2021 Credit Agreement partially offset by amounts received on interest rate swap derivatives. The decrease resulted from lower average outstanding debt balances during the second quarter of 2026 compared to the second quarter of 2025, partially offset by higher commitment fees on a higher unused revolving line availability.

Current wording

During the third quarter of 2026, other expense included interest expense of $0.3 million, which was $0.1 million lower than interest expense for the third quarter of 2025. Interest expense includes interest and other fees paid in relation to borrowings under the 2021 Credit Agreement partially offset by amounts received on interest rate swap derivatives. The decrease resulted from lower average outstanding debt balances during the third quarter of 2026 compared to the third quarter of 2025, partially offset by higher commitment fees on a higher unused revolving line availability.

Previous wording

During the second quarter of 2026, the Company recorded a provision for income taxes totaling $0.6 million on pre-tax income of $3.9 million, representing an effective tax rate of 17%. During the second quarter of 2025, the Company recorded a provision for income taxes of $0.8 million on a pre-tax income of $3.4 million, representing an effective tax rate of 25%. The effective tax rates for these periods differed from the U.S. statutory rate mainly due to the effects of local, state and foreign jurisdiction income taxes and certain permanent differences in expenses recognized for tax purposes, such as non-deductible meals and entertainment, management compensation and differences between expense recognized for book purposes versus tax purposes associated with equity compensation expense.

Current wording

During the third quarter of 2026, the Company recorded a provision for income taxes totaling $1.4 million on pre-tax income of $4.5 million, representing an effective tax rate of 31%. During the third quarter of 2025, the Company recorded a provision for income taxes of $1.2 million on a pre-tax income of $3.4 million, representing an effective tax rate of 34%. The effective tax rates for these periods differed from the U.S. statutory rate mainly due to the effects of local, state and foreign jurisdiction income taxes and certain permanent differences in expenses recognized for tax purposes, such as non-deductible meals and entertainment, management compensation and differences between expense recognized for book purposes versus tax purposes associated with equity compensation expense.

Previous wording

InfuSystem Holdings, Inc. Results of Operations for the Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025

Current wording

InfuSystem Holdings, Inc. Results of Operations for the Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025

Previous wording

The following represents the Company’s results of operations for the six months ended June 30, 2026 and 2025:

Current wording

The following represents the Company’s results of operations for the nine months ended September 30, 2026 and 2025:

Previous wording

Net revenues for the six-month period ended June 30, 2026 (“first half of 2026”) were $70.6 million, a decrease of $0.1 million, or 0.1%, compared to $70.7 million for the six-month period ended June 30, 2025 (“first half of 2025”). The decrease included lower net revenues for the Device Solutions segment partially offset by higher net revenues for the Patient Services segment.

Current wording

Net revenues for the nine-month period ended September 30, 2026 (“nine-month period of 2026”) were $108.2 million, an increase of $1.0 million, or 0.9%, compared to $107.2 million for the nine-month period ended September 30, 2025 (“nine-month period of 2025”). The increase included higher net revenues for the Patient Services segment partially offset by lower net revenues for the Device Solutions segment.

Previous wording

Care which were partially offset by a lower amount in Pain Management. The improved volume and collections benefited Oncology revenue by $1.7 million or 4.4%, and Wound Care treatment revenue by $3.1 million, or 144.5%. Pain Management revenue decreased by $0.2 million, or 6.0%. The Wound Care net revenues included sales of compression therapy devices stemming from two new supplier relationships. Sales for the first of these new supplier relationships, which include Pneumatic Compression Devices (PCD’s), started during the third quarter of 2025 and the second supplier relationship, which is a manufacturer of Adjustable Compression Wraps (ACW’s), began during the current period. On a combined basis, compression therapy devices represented over 76% of the growth in Wound Care.

Current wording

Patient Services net revenue of $72.7 million increased $8.0 million, or 12.4%, during the nine-month period of 2026 compared to the same prior year period. This increase was primarily attributable to additional treatment volume in Oncology and Wound Care which were partially offset by a lower amount in Pain Management. The improved volume and collections benefited Oncology revenue by $3.0 million or 5.4%, and Wound Care treatment revenue by $5.1 million, or 131.2%. Pain Management revenue decreased by $0.1 million, or 2.0%. The Wound Care net revenues included sales of compression therapy devices stemming from two new supplier relationships. Sales for the first of these new supplier relationships, which include Pneumatic Compression Devices (PCD’s), started during the third quarter of 2025 and the second supplier relationship, which is a manufacturer of Adjustable Compression Wraps (ACW’s), began during the current period. On a combined basis, compression therapy devices represented over 77% of the growth in Wound Care.

