0001558370-18-006459 | 10-Q | XBRL Viewer | Tactile Systems Technology INC

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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2018	Aug. 03, 2018
Document and Entity Information
Entity Registrant Name	TACTILE SYSTEMS TECHNOLOGY INC
Entity Central Index Key	0001027838
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2018
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		18,331,393

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 17,320	$ 23,968
Marketable securities	23,802	19,944
Accounts receivable, net	17,529	17,623
Inventories	16,437	11,040
Income taxes receivable	5,205	2,119
Prepaid expenses and other current assets	947	2,178
Total current assets	81,240	76,872
Property and equipment, net	4,012	3,776
Other assets
Intangible assets, net	2,984	2,218
Medicare accounts receivable, long-term	1,648	2,718
Deferred income taxes	2,648	2,662
Other non-current assets	201	201
Total other assets	7,481	7,799
Total assets	92,733	88,447
Current liabilities
Accounts payable	4,649	4,253
Accrued payroll and related taxes	5,520	6,706
Accrued expenses	2,033	2,598
Future product royalties	9	17
Other current liabilities	316	945
Total current liabilities	12,527	14,519
Long-term liabilities
Accrued warranty reserve, long-term	1,437	1,141
Total liabilities	13,964	15,660
Commitments and Contingencies (see Note 8)
Stockholders’ equity
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued and outstanding as of June 30, 2018 and December 31, 2017
Common stock, $0.001 par value, 300,000,000 shares authorized; 18,313,061 shares issued and 18,286,975 shares outstanding as of June 30, 2018; 17,872,465 shares issued and 17,846,379 shares outstanding as of December 31, 2017	18	18
Additional paid-in capital	73,678	70,224
Retained earnings	5,604	3,082
Accumulated other comprehensive loss	(38)	(44)
Less: treasury stock, at cost — 26,086 shares as of June 30, 2018 and December 31, 2017	(493)	(493)
Total stockholders’ equity	78,769	72,787
Total liabilities and stockholders’ equity	$ 92,733	$ 88,447

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	50,000,000	50,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common shares authorized	300,000,000	300,000,000
Common Stock, Shares, Issued	18,313,061	17,872,465
Common Stock, Shares, Outstanding	18,286,975	17,846,379
Treasury stock (in shares)	26,086	26,086

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Condensed Consolidated Statements of Operations
Revenues, net	$ 34,133	$ 26,264	$ 60,981	$ 46,114
Cost of goods sold	9,610	7,034	16,919	12,658
Gross profit	24,523	19,230	44,062	33,456
Operating expenses
Sales and marketing	14,452	10,645	27,009	20,811
Research and development	1,289	1,465	2,726	2,583
Reimbursement, general and administrative	7,471	6,390	14,843	12,264
Total operating expenses	23,212	18,500	44,578	35,658
Income (loss) from operations	1,311	730	(516)	(2,202)
Other income	132	64	223	119
Income (loss) before income taxes	1,443	794	(293)	(2,083)
Income tax benefit	(1,129)	(2,993)	(2,815)	(4,366)
Net income	$ 2,572	$ 3,787	$ 2,522	$ 2,283
Net income per common share
Basic (in dollars per share)	$ 0.14	$ 0.22	$ 0.14	$ 0.13
Diluted (in dollars per share)	$ 0.13	$ 0.20	$ 0.13	$ 0.12
Weighted-average common shares used to compute net income per common share
Basic (in shares)	18,155,543	17,176,386	18,076,546	17,028,237
Diluted (in shares)	19,313,156	18,814,565	19,204,100	18,713,421

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Condensed Consolidated Statements of Comprehensive Income
Net income	$ 2,572	$ 3,787	$ 2,522	$ 2,283
Other comprehensive income (loss)
Unrealized gain (loss) on marketable securities	26	(8)	19	(21)
Income tax related to items of other comprehensive income (loss)	(14)	6	(13)	12
Total other comprehensive income (loss)	12	(2)	6	(9)
Comprehensive income	$ 2,584	$ 3,785	$ 2,528	$ 2,274

Condensed Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands	Common Stock	Additional Paid In Capital.	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Loss	Treasury Stock	Total
Balances at the beginning at Dec. 31, 2016	$ 17	$ 62,406	$ (2,773)	$ (11)		$ 59,639
Balances at the beginning (in shares) at Dec. 31, 2016	16,833,737
Increase (Decrease) in Stockholders' Equity
Stock-based compensation		2,137				2,137
Exercise of common stock options and warrants and vesting of restricted stock units	$ 1	578				579
Exercise of common stock options and warrants and vesting of restricted stock units (in shares)	473,740
Taxes paid for net share settlement of restricted stock units		(153)				(153)
Common shares issued for employee stock purchase plan		2,210				2,210
Common shares issued for employee stock purchase plan (in shares)	259,981
Shares repurchased to cover taxes from restricted stock award vesting					$ (493)	(493)
Shares repurchased to cover taxes from restricted stock award vesting (in shares)	(26,087)
Comprehensive income for the period			2,283	(9)		2,274
Balances at the end at Jun. 30, 2017	$ 18	67,178	(490)	(20)	(493)	66,193
Balances at the end (in shares) at Jun. 30, 2017	17,541,371
Balances at the beginning at Dec. 31, 2017	$ 18	70,224	3,082	(44)	(493)	72,787
Balances at the beginning (in shares) at Dec. 31, 2017	17,846,379
Increase (Decrease) in Stockholders' Equity
Stock-based compensation		3,258				3,258
Exercise of common stock options and warrants and vesting of restricted stock units		571				571
Exercise of common stock options and warrants and vesting of restricted stock units (in shares)	377,018
Taxes paid for net share settlement of restricted stock units		(1,791)				(1,791)
Common shares issued for employee stock purchase plan		1,416				1,416
Common shares issued for employee stock purchase plan (in shares)	63,578
Comprehensive income for the period			2,522	6		2,528
Balances at the end at Jun. 30, 2018	$ 18	$ 73,678	$ 5,604	$ (38)	$ (493)	$ 78,769
Balances at the end (in shares) at Jun. 30, 2018	18,286,975

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities
Net income	$ 2,522	$ 2,283
Adjustments to reconcile net income to net cash used in operating activities
Depreciation and amortization	1,687	664
Stock-based compensation expense	3,258	2,137
Change in allowance for doubtful accounts	250	(296)
Loss on disposal of equipment	3
Changes in assets and liabilities:
Accounts receivable	(156)	2,389
Inventories	(5,397)	(3,077)
Income taxes receivable	(3,086)	(5,263)
Prepaid expenses and other assets	231	354
Medicare accounts receivable – long-term	1,070	(138)
Accounts payable	309	851
Accrued payroll and related taxes	(1,186)	(3,574)
Accrued expenses and other liabilities	(896)	688
Future product royalties	(8)	(33)
Net cash used in operating activities	(1,399)	(3,015)
Cash flows from investing activities
Proceeds from sales and maturities of marketable securities	9,000	1,000
Purchases of marketable securities	(11,844)	(11,049)
Purchases of property and equipment	(1,700)	(1,516)
Intangible asset costs	(901)	(23)
Other investments		(145)
Net cash used in investing activities	(5,445)	(11,733)
Cash flows from financing activities
Taxes paid for net share settlement of restricted stock units	(1,791)	(153)
Proceeds from exercise of common stock options and warrants	571	579
Proceeds from the issuance of common stock from the employee stock purchase plan	1,416	2,210
Shares repurchased to cover taxes from restricted stock award vesting		(493)
Net cash provided by financing activities	196	2,143
Net change in cash and cash equivalents	(6,648)	(12,605)
Cash and cash equivalents – beginning of period	23,968	30,701
Cash and cash equivalents – end of period	17,320	18,096
Supplemental cash flow disclosure
Cash paid for taxes	436	898
Capital expenditures incurred but not yet paid	$ 87	$ 294

Nature of Business and Operations	6 Months Ended
Nature of Business and Operations	Jun. 30, 2018
Nature of Business and Operations
Nature of Business and Operations	Note 1. Nature of Business and Operations Tactile Systems Technology, Inc. (“we,” “us,” and “our”) is the sole manufacturer and distributor of the Flexitouch and Entre systems, medical devices that help control symptoms of lymphedema, a chronic and progressive medical condition, and the Actitouch system, a medical device used to treat venous leg ulcers and chronic venous insufficiency. We provide our products for use in the home and sell them through vascular, wound and lymphedema clinics throughout the United States. We do business as “Tactile Medical.” We were originally incorporated in Minnesota under the name Tactile Systems Technology, Inc. on January 30, 1995. During 2006, we established a merger corporation and subsequently, on July 21, 2006, merged with and into this merger corporation, resulting in us being reincorporated as a Delaware corporation. The resulting corporation assumed the name Tactile Systems Technology, Inc. In September 2013, we began doing business as “Tactile Medical.” In connection with preparing for our initial public offering, our board of directors and stockholders approved a 1-for-2.820044 reverse stock split of our capital stock. The reverse stock split became effective in June 2016. On August 2, 2016 we closed the initial public offering of our common stock, which resulted in the sale of 4,120,000 shares of our common stock at a public offering price of $10.00 per share. We received net proceeds from the initial public offering of approximately $35.4 million, after deducting underwriting discounts and approximately $2.9 million of transaction expenses. In connection with the closing of the initial public offering, all of our outstanding redeemable convertible preferred stock automatically converted to common stock on August 2, 2016. At August 2, 2016, we did not have any redeemable convertible preferred stock issued or outstanding. 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 sales in the third and fourth quarters as a result of patients having paid their annual insurance deductibles in full, thereby reducing their out-of-pocket costs for our products, and because patients often spend the remaining balances in their healthcare flexible spending accounts at that time. This seasonality applies only to purchases 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 or do not have plans that include patient deductibles for purchases of our products.

