Balance

Beginning

Balance at

of Year

Additions

Deletions

Adjustments

End of Year

Year ended December 31, 2014:

Allowance for doubtful accounts (1)

$

1,141

$

1,692

$

1,404

$

(249

)

$

1,180

Allowance for sales returns (2)

134

3,451

3,412

—

173

Allowance for rental revenue adjustments (3)

2,115

8,267

8,239

249

2,392

Allowance for inventory reserves (4)

100

201

160

—

141

Allowance for rental asset loss (5)

157

1,443

768

—

832

Year ended December 31, 2013:

Allowance for doubtful accounts (1)

$

742

$

2,045

$

1,284

$

(362

)

$

1,141

Allowance for sales returns (2)

64

1,770

1,700

—

134

Allowance for rental revenue adjustments (3)

1,255

6,613

6,115

362

2,115

Allowance for inventory reserves (4)

98

78

76

—

100

Allowance for rental asset loss (5)

77

292

212

—

157

Year ended December 31, 2012:

Allowance for doubtful accounts (1)

$

865

$

1,071

$

1,194

$

—

$

742

Allowance for sales returns (2)

33

627

596

—

64

Allowance for rental revenue adjustments (3)

984

3,102

2,831

—

1,255

Allowance for inventory reserves (4)

108

42

52

—

98

Allowance for rental asset loss (5)

—

378

301

—

77

(1)

The additions to the allowance for doubtful accounts represent the estimates of bad debt expense based upon factors for which the company evaluates the collectability of accounts receivable, with actual recoveries netted into additions. Deductions are the actual write-offs of the receivables.

(2)

The additions to the allowance for sales returns represent estimates of returns based upon historical returns experience for the direct to patient sales channel only. No reserve is recorded for sales to providers. Deductions are the actual returns of products.

(3)

The additions to the allowance for rental revenue adjustments represent estimates of revenue adjustments that will need to be recorded for billing errors on rental revenue. Deductions are the actual adjustments and write offs of the rental receivables for such revenue adjustments.

(4)

The inventory allowances are adjusted quarterly for potentially excess, obsolete, slow-moving or impaired items.

(5)

The allowance for rental asset loss is based on estimated losses of the company’s rental assets that will potentially be lost, stolen or unrecoverable from the patient.