Previous wording

Device Solutions net revenue of $23.7 million decreased $4.7 million, or 16.5%, during the first half of 2026 compared to the same prior year period. This decrease included decreases in biomedical services of $3.0 million, equipment rentals of $0.3 million and equipment sales of $2.0 million. These decreases were partially offset by an increase in disposable medical supplies of $0.6 million. A portion of the decrease in biomedical services revenue totaling $3.2 million reflected a reduction in the volume and service level of devices on contract with GE Healthcare which was restructured during the third quarter of 2025. These decreases were partially offset by additional volume with other customers. The decrease in rental revenue and the decrease in equipment sales are both related to a large customer rental buyout that began in the prior period. The buyout, which started during the prior year’s first quarter, elevated the amount of equipment sales in the prior year and reduced quarterly rental revenues during the subsequent quarters including the current six-month period.

Current wording

Device Solutions net revenue of $35.5 million decreased $7.0 million, or 16.6%, during the nine-month period of 2026 compared to the same prior year period. This decrease included decreases in biomedical services of $4.9 million and equipment sales of $2.5 million. These decreases were partially offset by increases in disposable medical supplies of $0.3 million and equipment rentals of $0.1 million. A portion of the decrease in biomedical services revenue totaling $5.6 million reflected a reduction in the volume and service level of devices on contract with GE Healthcare which was restructured during the third quarter of 2025. Additionally, biomedical services revenue during 2025 included a non-recurring $0.6 million adjustment associated with a price increase agreed to in conjunction with the contract restructuring. These decreases were partially offset by additional volume with other customers. The decrease in equipment sales is related to a large customer rental buyout that began in the prior period. The buyout, which started during the prior year’s first quarter, elevated the amount of equipment sales in the prior year and reduced quarterly rental revenues during the subsequent quarters including the current nine-month period. Rental revenues increased despite this impact due to rental revenue volume increases with other customers.

Previous wording

Gross profit of $41.1 million for the first half of 2026 increased $2.1 million, or 5.3%, from $39.0 million for the first half of 2025. This increase was due to the increase in gross margin partially offset by the lower net revenues. Gross margin increased to 58.2% during the first half of 2026 compared to 55.2% during the same prior year period. Gross profit increased in the Patient Services segment and decreased in the Device Solutions segments. Gross margin increased in the Device Solutions segment and decreased in the Patient Services segment.

Current wording

Gross profit of $62.8 million for the nine-month period of 2026 increased $3.0 million, or 4.9%, from $59.9 million for the nine-month period of 2025. This increase was due to the increase in net revenues and the higher gross margin. Gross margin increased to 58.1% during the nine-month period of 2026 compared to 55.8% during the same prior year period. Gross profit increased in the Patient Services segment and decreased in the Device Solutions segments. Gross margin increased in the Device Solutions segment and decreased in the Patient Services segment.

Previous wording

Patient Services gross profit was $29.6 million during the first half of 2026, representing an increase of $2.6 million, or 9.8%, compared to the same prior year period. The improvement reflected increased net revenue offset partially by a lower gross margin, which decreased from the prior year by 0.6% to 63.2%. The decrease in gross margin reflected an unfavorable product mix change toward lower gross margin revenue categories offset partially by lower pump disposal and maintenance expenses. The unfavorable gross margin mix was mainly related to the increase in revenue related to wound care treatments, which have lower average gross margin than other Patient Services revenue categories. Pump disposal expenses include retirements of damaged pumps and reserves for missing pumps. Pump maintenance expenses include annual preventative maintenance certification and repairs and are performed by the Device Solutions segment. On a combined basis, pump disposal and maintenance expenses decreased by $0.3 million during the first half of 2026 compared to the prior year period.