Basis of Presentation	6 Months Ended
Basis of Presentation	Jun. 30, 2018
Basis of Presentation
Basis of Presentation	Note 2. Basis of Presentation Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. We have reclassified certain prior year amounts to conform to the current year’s presentation. The results for the six months ended June 30, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018, or for any other interim period or for any future year. The condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017. Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Tactile Systems Technology, Inc. and its wholly owned subsidiary, Swelling Solutions, Inc. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Comprehensive Income Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Our comprehensive income represents net income adjusted for unrealized gains and losses on available-for-sale marketable securities. JOBS Act Accounting Election As an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), we currently are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We elected to take advantage of the extended transition period for adopting new or revised accounting standards that have different effective dates for public and private companies until such time as those standards apply to private companies. However, as of the last business day of our second fiscal quarter of 2018, the market value of our common stock that was held by non-affiliates exceeded $700 million, and as a result, we will no longer qualify as an emerging growth company as of December 31, 2018. Therefore, after that date, we will no longer be able to take advantage of the extended transition period for adopting new or revised accounting standards.

Summary of Significant Accounting Policies	6 Months Ended
Summary of Significant Accounting Policies	Jun. 30, 2018
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	Note 3. Summary of Significant Accounting Policies Significant Accounting Policies During the six months ended June 30, 2018 there were no material changes in our significant accounting policies. See Note 3 - “Summary of Significant Accounting Policies” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 for information regarding our significant accounting policies. Recent Accounting Pronouncements We currently are an “emerging growth company” as defined by the JOBS Act. The JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, (the “Securities Act”), for complying with new or revised accounting standards. In other words, an emerging growth company can selectively delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We elected to avail ourselves of this exemption and, as a result, our financial statements may not be comparable to the financial statements of issuers that are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies. Section 107 of the JOBS Act provides that we can elect to opt out of the extended transition period at any time, which election is irrevocable. However, as of the last business day of our second fiscal quarter of 2018, the market value of our common stock that was held by non-affiliates exceeded $700 million, and as a result, we will no longer qualify as an emerging growth company as of December 31, 2018 and will no longer be able to take advantage of the extended transition period. Therefore, as of December 31, 2018, we will be required to adopt new or revised accounting standards when they are applicable to public companies that are not emerging growth companies. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers.” The new section replaces Section 605, “Revenue Recognition,” and creates modifications to various other revenue accounting standards for specialized transactions and industries. The section is intended to conform revenue accounting principles with concurrently issued International Financial Reporting Standards to reconcile previously differing treatment between U.S. practices and those of the rest of the world and to enhance disclosures related to disaggregated revenue information. The updated guidance will be effective for us for our interim and annual reporting periods ending on or after December 31, 2018 due to the recent determination of our upcoming change in filing status. As a result, we have commenced project planning for our implementation, which has included engaging an accounting firm to assist us. We have not yet made a determination on our transition method, nor have we determined whether this standard will have a material impact on our financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), which supersedes the existing guidance for lease accounting, “Leases” (Topic 840). ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting remains largely unchanged. The amendments in this ASU will be effective for us for interim and annual periods beginning after December 15, 2018. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial adoption, with an option to elect to use certain transition relief. Due to the recent determination of our upcoming change in filing status, which has accelerated our required implementation date of this standard, we have commenced project planning for our implementation. We are currently evaluating whether this standard will have a material impact on our financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses,” to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The ASU will be effective for us for interim and annual periods beginning after December 15, 2019. Therefore, we plan to further evaluate the anticipated impact of the adoption of this ASU on our consolidated financial statements in future periods. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) — Classification of Certain Cash Receipts and Cash Payments,” to provide clarity on how certain cash receipt and cash payment transactions are presented and classified within the statement of cash flows. The ASU will be effective for us for interim and annual periods beginning after December 15, 2018. We do not anticipate any material impact on our consolidated financial statements in future periods as a result of the adoption of this ASU. In January 2017, the FASB issued ASU No. 2017-01 “Business Combinations (Topic 805) — Clarifying the Definition of a Business,” to revise the definition of a business and provide new guidance to assist in the evaluation of transactions as either asset acquisitions (disposals) or business acquisitions (disposals). We currently are an “emerging growth company” as defined by the JOBS Act and this ASU will become effective for us on December 31, 2018 when we no longer qualify for that status. We have elected early adoption for interim transactions that have not previously been included in issued financial statements, which is permitted under this standard. The adoption of this standard did not have a material impact on our consolidated financial statements.

Asset Acquisitions

6 Months Ended

Jun. 30, 2018

Asset Acquisitions

Asset Acquisitions

Note 4. Asset Acquisition

On May 22, 2018, we acquired certain assets and the intellectual property of Wright Therapy Products, Inc. (“WTP”) for total consideration of approximately $875,000 plus a potential earn-out. The earn-out is based on certain revenue metrics over the seven-month period beginning June 30, 2018 and is capitalized to intangible assets. The assets include the rights to a portfolio of thirty-one issued and pending patents that include intellectual property related to WTP’s pneumatic compression therapy devices and five related trademarks, as well as certain customer accounts. Due to the nature of these patents and related trademarks, as well as our planned use, they have been classified as defensive intangible assets on the balance sheet. The acquisition was recorded as an asset acquisition, and an allocation of the purchase price, based on relative fair value, has been completed as reflected below:


	Gross		Weighted-Average
(Dollars in thousands)	Carrying Amount		Amortization Period
Defensive intangible assets	$	787.8	7 years
Customer accounts		87.5	5 years
Total	$	875.3

Marketable Securities

6 Months Ended

Jun. 30, 2018

Marketable Securities

Marketable Securities

Note 5. Marketable Securities

Our investments in marketable securities, all of which have original contractual maturities of twelve to twenty-five months, are classified as available-for-sale and consist of the following:


	As of June 30, 2018
			Unrealized				Fair
(In thousands)	Cost		Gains		Losses		Value
U.S. government and agency obligations	$	17,863	$	—	$	41	$	17,822
Corporate debt securities and certificates of deposit		5,990		—		10		5,980
Marketable securities	$	23,853	$	—	$	51	$	23,802


	As of December 31, 2017
			Unrealized				Fair
(In thousands)	Cost		Gains		Losses		Value
U.S. government and agency obligations	$	11,997	$	—	$	56	$	11,941
Corporate debt securities and certificates of deposit		8,017		—		14		8,003
Marketable securities	$	20,014	$	—	$	70	$	19,944

Unrealized losses and fair value of marketable securities aggregated by investment category and the length of time the securities were in a continuous loss position were as follows:


	As of June 30, 2018
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses
U.S. government and agency obligations	$	9,879	$	26	$	4,985	$	15	$	14,864	$	41
Corporate debt securities and certificates of deposit		4,981		9		999		1		5,980		10
Marketable securities	$	14,860	$	35	$	5,984	$	16	$	20,844	$	51


	As of December 31, 2017
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses
U.S. government and agency obligations	$	5,974	$	25	$	5,967	$	31	$	11,941	$	56
Corporate debt securities and certificates of deposit		7,005		13		998		1		8,003		14
Marketable securities	$	12,979	$	38	$	6,965	$	32	$	19,944	$	70

Intangible Assets

6 Months Ended

Jun. 30, 2018

Intangible Assets

Intangible Assets

Note 6. Intangible Assets

Our patents and other intangible assets, all of which are subject to amortization, are summarized as follows:


		As of June 30, 2018						As of December 31, 2017
	Weighted-Average	Gross						Gross
	Amortization	Carrying		Accumulated		Net		Carrying		Accumulated		Net
(Dollars in thousands)	Period	Amount		Amortization		Amount		Amount		Amortization		Amount
Patents	8 years	$	3,540	$	1,442	$	2,098	$	3,536	$	1,318	$	2,218
Defensive intangible assets	7 years		807		10		797		—		—		—
Customer accounts	5 years		90		1		89		—		—		—
Total		$	4,437	$	1,453	$	2,984	$	3,536	$	1,318	$	2,218

Amortization expense was $0.1 million for each of the three and six months ended June 30, 2018 and 2017. Future amortization expenses are expected as follows:


(In thousands)
2018 (July 1 - December 31)	$	189
2019		379
2020		379
2021		379
2022		379
Thereafter		1,279
Total	$	2,984

Accrued Expenses

6 Months Ended

Jun. 30, 2018

Accrued Expenses

Accrued Expenses

Note 7. Accrued Expenses

Accrued expenses consisted of the following:


(In thousands)	As of June 30, 2018		As of December 31, 2017
Accrued taxes	$	77	$	1,070
Warranty		665		531
Travel and business		516		453
Legal and consulting		483		317
Deferred rent		166		173
Clinical studies		55		15
Other		71		39
Total	$	2,033	$	2,598

Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies

Commitments and Contingencies

Note 8. Commitments and Contingencies

Lease Obligations

In March 2008, we entered into a non-cancelable operating lease agreement for building space for our corporate headquarters that provides for monthly rent, real estate taxes and operating expenses. This lease was subsequently extended to July 31, 2021.

