5. Balance sheet components

Cash, cash equivalents, and marketable securities

Accounts receivable and allowance for bad debts, returns, and adjustments

Concentration of customers and vendors

The Company primarily sells its products to traditional home medical equipment providers, distributors, and resellers in the United States and in foreign countries on a credit basis. The Company also sells its products direct-to-consumers primarily on a prepayment basis. Two customers each represented more than 10% of the Company’s net accounts receivable balance with accounts receivable balances of $12,162 and $5,848, respectively, as of September 30, 2023, and two customers each represented more than 10% of the Company's net accounts receivable balance with accounts receivable balances of $22,641 and $9,861, respectively, as of December 31, 2022.

The Company also rents products directly to consumers for insurance reimbursement, which resulted in a customer concentration relating to Medicare’s service reimbursement programs. Medicare’s service reimbursement programs accounted for 69.7% and 77.8% of rental revenue in the nine months ended September 30, 2023 and 2022, respectively, and based on total revenue were 13.7% and 11.2% for the nine months ended September 30, 2023 and 2022, respectively. Accounts receivable balances relating to Medicare’s service reimbursement programs (including held and unbilled, net of allowances) amounted to $2,500 or 5.2% of total net accounts receivable as of September 30, 2023 compared to $2,138 or 3.4% of total net accounts receivable as of December 31, 2022.

The Company currently purchases raw materials from a limited number of vendors, which resulted in a concentration of three major vendors. The three major vendors supply the Company with raw materials used to manufacture the Company’s products. For the nine months ended September 30, 2023, the Company’s three major vendors accounted for 29.3%, 16.3%, and 9.1%, respectively, of total

raw material purchases. For the nine months ended September 30, 2022, the Company’s three major vendors accounted for 27.0%, 20.2%, and 8.4%, respectively, of total raw material purchases.

Inventories

Inventories are stated at the lower of cost and net realizable value, using the first-in, first-out (FIFO) method. The Company records adjustments at least quarterly to inventory for potentially excess, obsolete, slow-moving, or impaired items. The Company recorded noncurrent inventory related to inventories that are expected to be realized or consumed after one year of $1,100 and $1,249 as of September 30, 2023 and December 31, 2022, respectively. Noncurrent inventories are primarily related to raw materials purchased in bulk to support long-term expected repairs to reduce costs and are classified in other assets. The Company had prepayments for raw materials of $0 and $7,017 as of September 30, 2023 and December 31, 2022, respectively, that were classified in prepaid expenses and other current assets. During the nine months ended September 30, 2023 and 2022, $1,997 and $998, respectively, of inventory was transferred to rental equipment and was considered a noncash transaction in the production and purchase of rental equipment on the consolidated statements of cash flows. Inventories that are considered current consist of the following:

Property and equipment

Repair and maintenance expense, which includes labor, parts, and freight, for rental equipment was $1,320 and $1,059 for the three months ended September 30, 2023 and 2022, respectively, and $3,873 and $3,289 for the nine months ended September 30, 2023 and 2022, respectively.

Long-lived assets

The Company accounts for the impairment and disposition of long-lived assets in accordance with Accounting Standards Codification (ASC) 360 — Property, Plant, and Equipment. In accordance with ASC 360, long-lived assets to be held are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable. No impairments were recorded as of September 30, 2023.

Goodwill and other identifiable intangible assets

Goodwill

As a result of a decrease in Company’s public stock price that caused the Company's market capitalization to fall below its carrying amount (stockholders' equity) during July 2023 and noted by management to be more than temporary as the quarter progressed, a quantitative analysis was required to be performed during the quarter ended September 30, 2023. The Company used a discounted cash flow analysis based on Level 3 inputs and determined that the goodwill carrying amount exceeded its fair value and, as such, an impairment charge of $32,894 was incurred in the quarter ended September 30, 2023. Total accumulated impairment losses were $32,894 as of September 30, 2023.

Intangible assets

Current liabilities