Current wording

Patient Services gross profit was $45.5 million during the nine-month period of 2026, representing an increase of $4.0 million, or 9.7%, compared to the same prior year period. The improvement reflected increased net revenue offset partially by a lower gross margin, which decreased from the prior year by 1.5% to 62.6%. The decrease in gross margin reflected an unfavorable product mix change toward lower gross margin revenue categories offset partially by lower pump disposal and maintenance expenses. The unfavorable gross margin mix was mainly related to the increase in revenue related to Wound Care treatments, which have lower average gross margin than other Patient Services revenue categories. Pump disposal expenses include retirements of damaged pumps and reserves for missing pumps. Pump maintenance expenses include annual preventative maintenance certification and repairs and are performed by the Device Solutions segment. On a combined basis, pump disposal and maintenance expenses decreased by $0.5 million during the nine-month period of 2026 compared to the prior year period.

Previous wording

Device Solutions gross profit during the first half of 2026 was $11.5 million, representing a decrease of $0.6 million, or 4.9%, compared to the same prior year period. The decrease was due to the decrease in net revenue offset partially by an increase in gross margin. The Device Solutions gross margin was 48.3% during the current period, which was 5.9% higher than the same prior year period. This increase in gross margin was primarily due to the aforementioned restructuring of the biomedical services contract with GE Healthcare which resulted in reduced expenses greater than the related reduction in net revenue. Reduced contract expenses included a reduction in biomedical personnel, a reduced amount of medical device replacement parts and lower travel expenses. These impacts improved the gross margin for the Device Solutions segment by 6.0%. Additional gross margin improvements totaling 1.7% were achieved though ongoing initiatives focused on improved procurement costs of materials and increased biomedical productivity. These benefits in gross margin were partially offset by cost inflation impacts from increased employee wage rates and higher healthcare expenses, which on a combined basis, reduced the Device Solutions segment gross margin by 1.8%. Higher wages were the result of typical annual merit and cost of living increases; however, the increase in the cost of health care benefits were significantly higher than amounts experienced in prior years.

Current wording

Device Solutions gross profit during the nine-month period of 2026 was $17.3 million, representing a decrease of $1.1 million, or 5.9%, compared to the same prior year period. The decrease was due to the decrease in net revenue offset partially by an increase in gross margin. The Device Solutions gross margin was 48.8% during the current period, which was 5.6% higher than the same prior year period. This increase in gross margin was primarily due to the aforementioned restructuring of the biomedical services contract with GE Healthcare which resulted in reduced expenses greater than the related reduction in net revenue. Reduced contract expenses included a reduction in biomedical personnel, a reduced amount of medical device replacement parts and lower travel expenses. These impacts improved the gross margin for the Device Solutions segment by 5.8%. This benefit was partially offset by the aforementioned 2025 non-recurring $0.6 million price increase adjustment, reducing the gross margin by 1.7%. Additional gross margin improvements totaling 3.0% were achieved though ongoing initiatives focused on improved procurement costs of materials and increased biomedical productivity. These benefits in gross margin were partially offset by cost inflation impacts from increased employee wage rates and higher healthcare expenses, which on a combined basis, reduced the Device Solutions segment gross margin by 1.5%. Higher wages were the result of typical annual merit and cost of living increases; however, the increase in the cost of health care benefits were significantly higher than amounts experienced in prior years.

Previous wording

Selling and marketing expenses for the first half of 2026 were $6.1 million, representing an increase of $0.4 million, or 6.7%, compared to selling and marketing expenses for the first half of 2025. Selling and marketing expenses as a percentage of net revenues was 8.6% representing an increase from the prior year period amount of 8.0%. This increase reflected an increase in sales team headcount, increased travel expenses and inflationary impacts including an increase in employee healthcare expenses. Selling and marketing expenses consist of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, travel and entertainment and other miscellaneous expenses.

Current wording

Selling and marketing expenses for the nine-month period of 2026 were $8.8 million, representing an increase of $0.7 million, or 8.9%, compared to selling and marketing expenses for the nine-month period of 2025. Selling and marketing expenses as a percentage of net revenues was 8.1% representing an increase from the prior year period amount of 7.5%. This increase reflected an increase in sales team headcount, higher commissions expenses, increased travel expenses and inflationary impacts including an increase in employee healthcare expenses. Selling and marketing expenses consist of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, travel and entertainment and other miscellaneous expenses.