In July 2016, we entered into a non-cancelable operating lease agreement for building space to accommodate the relocation of our manufacturing, quality, engineering and research and development functions. This lease agreement extends through November 2021 and provides for monthly rent, real estate taxes and operating expenses.

Rent expense was $0.4 million and $0.3 million for the three months ended June 30, 2018 and 2017, respectively, and $0.7 million and $0.5 million for the six months ended June 30, 2018 and 2017, respectively.

In July 2016, we entered into a fleet vehicle lease program for certain members of our field sales organization. At June 30, 2018, we had 17 vehicles with future lease obligations under this program.

We also have operating lease agreements for certain computer and office equipment that expire in 2021. The leases provide an option to purchase the related equipment at fair market value at the end of the lease.

Future base minimum lease payments for all lease obligations are expected to be as follows for the years ending December 31:


			Computer/Office		Fleet Vehicle
(In thousands)	Buildings		Equipment		Program		Total
2018 (July 1 - December 31)	$	405	$	28	$	82	$	515
2019		866		51		38		955
2020		870		34		—		904
2021		592		3		—		595
2022		—						—
Thereafter		—		—		—		—
Total	$	2,733	$	116	$	120	$	2,969

Major Vendors

We had purchases from two major vendors that accounted for 44% and 39% of our total purchases for the three and six months ended June 30, 2018, respectively. We had purchases from three major vendors that accounted for 36% of our total purchases for each of the three and six months ended June 30, 2017.

Purchase Commitments

We issued purchase orders in 2017 totaling $5.9 million for items that we expect to receive between August and December of 2018.

Employment Agreements

We have entered into employment agreements with certain of our officers. The agreements provide for payment of severance ranging from 9 to 15 months of then-current annualized base salary in the event of termination by us without cause or by the employee for good reason or, in the case of two of the officers, death, disability, or as a result of a qualifying termination after a change in control. The agreements also provide for payment of an amount equal to 9 to 15 months of the then-current annual target bonus in the event of termination by us without cause or by the employee for good reason, or, in the case of two of the officers, death, disability, or as a result of a qualifying termination after a change in control. In addition, the agreements provide for the vesting of certain equity compensation through the date of termination in the event of termination by us without cause or by the employee for good reason.

Retirement Plan

We maintain a 401(k) retirement plan for our employees in which eligible employees can contribute a percentage of their pre-tax compensation. We may also make discretionary contributions to the 401(k) plan. We made contributions of $58,000 and $48,000 for the three months ended June 30, 2018 and 2017, respectively, and $111,000 and $93,000 for the six months ended June 30, 2018 and 2017, respectively.

Stockholders' Equity

6 Months Ended

Jun. 30, 2018

Stockholders' Equity

Stockholders' Equity

Note 9. Stockholders' Equity

We completed an initial public offering of our common stock on August 2, 2016, in which we sold 4,120,000 shares of our common stock at a public offering price of $10.00 per share. Immediately prior to the completion of the initial public offering, all then-outstanding shares of our Series A and Series B preferred stock were converted into 5,924,453 shares of our common stock. Our Series A preferred stock converted to common stock at a ratio of 1-for-1.03 and our Series B preferred stock converted to common stock at a ratio of 1-for-1. In addition, immediately prior to the completion of the initial public offering, we issued 2,354,323 additional shares of our common stock that our Series A and Series B preferred stockholders were entitled to receive in connection with the conversion of the preferred stock, and we issued 956,842 shares of our common stock to pay accrued dividends on our Series B preferred stock. We also paid $8.2 million in cumulative accrued dividends to our Series A convertible preferred stockholders in connection with the initial public offering, including $0.1 million of dividends paid to the holders of the common restricted shares.

Stock-Based Compensation

Our 2016 Equity Incentive Plan (the “2016 Plan”) authorizes us to grant stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards to employees, non-employee directors and certain consultants and advisors. There were up to 4,800,000 shares of our common stock initially reserved for issuance pursuant to the 2016 Plan. The 2016 Plan provides that the number of shares reserved and available for issuance under the 2016 Plan will automatically increase annually on January 1 of each calendar year, commencing in 2017 and ending on and including January 1, 2026, by an amount equal to the lesser of: (a) 5% of the number of common shares of stock outstanding as of December 31 of the immediately preceding calendar year, or (b) 2,500,000 shares; provided, however, that our Board of Directors may determine that any annual increase be a lesser number. In addition, all awards granted under our 2007 Omnibus Stock Plan and our 2003 Stock Option Plan that were outstanding when the 2016 Plan became effective and that are forfeited, expire, are cancelled, are settled for cash or otherwise not issued, will become available for issuance under the 2016 Plan. Effective January 1, 2017, 841,686 shares were added to the 2016 Plan, as available for issuance thereunder, pursuant to the automatic increase feature of the 2016 Plan. Effective January 1, 2018, 892,318 shares were added to the 2016 Plan, as available for issuance thereunder, pursuant to the automatic increase feature of the 2016 Plan. As of June 30, 2018, 5,230,344 shares were available for future grant pursuant to the 2016 Plan.

Upon adoption and approval of the 2016 Plan, all of our previous equity incentive compensation plans were terminated. However, existing awards under those plans continue to vest in accordance with the original vesting schedules and will expire at the end of their original terms.

We recorded stock-based compensation expense of $1.8 million and $1.2 million for the three months ended June 30, 2018 and 2017, respectively, and $3.3 million and $2.1 million for the six months ended June 30, 2018 and 2017, respectively. This expense was allocated as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2018		2017		2018		2017
Cost of goods sold	$	69	$	49	$	109	$	98
Sales and marketing expenses		786		354		1,438		669
Research and development expenses		25		21		94		44
Reimbursement, general and administrative expenses		897		756		1,617		1,326
Total stock-based compensation expense	$	1,777	$	1,180	$	3,258	$	2,137

Stock Options

Stock options issued to participants other than non-employees vest over three or four years and typically have a contractual term of seven or ten years. Annually, stock options are granted to our non-employee directors on the date of the annual meeting of stockholders and vest in full on the earlier of one year after the date of grant or on the date of the next year’s annual meeting of stockholders. These options have a contractual term of seven years.

Stock-based compensation expense included in our Condensed Consolidated Statements of Operations for stock options was $0.5 million and $0.3 million for the three months ended June 30, 2018 and 2017, respectively, and $1.0 million and $0.5 million for the six months ended June 30, 2018 and 2017, respectively.

At June 30, 2018, there was approximately $4.9 million of total unrecognized pre-tax stock option expense under our equity compensation plans, which is expected to be recognized on a straight-line basis over a weighted-average period of 2.8 years.

Stock option activity for the six months ended June 30, 2018 is summarized as follows:


		Weighted-		Weighted-
		Average		Average	Aggregate
	Options	Exercise Price		Remaining	Intrinsic
(In thousands except share, per share and years data)	Outstanding	Per Share (1)		Contractual Life	Value (2)
Balance at December 31, 2017	1,487,720	$	8.41	6.2 years	$	29,611
Granted	110,521	$	35.01
Exercised	(265,139)	$	2.16		$	9,842
Forfeited	(20,851)	$	20.91
Balance at June 30, 2018	1,312,251	$	11.72	6.3 years	$	52,860

Options exercisable at June 30, 2018	806,689	$	3.67	4.9 years	$	38,989

(1)

The exercise price of each option granted during the period shown was equal to the market price of the underlying stock on the date of grant.

(2)

The aggregate intrinsic value of options exercised represents the difference between the exercise price of the option and the closing stock price of our common stock on the date of exercise. The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period.

