Revenue

12 Months Ended

Dec. 31, 2023

Revenue.

Revenue

Note 14.  Revenue

We derive our revenue from the sale and rental of our products to our customers in the United States. The following table presents our revenue, inclusive of sales and rental revenue, disaggregated by product:

	Year Ended
	December 31,
(In thousands)	2023		2022		2021
Revenue
Lymphedema products	$	241,721	$	212,266	$	202,913
Airway clearance products		32,702		34,519		5,144
Total	$	274,423	$	246,785	$	208,057
Percentage of total revenue
Lymphedema products		88%		86%		98%
Airway clearance products		12%		14%		2%
Total		100%		100%		100%

Our revenue by channel, inclusive of sales and rental revenue, for the years ended December 31, 2023, 2022 and 2021, are summarized in the following table:

	Year Ended
	December 31,
(In thousands)	2023		2022		2021
Private insurers and other payers	$	148,901	$	139,087	$	141,377
Veterans Administration		27,003		25,507		25,654
Medicare		65,817		47,672		35,882
Durable medical equipment distributors		32,702		34,519		5,144
Total	$	274,423	$	246,785	$	208,057

Our rental revenue is derived from rent-to-purchase arrangements that typically range from three to ten months. As title transfers to the patient, with whom we have the contract, upon the termination of the lease term and because collectability is probable, under ASC 842, these are recognized as sales-type leases. Each rental agreement contains two components, the controller and related garments, both of which are interdependent and recognized as one lease component.

The revenue and associated cost of revenue of sales-type leases are recognized on the lease commencement date and a net investment in leases is recorded on the Consolidated Balance Sheet. We bill the patients’ insurance payers monthly over the duration of the rental term. We record the net investment in leases and recognize revenue upon commencement of the lease in the amount of the expected consideration to be received through the monthly payments. Similar to our sales revenue, the transaction price is impacted by multiple factors, including the terms and conditions contracted by various third party payers. As the rental contract resides with the patients, we have elected the portfolio approach, at the payer level, to determine the expected consideration, which considers the impact of early terminations. While the contract is with the patient, in certain circumstances, the third party payer elects an initial rental period with an option to extend. We assess the likelihood of extending the lease at the onset of the lease to determine if the option is reasonably certain to be exercised. As the lease is short-term in nature, we anticipate collection of substantially all of the net investment within the first year of the lease agreement. Completion of these payments represents the fair market value of the equipment, and as such, interest income is not applicable.

Rental revenue for the years ended December 31, 2023, 2022 and 2021, was primarily from private insurers. Sales-type lease revenue and the associated cost of revenue for the years ended December 31, 2023, 2022 and 2021, was:

	Year Ended December 31,
(In thousands)	2023		2022		2021
Sales-type lease revenue	$	34,930	$	35,440	$	30,143
Cost of sales-type lease revenue		12,577		11,190		9,622
Gross profit	$	22,353	$	24,250	$	20,521