Previous wording

General and administrative expenses for the first half of 2026 were $28.9 million, an increase of $0.4 million, or 1.5%, from the first half of 2025. G&A expenses during these periods consisted primarily of accounting, administrative, third-party payer billing and contract services, customer service, nurses on staff, new product services, service center personnel salaries, fringe benefits and other payroll-related items, professional fees, legal fees, stock-based compensation, insurance and other miscellaneous items. Additionally, the amount for the six-month period of 2025 included a one-time accrued severance expense of $1.0 million for the Company's outgoing CEO. Additional reductions included a $0.5 million reduction in the accrual for management bonuses and $0.1 million in reduced travel expenses. These decreases were partially offset by increases in other expenses including: $0.2 million in increased expenses related to information technology and business applications upgrades including the replacement of the Company’s ERP, additional personnel directly related to the increased Patient Services net revenue including revenue cycle personnel totaling $0.4 million, a $0.7 million increase in stock-based compensation expenses, cost inflation impacts from increased employee wage rates and higher healthcare expenses totaling $0.9 million and a $0.2 million increase in the Company's bad debt accrual which was a benefit in the prior year’s second quarter but an expense amount during 2026. The ERP system upgrade project expenses were higher during the current period due to a higher intensity of activities related to the go-live phase of the project which occurred on March 1, 2026. While additional costs are expected to be incurred during the post go-live phase to support system stabilization and enhancement activities, project expenses have begun to taper down during the second quarter of 2026. Similar to impacts to gross margin and selling and marketing expenses, higher wages were the result of typical annual merit and cost of living increases; however, the increase in the cost of health care benefits were significantly higher than amounts experienced in prior years. General and administrative expenses as a percentage of net revenues for the first half of 2026 increased to 40.9% compared to 40.2% for the same prior year period.

Current wording

General and administrative expenses for the nine-month period of 2026 were $43.0 million, an increase of $0.1 million, or 0.3%, from the nine-month period of 2025. G&A expenses during these periods consisted primarily of accounting, administrative, third-party payer billing and contract services, customer service, nurses on staff, new product services, service center personnel salaries, fringe benefits and other payroll-related items, professional fees, legal fees, stock-based compensation, insurance and other miscellaneous items. Additionally, the amount for the nine-month period of 2025 included a one-time accrued severance expense of $1.0 million for the Company's outgoing CEO. Additional reductions included a $1.1 million reduction in the accrual for management bonuses and $0.4 million reduction in expenses related to information technology and business applications upgrades including the replacement of the Company’s ERP. These decreases were partially offset by increases in other expenses including: additional personnel directly related to the increased Patient Services net revenue including revenue cycle personnel totaling $0.4 million, a $0.6 million increase in stock-based compensation expenses, cost inflation impacts from increased employee wage rates and higher healthcare expenses totaling $1.3 million and a $0.4 million increase in the Company's bad debt accrual. The ERP system upgrade project expenses were lower during the current period due to a lower intensity of activities related to the go-live phase of the project which occurred on March 1, 2026. While additional costs are expected to be incurred during the post go-live phase to support system stabilization and enhancement activities, project expenses have begun to taper down during the second and third quarters of 2026. Similar to impacts to gross margin and selling and marketing expenses, higher wages were the result of typical annual merit and cost of living increases; however, the increase in the cost of health care benefits were significantly higher than amounts experienced in prior years. General and administrative expenses as a percentage of net revenues for the nine-month period of 2026 decreased to 39.8% compared to 40.0% for the same prior year period.

Previous wording

During the first half of 2026, other income and expense included interest expense of $0.5 million, which was $0.2 million lower than interest expense for the first half of 2025. This decrease was due to a decrease in average outstanding borrowings on the 2021 Credit Agreement revolving line of credit partially offset by higher commitment fees on a higher unused revolving line availability.

Current wording

During the nine-month period of 2026, other income and expense included interest expense of $0.8 million, which was $0.3 million lower than interest expense for the nine-month period of 2025. This decrease was due to a decrease in average outstanding borrowings on the 2021 Credit Agreement revolving line of credit partially offset by higher commitment fees on a higher unused revolving line availability.