Options exercisable of 1,152,453 as of June 30, 2017 had a weighted-average exercise price of $1.92 per share.

Stock-Settled Restricted Stock Units

We have granted both time-based and performance-based stock-settled restricted stock units to certain participants under the 2016 Plan.

Time-based stock-settled restricted stock units granted under the 2016 Plan vest over one to three years. These awards are stock-settled with common shares. Stock-based compensation expense included in our Condensed Consolidated Statements of Operations for time-based stock-settled restricted stock units was $0.9 million and $0.7 million for the three months ended June 30, 2018 and 2017, respectively, and $1.7 million and $1.2 million for the six months ended June 30, 2018 and 2017, respectively. As of June 30, 2018, there was approximately $6.0 million of total unrecognized pre-tax compensation expense related to outstanding time-based stock-settled restricted stock units that is expected to be recognized over a weighted-average period of 2.0 years. Our time-based stock-settled restricted stock unit activity for the six months ended June 30, 2018 was as follows:


		Weighted-
		Average Grant		Aggregate
	Units	Date Fair Value		Intrinsic
(In thousands except unit and per unit data)	Outstanding	Per Unit		Value (1)
Balance at December 31, 2017	441,507	$	16.38	$	12,795
Granted	86,416	$	33.70
Vested	(166,746)	$	21.96
Cancelled	(16,901)	$	20.02
Balance at June 30, 2018	344,276	$	27.72	$	17,902

Deferred and unissued at June 30, 2018 (2)	3,147	$	27.74	$	164

(1)

The aggregate intrinsic value of stock-settled restricted stock units outstanding was based on our closing stock price on the last trading day of the period.

(2)

For the six months ended June 30, 2018, there were 934 restricted stock units granted to non-employee directors in lieu of their quarterly cash retainer payments. These restricted stock units were fully vested upon grant and represent the right to receive one share of common stock, per unit, upon the earlier of the directors’ termination of service as a director of ours or the occurrence of a change of control of us. These restricted stock units are included in the “Granted” line in the table above and are also included in the “Vested” line in the table above due to their being fully vested upon grant. As of June 30, 2018, there were 3,147 outstanding restricted stock units that have been granted to non-employee directors in lieu of their quarterly director retainer payments. These restricted stock units are not included in the “Balance at June 30, 2018” line in the table above because they are fully vested.

In February 2018, we granted 67,982 performance-based stock-settled restricted stock units (“PSUs”), which represents the target number of PSUs under these awards, to certain participants under the 2016 Plan. These PSUs have both performance-based and time-based vesting features. The PSUs will be earned if and to the extent performance goals based on revenue and adjusted EBITDA are achieved in 2019. The number of PSUs earned will depend on the level at which the performance targets are achieved, and can range from 50% of target if threshold performance is achieved and up to 150% of target if maximum performance is achieved. One third of the earned PSUs will vest on the date the Compensation and Organization Committee certifies the number of PSUs earned, and the remaining two thirds of the earned PSUs will vest on the first anniversary of that certification date. All earned and vested PSUs will be settled in shares of common stock. Stock-based compensation expense included in our Condensed Consolidated Statements of Operations for PSUs was $0.2 million and $0.3 million for the three and six months ended June 30, 2018, respectively, and $0 for the same periods in 2017. As of June 30, 2018, there was approximately $1.9 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.7 years.

Employee Stock Purchase Plan

Our employee stock purchase plan (“ESPP”), which was approved by our Board of Directors on April 27, 2016 and by our stockholders on June 20, 2016, allows participating employees to purchase shares of our common stock at a discount through payroll deductions. The plan is available to all our employees and employees of participating subsidiaries. Participating employees may purchase common stock, on a voluntary after-tax basis, at a price equal to 85% of the lower of the closing market price per share of our common stock on the first or last trading day of each stock purchase period. The plan provides for six-month purchase periods, beginning on May 16 and November 16 of each calendar year.

A total of 1.6 million shares of common stock was initially reserved for issuance under the ESPP, and this share reserve will automatically be supplemented each January 1, commencing in 2017 and ending on and including January 1, 2026, by an amount equal to the least of (1) 1% of the shares of our common stock outstanding on the immediately preceding December 31, (2) 500,000 shares or (3) such lesser amount as our Board of Directors may determine. Effective January 1, 2018, 178,463 shares were added to the ESPP, as available for issuance thereunder, pursuant to the automatic increase feature of the plan. On May 15, 2018, 63,578 shares were purchased under the ESPP, utilizing $1.4 million of employee contributions. As of June 30, 2018, 1,576,090 shares were available for future issuance under the ESPP. We recognized stock-based compensation expense associated with the ESPP of $0.1 million and $0.2 million for the three months ended June 30, 2018 and 2017, respectively, and $0.3 million and $0.4 million for the six months ended June 30, 2018 and 2017, respectively.

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2018
Income Taxes
Income Taxes	Note 10. Income Taxes We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjusting for discrete tax items recorded in the period. Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. These differences relate primarily to different methods used for income tax reporting purposes, including for depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable and inventory reserves. Our provision for income taxes included current federal and state income tax expense, as well as deferred federal and state income tax expense. The effective tax rate for the three months ended June 30, 2018 was a benefit of 78.3%, compared to a benefit of 376.5% for the three months ended June 30, 2017. The primary driver of the change in the effective tax rate was a decrease in the tax benefits related to tax-deductible stock-based compensation activity, combined with an increase in our pre-tax book income as compared to the same prior year period. Significant tax deductions in both the current and prior year period included benefits with respect to the vesting of restricted stock units, exercises of non-qualified stock options, and disqualifying dispositions of incentive stock options and ESPP shares. We recorded an income tax benefit of $1.1 million and $3.0 million for the three months ended June 30, 2018 and 2017, respectively. The effective tax rate for the six months ended June 30, 2018 was 958.9%, compared to 209.7% for the six months ended June 30, 2017. The primary driver of the change in the effective tax rate was a decrease in the tax benefits related to tax-deductible stock-based compensation activity, combined with a decrease in our pre-tax book loss as compared to the same prior year period. We recorded an income tax benefit of $2.8 million and an income tax benefit of $4.4 million for the six months ended June 30, 2018 and 2017, respectively. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more likely than not” threshold, the amount recognized in the condensed consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. As of June 30, 2018 we had an unrecognized tax benefit ("UTB") with respect to state income taxes of approximately $57,000. The UTB represents taxes, interest, and penalties related to un-filed and unpaid income taxes in multiple state jurisdictions. We are continuing actions to settle these outstanding liabilities. To date, we have settled a significant portion of our outstanding liabilities through voluntary settlements with various state taxing authorities. We are currently under examination by the Internal Revenue Service for our 2016 federal tax return. We are not currently under examination for income taxes by any other taxing jurisdictions. In the event of any future tax assessments, we have elected to record the income taxes and any related interest and penalties as income tax expense on our statement of operations.

Net Income Per Share

6 Months Ended

Jun. 30, 2018

Net Income Per Share

Net Income Per Share

Note 11. Net Income Per Share

The following table sets forth the computation of our basic and diluted net income per share:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands, except share and per share data)	2018		2017		2018		2017
Net income	$	2,572	$	3,787	$	2,522	$	2,283
Weighted-average shares outstanding		18,155,543		17,176,386		18,076,546		17,028,237
Effect of restricted stock units, common stock options, warrants, and employee stock purchase plan shares		1,157,613		1,638,179		1,127,554		1,685,184
Weighted-average shares used to compute diluted net income per share		19,313,156		18,814,565		19,204,100		18,713,421
Net income per share - Basic	$	0.14	$	0.22	$	0.14	$	0.13
Net income per share - Diluted	$	0.13	$	0.20	$	0.13	$	0.12

The following common stock equivalents were excluded from the computation of diluted net income per share for the periods presented because including them would have been anti-dilutive:


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2018	2017	2018	2017
Restricted stock units	8,238	—	8,238	66,517
Common stock options	110,521	39,755	120,521	111,500
Common stock warrants	—	—	—	1,122
Employee stock purchase plan	28,996	49,021	28,996	49,021
Total	147,755	88,776	157,755	228,160

Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Fair Value Measurements

Fair Value Measurements

Note 12. Fair Value Measurements

We determine the fair value of our assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We use a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1). The next highest priority is based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in non-active markets or other observable inputs (Level 2). The lowest priority is given to unobservable inputs (Level 3). The following provides information regarding fair value measurements for our cash equivalents and marketable securities as of June 30, 2018 and December 31, 2017 according to the three-level fair value hierarchy:


	As of June 30, 2018
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
(In thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Recurring Fair Value Measurements:
Money market mutual funds	$	11,614	$	—	$	—	$	11,614
U.S. government and agency obligations		8,864		8,958		—		17,822
Corporate debt securities		—		5,980		—		5,980
Total	$	20,478	$	14,938	$	—	$	35,416


	As of December 31, 2017
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
(In thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Recurring Fair Value Measurements:
Money market mutual funds	$	9,212	$	—	$	—	$	9,212
U.S. government and agency obligations		1,000		10,941		—		11,941
Corporate debt securities		—		8,003		—		8,003
Total	$	10,212	$	18,944	$	—	$	29,156

During the six months ended June 30, 2018, there were no transfers within the three-level hierarchy. A significant transfer is recognized when the inputs used to value a security have been changed, which merits a transfer between the disclosed levels of the valuation hierarchy.

The fair values for our money market mutual funds, U.S. government and agency obligations and corporate debt securities are determined based on valuations provided by external investment managers who obtain them from a variety of industry standard data providers.

The carrying amounts of financial instruments such as cash equivalents, accounts receivable, other assets, accounts payable, accrued expenses and other liabilities approximate their related fair values due to the short-term maturities of these items. Non-financial assets, such as equipment and leasehold improvements, and intangible assets are subject to non-recurring fair value measurements if they are deemed impaired. We had no re-measurements of non-financial assets to fair value in the six months ended June 30, 2018.

- Definition

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

+ References + Details

Subsequent Event	6 Months Ended
Subsequent Event	Jun. 30, 2018
Subsequent Events
Subsequent Events	Note 13. Subsequent Event On August 3, 2018, we entered into a Credit Agreement (the “Credit Agreement”) with the lenders from time to time party thereto, and Wells Fargo Bank, National Association. The Credit Agreement provides for a new $10,000,000 revolving credit facility. The revolving credit facility expires on August 3, 2021. Subject to satisfaction of certain conditions, we may increase the amount of the revolving loans available under the Credit Agreement and/or add one or more term loan facilities in an amount not to exceed $25,000,000 in the aggregate, such that the total aggregate principal amount of loans available under the Credit Agreement (including under the revolving credit facility) does not exceed $35,000,000. Amounts drawn under the revolving credit facility will bear interest, at our option, at a rate equal to (a) the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) LIBOR for an interest period of one month plus 1% (the “Base Rate”) plus an applicable margin or (b) LIBOR plus the applicable margin. The applicable margin is 0.40% to 1.15% on loans bearing interest at the Base Rate and 1.40% to 2.15% on loans bearing interest at LIBOR, in each case depending on our consolidated total leverage ratio. Undrawn portions of the revolving credit facility are subject to an unused line fee at a rate per annum from 0.200% to 0.275%, depending on our consolidated total leverage ratio. Our obligations under the Credit Agreement are secured by a security interest in substantially all of our assets and those of our subsidiaries and will also be guaranteed by our subsidiaries. The Credit Agreement limits our ability to make capital expenditures during a fiscal year in excess of the amounts set forth in the Credit Agreement, and requires that we (i) not permit, as of the last day of each fiscal quarter, our consolidated total leverage ratio to exceed 3.00 to 1.00 and (ii) maintain minimum cash and cash equivalents, measured on the last day of each fiscal quarter, of not less than $7,500,000 (subject to a temporary reduction to $5,000,000 for the two fiscal quarters immediately following a permitted acquisition). The Credit Agreement also contains certain other restrictions and covenants, which, among other things, restrict our ability to acquire or merge with another entity, dispose of our assets, make investments, loans or guarantees, incur additional indebtedness, create liens or other encumbrances, or pay dividends or make other distributions. Amounts due under the Credit Agreement may be accelerated upon an Event of Default (as defined in the Credit Agreement), such as breach of a representation, covenant or agreement of ours, defaults with respect to certain of our other material indebtedness or the occurrence of bankruptcy if not otherwise waived or cured. We may use the proceeds from advances under the revolving credit facility (i) to finance capital expenditures, (ii) to pay fees, commissions and expenses in connection with the Credit Agreement and (iii) for working capital and general corporate purposes.

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2018
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. We have reclassified certain prior year amounts to conform to the current year’s presentation. The results for the six months ended June 30, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018, or for any other interim period or for any future year. The condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017.
Principles of Consolidation	Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Tactile Systems Technology, Inc. and its wholly owned subsidiary, Swelling Solutions, Inc. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Comprehensive Income	Comprehensive Income Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Our comprehensive income represents net income adjusted for unrealized gains and losses on available-for-sale marketable securities.
JOBS Act Accounting Election	JOBS Act Accounting Election As an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), we currently are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We elected to take advantage of the extended transition period for adopting new or revised accounting standards that have different effective dates for public and private companies until such time as those standards apply to private companies. However, as of the last business day of our second fiscal quarter of 2018, the market value of our common stock that was held by non-affiliates exceeded $700 million, and as a result, we will no longer qualify as an emerging growth company as of December 31, 2018. Therefore, after that date, we will no longer be able to take advantage of the extended transition period for adopting new or revised accounting standards.
Recent Accounting Pronouncements	Recent Accounting Pronouncements We currently are an “emerging growth company” as defined by the JOBS Act. The JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, (the “Securities Act”), for complying with new or revised accounting standards. In other words, an emerging growth company can selectively delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We elected to avail ourselves of this exemption and, as a result, our financial statements may not be comparable to the financial statements of issuers that are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies. Section 107 of the JOBS Act provides that we can elect to opt out of the extended transition period at any time, which election is irrevocable. However, as of the last business day of our second fiscal quarter of 2018, the market value of our common stock that was held by non-affiliates exceeded $700 million, and as a result, we will no longer qualify as an emerging growth company as of December 31, 2018 and will no longer be able to take advantage of the extended transition period. Therefore, as of December 31, 2018, we will be required to adopt new or revised accounting standards when they are applicable to public companies that are not emerging growth companies. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers.” The new section replaces Section 605, “Revenue Recognition,” and creates modifications to various other revenue accounting standards for specialized transactions and industries. The section is intended to conform revenue accounting principles with concurrently issued International Financial Reporting Standards to reconcile previously differing treatment between U.S. practices and those of the rest of the world and to enhance disclosures related to disaggregated revenue information. The updated guidance will be effective for us for our interim and annual reporting periods ending on or after December 31, 2018 due to the recent determination of our upcoming change in filing status. As a result, we have commenced project planning for our implementation, which has included engaging an accounting firm to assist us. We have not yet made a determination on our transition method, nor have we determined whether this standard will have a material impact on our financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), which supersedes the existing guidance for lease accounting, “Leases” (Topic 840). ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting remains largely unchanged. The amendments in this ASU will be effective for us for interim and annual periods beginning after December 15, 2018. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial adoption, with an option to elect to use certain transition relief. Due to the recent determination of our upcoming change in filing status, which has accelerated our required implementation date of this standard, we have commenced project planning for our implementation. We are currently evaluating whether this standard will have a material impact on our financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses,” to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The ASU will be effective for us for interim and annual periods beginning after December 15, 2019. Therefore, we plan to further evaluate the anticipated impact of the adoption of this ASU on our consolidated financial statements in future periods. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) — Classification of Certain Cash Receipts and Cash Payments,” to provide clarity on how certain cash receipt and cash payment transactions are presented and classified within the statement of cash flows. The ASU will be effective for us for interim and annual periods beginning after December 15, 2018. We do not anticipate any material impact on our consolidated financial statements in future periods as a result of the adoption of this ASU. In January 2017, the FASB issued ASU No. 2017-01 “Business Combinations (Topic 805) — Clarifying the Definition of a Business,” to revise the definition of a business and provide new guidance to assist in the evaluation of transactions as either asset acquisitions (disposals) or business acquisitions (disposals). We currently are an “emerging growth company” as defined by the JOBS Act and this ASU will become effective for us on December 31, 2018 when we no longer qualify for that status. We have elected early adoption for interim transactions that have not previously been included in issued financial statements, which is permitted under this standard. The adoption of this standard did not have a material impact on our consolidated financial statements.