Previous wording

During the first half of 2026, the Company recorded a provision for income taxes totaling $1.0 million on pre-tax income of $5.3 million representing an effective tax rate of 20%. During the first half of 2025, the Company recorded a provision for income taxes totaling $1.4 million on pre-tax income of $3.7 million, representing an effective tax rate of 37%. The pre-tax income amount for 2025 included significant non-deductible expenses including the severance expense for the outgoing CEO, which exceeded the annual deduction limitation for officer compensation. Non-deductible expenses for 2025 also included a shortfall in the amount of stock compensation expense recognizable for tax purposes versus the amount recognized for book purposes. Together, these items impacted tax expense by $0.5 million, or 12% of pre-tax income. During 2026, stock compensation expense was a surplus for tax purposes as compared to the amount recognized for book purposes. Other factors causing the effective rate during both periods to differ from the U.S. statutory amounts included the effects of local, state and foreign jurisdiction income taxes, limitations on the deductions of certain expenses including meals and entertainment expense.

Current wording

During the nine-month period of 2026, the Company recorded a provision for income taxes totaling $2.4 million on pre-tax income of $9.8 million representing an effective tax rate of 25%. During the nine-month period of 2025, the Company recorded a provision for income taxes totaling $2.5 million on pre-tax income of $7.1 million, representing an effective tax rate of 36%. The pre-tax income amount for 2025 included significant non-deductible expenses including the severance expense for the outgoing CEO, which exceeded the annual deduction limitation for officer compensation. Non-deductible expenses for 2025 also included a shortfall in the amount of stock compensation expense recognizable for tax purposes versus the amount recognized for book purposes. Together, these items impacted tax expense by $0.6 million, or 9% of pre-tax income. During 2026, stock compensation expense was a surplus for tax purposes as compared to the amount recognized for book purposes. Other factors causing the effective rate during both periods to differ from the U.S. statutory amounts included the effects of local, state and foreign jurisdiction income taxes, limitations on the deductions of certain expenses including meals and entertainment expense.

Previous wording

As of June 30, 2026, amounts outstanding under the Revolving Facility bear interest at a variable rate equal to, at the Company’s election, Adjusted Term SOFR for Term Benchmark loans or an Alternative Base Rate for ABR loans, as defined by the Second Amendment, plus a spread that will vary depending upon the Company’s leverage ratio. The spread ranges from 2.05% to 3.05% for Term Benchmark Loans and 1.05% to 2.05% for base rate loans. The weighted-average Term Benchmark loan rate at June 30, 2026 was 5.66% (Adjusted Term SOFR of 3.61% plus 2.05%). The actual ABR loan rate at June 30, 2026 was 7.80% (lender’s prime rate of 6.75% plus 1.05%). As of June 30, 2026, the Company was in compliance with all debt-related covenants under the 2021 Credit Agreement, as amended.

Current wording

As of September 30, 2026, amounts outstanding under the Revolving Facility bear interest at a variable rate equal to, at the Company’s election, Adjusted Term SOFR for Term Benchmark loans or an Alternative Base Rate for ABR loans, as defined by the Second Amendment, plus a spread that will vary depending upon the Company’s leverage ratio. The spread ranges from 2.05% to 3.05% for Term Benchmark Loans and 1.05% to 2.05% for base rate loans. The weighted-average Term Benchmark loan rate at September 30, 2026 was 5.79% (Adjusted Term SOFR of 3.74% plus 2.05%). The actual ABR loan rate at September 30, 2026 was 8.05% (lender’s prime rate of 7.00% plus 1.05%). As of September 30, 2026, the Company was in compliance with all debt-related covenants under the 2021 Credit Agreement, as amended.