Asset Acquisition (Tables)

6 Months Ended

Jun. 30, 2018

Asset Acquisitions

Schedule of allocation of the purchase price at acquisition date fair value


	Gross		Weighted-Average
(Dollars in thousands)	Carrying Amount		Amortization Period
Defensive intangible assets	$	787.8	7 years
Customer accounts		87.5	5 years
Total	$	875.3

Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2018

Marketable Securities

Schedule of marketable securities


	As of June 30, 2018
			Unrealized				Fair
(In thousands)	Cost		Gains		Losses		Value
U.S. government and agency obligations	$	17,863	$	—	$	41	$	17,822
Corporate debt securities and certificates of deposit		5,990		—		10		5,980
Marketable securities	$	23,853	$	—	$	51	$	23,802


	As of December 31, 2017
			Unrealized				Fair
(In thousands)	Cost		Gains		Losses		Value
U.S. government and agency obligations	$	11,997	$	—	$	56	$	11,941
Corporate debt securities and certificates of deposit		8,017		—		14		8,003
Marketable securities	$	20,014	$	—	$	70	$	19,944

Schedule of unrealized losses on investment


	As of June 30, 2018
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses
U.S. government and agency obligations	$	9,879	$	26	$	4,985	$	15	$	14,864	$	41
Corporate debt securities and certificates of deposit		4,981		9		999		1		5,980		10
Marketable securities	$	14,860	$	35	$	5,984	$	16	$	20,844	$	51


	As of December 31, 2017
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses
U.S. government and agency obligations	$	5,974	$	25	$	5,967	$	31	$	11,941	$	56
Corporate debt securities and certificates of deposit		7,005		13		998		1		8,003		14
Marketable securities	$	12,979	$	38	$	6,965	$	32	$	19,944	$	70

Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

Intangible Assets

Schedule of finite lived intangible assets


		As of June 30, 2018						As of December 31, 2017
	Weighted-Average	Gross						Gross
	Amortization	Carrying		Accumulated		Net		Carrying		Accumulated		Net
(Dollars in thousands)	Period	Amount		Amortization		Amount		Amount		Amortization		Amount
Patents	8 years	$	3,540	$	1,442	$	2,098	$	3,536	$	1,318	$	2,218
Defensive intangible assets	7 years		807		10		797		—		—		—
Customer accounts	5 years		90		1		89		—		—		—
Total		$	4,437	$	1,453	$	2,984	$	3,536	$	1,318	$	2,218

Schedule of future amortization expense


(In thousands)
2018 (July 1 - December 31)	$	189
2019		379
2020		379
2021		379
2022		379
Thereafter		1,279
Total	$	2,984

Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2018

Accrued Expenses

Schedule of Accrued Expenses


(In thousands)	As of June 30, 2018		As of December 31, 2017
Accrued taxes	$	77	$	1,070
Warranty		665		531
Travel and business		516		453
Legal and consulting		483		317
Deferred rent		166		173
Clinical studies		55		15
Other		71		39
Total	$	2,033	$	2,598

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies

Schedule of future minimum lease payments


			Computer/Office		Fleet Vehicle
(In thousands)	Buildings		Equipment		Program		Total
2018 (July 1 - December 31)	$	405	$	28	$	82	$	515
2019		866		51		38		955
2020		870		34		—		904
2021		592		3		—		595
2022		—						—
Thereafter		—		—		—		—
Total	$	2,733	$	116	$	120	$	2,969

Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2018

Stockholders' Equity

Schedule of allocation of stock-based compensation expense


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2018		2017		2018		2017
Cost of goods sold	$	69	$	49	$	109	$	98
Sales and marketing expenses		786		354		1,438		669
Research and development expenses		25		21		94		44
Reimbursement, general and administrative expenses		897		756		1,617		1,326
Total stock-based compensation expense	$	1,777	$	1,180	$	3,258	$	2,137

Schedule of stock option activity


		Weighted-		Weighted-
		Average		Average	Aggregate
	Options	Exercise Price		Remaining	Intrinsic
(In thousands except share, per share and years data)	Outstanding	Per Share (1)		Contractual Life	Value (2)
Balance at December 31, 2017	1,487,720	$	8.41	6.2 years	$	29,611
Granted	110,521	$	35.01
Exercised	(265,139)	$	2.16		$	9,842
Forfeited	(20,851)	$	20.91
Balance at June 30, 2018	1,312,251	$	11.72	6.3 years	$	52,860

Options exercisable at June 30, 2018	806,689	$	3.67	4.9 years	$	38,989

(1)

The exercise price of each option granted during the period shown was equal to the market price of the underlying stock on the date of grant.

(2)

Schedule of stock-settled restricted stock unit activity


		Weighted-
		Average Grant		Aggregate
	Units	Date Fair Value		Intrinsic
(In thousands except unit and per unit data)	Outstanding	Per Unit		Value (1)
Balance at December 31, 2017	441,507	$	16.38	$	12,795
Granted	86,416	$	33.70
Vested	(166,746)	$	21.96
Cancelled	(16,901)	$	20.02
Balance at June 30, 2018	344,276	$	27.72	$	17,902

Deferred and unissued at June 30, 2018 (2)	3,147	$	27.74	$	164

(1)

The aggregate intrinsic value of stock-settled restricted stock units outstanding was based on our closing stock price on the last trading day of the period.

(2)

Net Income Per Share (Tables)

6 Months Ended

Jun. 30, 2018

Net Income Per Share

Schedule of computation of the basic and diluted net income (loss) per share


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands, except share and per share data)	2018		2017		2018		2017
Net income	$	2,572	$	3,787	$	2,522	$	2,283
Weighted-average shares outstanding		18,155,543		17,176,386		18,076,546		17,028,237
Effect of restricted stock units, common stock options, warrants, and employee stock purchase plan shares		1,157,613		1,638,179		1,127,554		1,685,184
Weighted-average shares used to compute diluted net income per share		19,313,156		18,814,565		19,204,100		18,713,421
Net income per share - Basic	$	0.14	$	0.22	$	0.14	$	0.13
Net income per share - Diluted	$	0.13	$	0.20	$	0.13	$	0.12

Schedule of potentially dilutive securities outstanding


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2018	2017	2018	2017
Restricted stock units	8,238	—	8,238	66,517
Common stock options	110,521	39,755	120,521	111,500
Common stock warrants	—	—	—	1,122
Employee stock purchase plan	28,996	49,021	28,996	49,021
Total	147,755	88,776	157,755	228,160

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Measurements

Schedule of fair value measurements for marketable securities


	As of June 30, 2018
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
(In thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Recurring Fair Value Measurements:
Money market mutual funds	$	11,614	$	—	$	—	$	11,614
U.S. government and agency obligations		8,864		8,958		—		17,822
Corporate debt securities		—		5,980		—		5,980
Total	$	20,478	$	14,938	$	—	$	35,416


	As of December 31, 2017
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
(In thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Recurring Fair Value Measurements:
Money market mutual funds	$	9,212	$	—	$	—	$	9,212
U.S. government and agency obligations		1,000		10,941		—		11,941
Corporate debt securities		—		8,003		—		8,003
Total	$	10,212	$	18,944	$	—	$	29,156

Nature of Business and Operations (Details) $ / shares in Units, $ in Millions		1 Months Ended
	Aug. 02, 2016 USD ($) $ / shares shares	Jun. 30, 2016
Subsidiary, Sale of Stock
Reverse stock split ratio		0.354604396
IPO
Subsidiary, Sale of Stock
Number of shares of common stock sold \| shares	4,120,000
IPO price per share (in dollars per share) \| $ / shares	$ 10.00
Proceeds from IPO	$ 35.4
Expense Relating To Initial Public Offering	$ 2.9

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	Jun. 29, 2018	Jun. 30, 2018	Dec. 31, 2017
Summary of Significant Accounting Policies
Minimum market value of the Company common stock that was held by non-affiliates	$ 700,000
Accounts Receivable
Medicare accounts receivable, long-term		$ 1,648	$ 2,718
Product Warranty
Accrued warranty reserve, current		665	531
Accrued warranty reserve, long-term		1,437	1,141
Inventories
Inventories		$ 16,437	$ 11,040

Asset Acquisitions (Details) - Certain Assets and Intellectual Property of WTP	May 22, 2018 USD ($) item
Business Acquisition [Line Items]
Total consideration \| $	$ 875,000
Number of issued and pending patents in the acquired portfolio	31
Number of trademarks in the acquired portfolio	5

Asset Acquisition (Allocation of purchase price) (Details)	May 22, 2018 USD ($)
Certain Assets and Intellectual Property of WTP
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 875,300
Defensive intangible assets
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted average amortization period	7 years
Defensive intangible assets \| Certain Assets and Intellectual Property of WTP
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 787,800
Customer accounts
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted average amortization period	5 years
Customer accounts \| Certain Assets and Intellectual Property of WTP
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 87,500

Marketable Securities (Details) - USD ($) $ in Thousands	6 Months Ended
Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Marketable Securities
Cost	$ 23,853	$ 20,014
Unrealized Losses	51	70
Fair Value	23,802	19,944
Fair value less than 12 months	14,860	12,979
Unrealized losses, less than 12 months	35	38
Fair value, 12 months or more	5,984	6,965
Unrealized losses, 12 months or more	16	32
Fair value, Total	20,844	19,944
Unrealized loss, Total	$ 51	70
Minimum
Schedule of Available-for-sale Securities [Line Items]
Contractual maturities of marketable securities	12 months
Maximum
Schedule of Available-for-sale Securities [Line Items]
Contractual maturities of marketable securities	25 months
U.S. government and agency obligations
Marketable Securities
Cost	$ 17,863	11,997
Unrealized Losses	41	56
Fair Value	17,822	11,941
Fair value less than 12 months	9,879	5,974
Unrealized losses, less than 12 months	26	25
Fair value, 12 months or more	4,985	5,967
Unrealized losses, 12 months or more	15	31
Fair value, Total	14,864	11,941
Unrealized loss, Total	41	56
Corporate debt securities
Marketable Securities
Cost	5,990	8,017
Unrealized Losses	10	14
Fair Value	5,980	8,003
Fair value less than 12 months	4,981	7,005
Unrealized losses, less than 12 months	9	13
Fair value, 12 months or more	999	998
Unrealized losses, 12 months or more	1	1
Fair value, Total	5,980	8,003
Unrealized loss, Total	$ 10	$ 14

Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended	12 Months Ended
Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Dec. 31, 2017
Patents and Intangibles
Gross Carrying Amount	$ 4,437		$ 4,437	$ 3,536
Accumulated Amortization	1,453		1,453	$ 1,318
Net Amount	2,984		2,984
Amortization expense	100	$ 100
Future Amortization
2018 (July 1 - December 31)	189		189
2019	379		379
2020	379		379
2021	379		379
2022	379		379
Thereafter	1,279		$ 1,279
Patents
Patents and Intangibles
Weighted Average Amortization Period			8 years	8 years
Gross Carrying Amount	3,540		$ 3,540	$ 3,536
Accumulated Amortization	1,442		1,442	1,318
Net Amount	2,098		$ 2,098	$ 2,218
Defensive intangible assets
Patents and Intangibles
Weighted Average Amortization Period			7 years	7 years
Gross Carrying Amount	807		$ 807
Accumulated Amortization	10		10
Net Amount	797		$ 797
Customer accounts
Patents and Intangibles
Weighted Average Amortization Period			5 years	5 years
Gross Carrying Amount	90		$ 90
Accumulated Amortization	1		1
Net Amount	$ 89		$ 89

Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Accrued Expenses
Accrued taxes	$ 77	$ 1,070
Warranty	665	531
Travel and business	516	453
Legal and consulting	483	317
Deferred rent	166	173
Clinical studies	55	15
Other	71	39
Total	$ 2,033	$ 2,598

Commitments and Contingencies (Details) $ in Thousands	3 Months Ended		6 Months Ended
Commitments and Contingencies (Details) $ in Thousands	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) item	Jun. 30, 2017 USD ($)
Operating Leased Assets [Line Items]
Rent expense	$ 400	$ 300	$ 700	$ 500
Number of leased vehicles \| item			17
2018 (July 1 - December 31)	515		$ 515
2019	955		955
2020	904		904
2021	595		595
Total	2,969		2,969
Building
Operating Leased Assets [Line Items]
2018 (July 1 - December 31)	405		405
2019	866		866
2020	870		870
2021	592		592
Total	2,733		2,733
Computer/Office Equipment
Operating Leased Assets [Line Items]
2018 (July 1 - December 31)	28		28
2019	51		51
2020	34		34
2021	3		3
Total	116		116
Fleet Vehicle Program
Operating Leased Assets [Line Items]
2018 (July 1 - December 31)	82		82
2019	38		38
Total	$ 120		$ 120

Commitments and Contingencies - Major Vendors (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) item	Jun. 30, 2017 item	Jun. 30, 2018 USD ($) item	Jun. 30, 2017 item
Concentration Risk [Line Items]
Number of vendors \| item	2	3	2	3
Purchase commitments
Purchase commitments \| $	$ 5.9		$ 5.9
Purchases \| Vendor
Concentration Risk [Line Items]
Accounts Receivable (in percentage)	44.00%	36.00%	39.00%	36.00%

Commitments and Contingencies - Deferred Compensation (Details)	6 Months Ended
	Jun. 30, 2018 item
Minimum
Deferred Compensation Arrangement with Individual, Share-based Payments
Severance term (in months)	9 months
Number of months of bonus payable	9 months
Maximum
Deferred Compensation Arrangement with Individual, Share-based Payments
Severance term (in months)	15 months
Number of months of bonus payable	15 months
Certain Officers
Deferred Compensation Arrangement with Individual, Share-based Payments
Number of officers	2

Commitments and Contingencies - Retirement Plan (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
401(k)
Defined Contribution Plan Disclosure
Discretionary contributions	$ 58,000	$ 48,000	$ 111,000	$ 93,000

Stockholders' Equity - Series A & B Preferred Stock (Details) $ / shares in Units, $ in Millions	Aug. 02, 2016 USD ($) $ / shares shares
Preferred stock
Conversion of preferred stock to common stock (in shares)	5,924,453
Number of new stock issued relating to the IPO that Series A and Series B preferred stockholders are entitled to receive	2,354,323
IPO
Preferred stock
Number of shares of common stock sold	4,120,000
Share price (in dollars per share) \| $ / shares	$ 10.00
Series B Preferred Stock
Preferred stock
Preferred stock to common stock conversion ratio	1
Number of new stock issued to pay accrued stock dividends relating to initial offering price	956,842
Series A Preferred Stock
Preferred stock
Preferred stock to common stock conversion ratio	0.9708
Accrued Cumulative Dividends \| $	$ 8.2
Payment of dividends \| $	$ 0.1

Stockholders' Equity - Stock-Based Compensation General Information (Details)	Jun. 30, 2018 shares
2016 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	4,800,000

Stockholders' Equity - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Stock-based compensation
Compensation expense	$ 1,777	$ 1,180	$ 3,258	$ 2,137
Cost of goods sold
Stock-based compensation
Compensation expense	69	49	109	98
Sales and marketing
Stock-based compensation
Compensation expense	786	354	1,438	669
Research and development
Stock-based compensation
Compensation expense	25	21	94	44
Reimbursement, general and administrative
Stock-based compensation
Compensation expense	$ 897	$ 756	$ 1,617	$ 1,326
2016 Plan
Stock-based compensation
Shares available for future issuance	5,230,344		5,230,344
Automatic annual increase to the number of shares reserved and available for issuance as a percentage of outstanding common stock (as a percent)	5.00%		5.00%
Automatic annual increase to the number of shares reserved and available for issuance	2,500,000		2,500,000
Increase in number of shares reserved and available for issuance					892,318	841,686