Previous wording

On May 12, 2026, our Board of Directors approved a stock repurchase program (the “Share Repurchase Program”) that authorizes the Company to repurchase up to $20.0 million of the Company’s outstanding common stock starting on July 1, 2026 and running through June 30, 2028. The Share Repurchase Program superseded the previous authorization, which expired on June 30, 2026. Repurchases under the Share Repurchase Program are subject to market conditions, the periodic capital needs of the Company’s operating activities, and the continued satisfaction of all covenants under the 2021 Credit Agreement, as amended. Repurchases under the Share Repurchase Program may take place in the open market or in privately negotiated transactions and may be made under a Rule 10b5-1 plan. The Share Repurchase Program does not obligate the Company to repurchase shares and may be suspended, terminated, or modified at any time at the discretion of the Board. As of June 30, 2026, the Company had not repurchased or retired any shares of the Company’s outstanding stock under the recently approved Share Repurchase Program. The Company had repurchased and retired approximately $15.3 million, or 1,998,735 shares of the Company's outstanding common stock under the previous authorization.

Current wording

On May 12, 2026, our Board of Directors approved a stock repurchase program (the “Share Repurchase Program”) that authorizes the Company to repurchase up to $20.0 million of the Company’s outstanding common stock starting on July 1, 2026 and running through June 30, 2028. The Share Repurchase Program superseded the previous authorization, which expired on June 30, 2026. Repurchases under the Share Repurchase Program are subject to market conditions, the periodic capital needs of the Company’s operating activities, and the continued satisfaction of all covenants under the 2021 Credit Agreement, as amended. Repurchases under the Share Repurchase Program may take place in the open market or in privately negotiated transactions and may be made under a Rule 10b5-1 plan. The Share Repurchase Program does not obligate the Company to repurchase shares and may be suspended, terminated, or modified at any time at the discretion of the Board. As of September 30, 2026, the Company had repurchased and retired approximately $0.6 million, or 50,439 shares of the Company’s outstanding stock under the recently approved Share Repurchase Program. The Company had repurchased and retired approximately $15.3 million, or 1,973,194 shares of the Company's outstanding common stock under the previous authorization.

Previous wording

Operating Cash Flow. Operating cash flows provided $7.7 million in cash during the first half of 2026 and $8.8 million of cash during the first half of 2025. This $1.0 million reduction was attributable to an increase in cash used to fund working capital items offset partially by an increase in net income adjusted for non-cash items. During the first half of 2026 net income adjusted for non-cash items was $14.9 million, an increase of $4.0 million compared to net income adjusted for non-cash items of $10.9 million during the first half of 2025. Also during the first half of 2026 cash used to fund working capital items was $7.1 million, an increase of $5.0 million compared to $2.1 million during first half of 2025. The increase in net income adjusted for non-cash items, was primarily attributable to higher gross profit partially offset by higher selling, general and administrative expenses in 2026, as described above. The use of cash for working capital items during the first half of 2026 included a $5.7 million increase in accounts receivable and a $2.6 million decrease in accounts payable and other liabilities, net of capital items. These cash flow uses were partially offset by a $0.6 million decrease in inventories and a $0.6 million decrease in other assets. The cash used for working capital items during the first half of 2025 included a $2.1 million increase in accounts receivable and a $2.0 million decrease in accounts payable and other liabilities, net of capital items. These uses of cash were partially offset by a $1.1 million decrease in other assets and a $0.9 million decrease in inventories.

Current wording

Operating Cash Flow. Operating cash flows provided $18.1 million in cash during the nine-month period of 2026 and $17.3 million of cash during the nine-month period of 2025. This $0.8 million increase was attributable to an increase in net income adjusted for non-cash items offset partially by an increase in cash used to fund working capital items. During the nine-month period of 2026 net income adjusted for non-cash items was $24.3 million, an increase of $5.9 million compared to net income adjusted for non-cash items of $18.4 million during the nine-month period of 2025. Also during the nine-month period of 2026 cash used to fund working capital items was $6.2 million, an increase of $5.1 million compared to $1.1 million during nine-month period of 2025. The increase in net income adjusted for non-cash items, was primarily attributable to higher gross profit partially offset by higher selling, general and administrative expenses in 2026, as described above.

Previous wording

The increase in accounts receivable during 2026 was attributable to a change in mix of revenue favoring Patient Services which has a longer average revenue collection time as compared with Device Solutions. The increase in accounts receivable during 2025 was mainly due to the sequential increase in quarterly revenue during the first half of 2025 as compared to the first half of ended December 31, 2024. Accounts payable and other liabilities net of capital items decreased by $2.6 million during the first half of 2026 and decreased $2.0 million during the first half of 2025, representing a $0.6 million unfavorable cash flow swing, mainly due to a lower management bonus accrual for 2026. Additional differences are related to variations in timing of payments to suppliers and other timing differences. The decrease in inventories during 2026 reflected higher sales for wound care products that are drop shipped to patients and not carried in inventory. The decrease in inventories during 2025 reflected better management of inventory levels held to support recurring revenues and reflected the fact that much of the increase in net revenues during 2025 was in business lines that do not require inventory stock, such as equipment rentals, or where products are drop-shipped directly to the customer such as wound care.