Stockholders' Equity - Stock Options and Restricted Stock (Details) - USD ($)	1 Months Ended	2 Months Ended	3 Months Ended		5 Months Ended	6 Months Ended		12 Months Ended
	Feb. 28, 2018	Mar. 31, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Stock-based compensation, general disclosures
Stock-based compensation expense			$ 1,777,000	$ 1,180,000		$ 3,258,000	$ 2,137,000
Common stock options
Stock-based compensation, general disclosures
Term (in years)						7 years
Stock-based compensation expense			500,000	$ 300,000		$ 1,000,000	$ 500,000
Total unrecognized pre-tax compensation expense related to nonvested stock option awards			$ 4,900,000		$ 4,900,000	$ 4,900,000
Weighted-average period over which unrecognized compensation cost is expected to be recognized						2 years 9 months 18 days
Options
Outstanding at beginning of period						1,487,720
Granted						110,521
Exercised						(265,139)
Forfeited						(20,851)
Outstanding at end of period			1,312,251		1,312,251	1,312,251		1,487,720
Weighted Average Exercise Price ($/share)
Outstanding at beginning of period						$ 8.41
Granted						35.01
Exercised						2.16
Forfeited						20.91
Outstanding at end of period			$ 11.72		$ 11.72	$ 11.72		$ 8.41
Other information
Options exercisable Number of Exercisable			806,689	1,152,453	806,689	806,689	1,152,453
Options exercisable, weighted-average exercise price			$ 3.67	$ 1.92	$ 3.67	$ 3.67	$ 1.92
Weighted average remaining contractual life (in years)						6 years 3 months 18 days		6 years 2 months 12 days
Exercisable options, weighted-average remaining contractual life						4 years 10 months 24 days
Options outstanding			$ 52,860,000		$ 52,860,000	$ 52,860,000		$ 29,611,000
Options exercisable			$ 38,989,000		$ 38,989,000	38,989,000
Exercised						$ 9,842,000
Restricted stock unit awards, Average Intrinsic Value
Number of option outstanding			1,312,251		1,312,251	1,312,251		1,487,720
Weighted average remaining contractual life (in years)						6 years 3 months 18 days		6 years 2 months 12 days
Options Outstanding, weighted average exercise price			$ 11.72		$ 11.72	$ 11.72		$ 8.41
Options exercisable Number of Exercisable			806,689	1,152,453	806,689	806,689	1,152,453
Options exercisable, weighted-average exercise price			$ 3.67	$ 1.92	$ 3.67	$ 3.67	$ 1.92
Common stock options \| Minimum
Stock-based compensation, general disclosures
Vesting period (in years)						3 years
Term (in years)						7 years
Common stock options \| Maximum
Stock-based compensation, general disclosures
Vesting period (in years)						4 years
Term (in years)						10 years
Restricted Stock Units
Stock-based compensation, general disclosures
Stock-based compensation expense			$ 200,000	$ 0		$ 300,000	$ 0
Weighted-average period over which unrecognized compensation cost is expected to be recognized						2 years 8 months 12 days
Total unrecognized pre-tax compensation expense related to awards			$ 1,900,000		$ 1,900,000	$ 1,900,000
Number of Stock-Settled Restricted Stock Unit Awards Outstanding
Restricted stock unit awards outstanding at the beginning of the period (in shares)						441,507
Granted (in shares)						86,416
Vested (in shares)						(166,746)
Cancelled (in shares)						(16,901)
Restricted stock unit awards outstanding at the end of the period (in shares)			344,276		344,276	344,276		441,507
Number of share of common stock that restricted stock unit has the right to convert to			1		1	1
Weighted Average Grant Date Fair Value Per Share
Restricted stock unit awards outstanding at the beginning of the period (in dollars per share)						$ 16.38
Granted (in dollars per share)						33.70
Vested (in dollars per share)						21.96
Cancelled (in dollars per share)						20.02
Restricted stock unit awards outstanding at the end of the period (in dollars per share)			$ 27.72		$ 27.72	$ 27.72		$ 16.38
Restricted stock unit awards, Average Intrinsic Value
Restricted stock unit awards, Average Intrinsic Value			$ 17,902,000		$ 17,902,000	$ 17,902,000		$ 12,795,000
Restricted Stock Units \| Non-employee Directors
Number of Stock-Settled Restricted Stock Unit Awards Outstanding
Granted (in shares)						934
Restricted stock unit awards outstanding at the end of the period (in shares)			3,147		3,147	3,147
Number of granted and vested restricted stock units			3,147		3,147	3,147
Weighted Average Grant Date Fair Value Per Share
Restricted stock unit awards outstanding at the end of the period (in dollars per share)			$ 27.74		$ 27.74	$ 27.74
Restricted stock unit awards, Average Intrinsic Value
Restricted stock unit awards, Average Intrinsic Value			$ 164,000		$ 164,000	$ 164,000
Tranche one \| Restricted Stock Units
Stock-based compensation, general disclosures
Compensation arrangement	33.33%
Tranche two \| Restricted Stock Units
Stock-based compensation, general disclosures
Compensation arrangement	66.67%
2016 Plan \| Restricted Stock Units
Stock-based compensation, general disclosures
Stock-based compensation expense			900,000	$ 700,000		$ 1,700,000	$ 1,200,000
Weighted-average period over which unrecognized compensation cost is expected to be recognized						2 years
Total unrecognized pre-tax compensation expense related to awards			6,000,000		6,000,000	$ 6,000,000
2016 Plan \| Restricted Stock Units \| Minimum
Stock-based compensation, general disclosures
Vesting period (in years)						1 year
2016 Plan \| Restricted Stock Units \| Maximum
Stock-based compensation, general disclosures
Vesting period (in years)						3 years
2016 Plan \| Performance-based stock-settled restricted stock units
Number of Stock-Settled Restricted Stock Unit Awards Outstanding
Granted (in shares)	67,982
2016 Plan \| Performance-based stock-settled restricted stock units \| Minimum
Number of Stock-Settled Restricted Stock Unit Awards Outstanding
Percentage to earn or vest the performance-based stock-settled restricted stock units		$ 50	$ 50
2016 Plan \| Performance-based stock-settled restricted stock units \| Maximum
Number of Stock-Settled Restricted Stock Unit Awards Outstanding
Percentage to earn or vest the performance-based stock-settled restricted stock units					$ 150

Stockholders' Equity - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands			3 Months Ended		6 Months Ended
	May 15, 2018	Jan. 01, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Apr. 27, 2017
Class of Stock [Line Items]
Shares issued					$ 1,416	$ 2,210
Stock-based compensation expense			$ 1,777	$ 1,180	$ 3,258	2,137
Employee Stock Purchase Plan
Class of Stock [Line Items]
Purchase price of common stock under plan (as a percent)					85.00%
Offering period (in months)					6 months
Shares issued (in shares)	63,578
Shares issued	$ 1,400
Incremental share increase (as a percent)					1.00%
Incremental share increase (in shares)					500,000
Increase in number of shares reserved and available for issuance		178,463
Shares reserved			1,576,090		1,576,090		1,600,000
Stock-based compensation expense			$ 100	200	$ 300	400
Restricted Stock Units
Class of Stock [Line Items]
Stock-based compensation expense			200	$ 0	300	$ 0
Unrecognized stock-based compensation expense, Restricted stock			$ 1,900		$ 1,900

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Tax Line Items
Income tax benefit	$ 1,129	$ 2,993	$ 2,815	$ 4,366
Effective Income Tax Rate Reconciliation, Percent
Effective rate (as percent)	78.30%	376.50%	958.90%	209.70%
State
Effective Income Tax Rate Reconciliation, Percent
Unrecognized tax benefits	$ 57		$ 57

Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Net Income Per Share
Net income	$ 2,572	$ 3,787	$ 2,522	$ 2,283
Weighted-average shares outstanding	18,155,543	17,176,386	18,076,546	17,028,237
Effect of restricted stock units, common stock options, warrants, and employee stock purchase plan shares	1,157,613	1,638,179	1,127,554	1,685,184
Weighted-average shares used to compute diluted net income per share	19,313,156	18,814,565	19,204,100	18,713,421
Net income per share - Basic	$ 0.14	$ 0.22	$ 0.14	$ 0.13
Net income per share - Diluted	$ 0.13	$ 0.20	$ 0.13	$ 0.12

Net Income (Loss) Per Share Attributable to Common Stockholders (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	147,755	88,776	157,755	228,160
Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	8,238		8,238	66,517
Employee stock purchase plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	28,996	49,021	28,996	49,021
Common stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	110,521	39,755	120,521	111,500
Common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share				1,122

Fair Value Measurements (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fair Value Measurements
Available for sale debt securities	$ 23,802	$ 19,944
Amount of transfers of marketable securities within the three level hierarchy	0
U.S. government and agency obligations
Fair Value Measurements
Available for sale debt securities	17,822	11,941
Corporate debt securities
Fair Value Measurements
Available for sale debt securities	5,980	8,003
Recurring
Fair Value Measurements
Available for sale debt securities	35,416	29,156
Recurring \| Money market mutual funds
Fair Value Measurements
Marketable securities	11,614	9,212
Recurring \| U.S. government and agency obligations
Fair Value Measurements
Available for sale debt securities	17,822	11,941
Recurring \| Corporate debt securities
Fair Value Measurements
Available for sale debt securities	5,980	8,003
Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value Measurements
Available for sale debt securities	20,478	10,212
Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1) \| Money market mutual funds
Fair Value Measurements
Marketable securities	11,614	9,212
Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1) \| U.S. government and agency obligations
Fair Value Measurements
Available for sale debt securities	8,864	1,000
Recurring \| Significant Other Observable Inputs (Level 2)
Fair Value Measurements
Available for sale debt securities	14,938	18,944
Recurring \| Significant Other Observable Inputs (Level 2) \| U.S. government and agency obligations
Fair Value Measurements
Available for sale debt securities	8,958	10,941
Recurring \| Significant Other Observable Inputs (Level 2) \| Corporate debt securities
Fair Value Measurements
Available for sale debt securities	$ 5,980	$ 8,003

Subsequent Event (Details) - Subsequent Event - Revolving credit facility	Aug. 03, 2018 USD ($)
Subsequent Event [Line Items]
Line of credit	$ 10,000,000
Aggregate Borrowings	25,000,000
Total aggregate principal amount of loans	$ 35,000,000
Maximum leverage Ratio	300.00%
Minimum cash and cash equivalents	$ 7,500,000
Cash and cash equivalents, temporary reduction	$ 5,000,000
Minimum
Subsequent Event [Line Items]
Unused line fee (as a percent)	0.20%
Maximum
Subsequent Event [Line Items]
Unused line fee (as a percent)	0.275%
Federal Funds
Subsequent Event [Line Items]
Basis spread (as a percent)	0.50%
Base Rate
Subsequent Event [Line Items]
Basis spread (as a percent)	1.00%
Base Rate \| Minimum
Subsequent Event [Line Items]
Basis spread (as a percent)	0.40%
Base Rate \| Maximum
Subsequent Event [Line Items]
Basis spread (as a percent)	1.15%
LIBOR \| Minimum
Subsequent Event [Line Items]
Basis spread (as a percent)	1.40%
LIBOR \| Maximum
Subsequent Event [Line Items]
Basis spread (as a percent)	2.15%