Current wording

The increase in accounts receivable during 2026 was partially attributable to a change in mix of revenue favoring Patient Services which has a longer average revenue collection time as compared with Device Solutions and due to a temporary ERP related order-to-cash process disruption. The increase in accounts receivable during 2025 was mainly due to the sequential increase in quarterly revenue during the nine-month period of 2025 as compared to the nine-month period of ended December 31, 2024.

Previous wording

Investing Cash Flow. Net cash used in investing activities was $5.8 million for the first half of 2026 compared to $4.3 million for the first half of 2025, an increase of $1.4 million. The increase was partially due to an increase totaling $2.2 million in cash used to purchase medical equipment during the first half of 2026 compared to the first half of 2025. Purchases of medical equipment were higher during 2026 compared to 2025 mainly due to normal variations in the timing of purchase of medical equipment used to replace devices taken out of service or to support new customer growth. The increase in cash used for investing activities was also due to a $0.7 million decrease in proceeds from sale of medical equipment, property and equipment. The decrease in proceeds from sale of medical equipment, property and equipment reflects the lower amount of sales of medical equipment and a lower allocation of equipment sales taken from the Company’s existing fleet versus purchased for sale in 2026 as compared to 2025.

Current wording

Investing Cash Flow. Net cash used in investing activities was $7.8 million for the nine-month period of 2026 compared to $4.6 million for the nine-month period of 2025, an increase of $3.2 million. The increase was partially due to an increase totaling $3.4 million in cash used to purchase medical equipment during the nine-month period of 2026 compared to the nine-month period of 2025. Purchases of medical equipment were higher during 2026 compared to 2025 mainly due to normal variations in the timing of purchase of medical equipment used to replace devices taken out of service or to support new customer growth. The increase in cash used for investing activities was also due to a $1.3 million decrease in proceeds from sale of medical equipment, property and equipment. The decrease in proceeds from sale of medical equipment, property and equipment reflects the lower amount of sales of medical equipment and a lower allocation of equipment sales taken from the Company’s existing fleet versus purchased for sale in 2026 as compared to 2025. Also in 2025, the investing cash flows included a use of cash to acquire a business for $1.4 million. No acquisitions took place in 2026.

Previous wording

Financing Cash Flow. Cash flow used in financing activities during the first half of 2026 totaled $4.2 million, included $4.4 million in cash used to repurchase the Company's common stock and cash used to satisfy statutory withholding on employee stock-based compensation plans totaling $0.8 million. These amounts were partially offset by net borrowings on the revolving line of credit under the 2021 Credit Agreement totaling $0.8 million and proceeds from employee stock option exercises and employee stock purchase plan proceeds totaling $0.2 million. Cash used in financing activities during the first half of 2025 was $4.3 million and primarily related to $6.4 million in cash used to repurchase the Company's common stock and cash used to satisfy statutory withholding on employee stock-based compensation plans totaling $0.5 million. These uses were partially offset by net revolving line of credit borrowings under the 2021 Credit Agreement totaling $2.5 million.

Current wording

Financing Cash Flow. Cash flow used in financing activities during the nine-month period of 2026 totaled $4.4 million, included $5.0 million in cash used to repurchase the Company's common stock and cash used to satisfy statutory withholding on employee stock-based compensation plans totaling $0.8 million. These amounts were partially offset by proceeds from employee stock option exercises and employee stock purchase plan proceeds totaling $1.3 million. Cash used in financing activities during the nine-month period of 2025 was $12.3 million and primarily related to $8.5 million in cash used to repurchase the Company's common stock, cash used to satisfy statutory withholding on employee stock-based compensation plans totaling $1.0 million and net revolving line of credit repayments under the 2021 Credit Agreement totaling $2.8 million.