4. Balance sheet components

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. One single customer represented more than 10% of the Company's total revenue for the three months ended March 31, 2025. One customer represented more than 10% of the Company’s net accounts receivable balance with a net accounts receivable balance of $4,302 as of March 31, 2025 and $3,288 as of December 31, 2024.

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 55.0% and 58.4% of rental revenue in the three months ended March 31, 2025 and 2024, respectively, and accounted for 9.2% and 11.2% of total revenue for the three months ended March 31, 2025 and 2024, respectively. Accounts receivable balances relating to Medicare’s service reimbursement programs (including held and unbilled, net of allowances) amounted to $1,352, or 3.7%, of total net accounts receivable as of March 31, 2025 compared to $1,107, or 4.8%, of total net accounts receivable as of December 31, 2024.

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 three months ended March 31, 2025, the Company’s three major vendors accounted for 17.9%, 10.8%, and 10.6%, respectively, of total raw material purchases. For the three months ended March 31, 2024, the Company’s three major vendors accounted for 24.6%, 17.2%, and 10.0%, 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, or FIFO, method. The Company records adjustments to inventory for potentially excess, obsolete, slow-moving or impaired items, and losses on firm purchase commitments as a component of cost of sales in the consolidated statements of comprehensive loss. The Company recorded noncurrent inventory related to inventories that are expected to be realized or consumed after one year of $679 and $1,291 as of March 31, 2025 and December 31, 2024, 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. During the three months ended March 31, 2025 and 2024, $149 and $331, 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

Expenditures for additions, improvements and replacements are capitalized and depreciated to a salvage value of $0. Repair and maintenance costs on rental equipment are included in cost of rental revenue on the consolidated statements of comprehensive loss. Repair and maintenance expense, which includes labor, parts, and freight, for rental equipment was $1,838 and $1,759 for the three months ended March 31, 2025 and 2024, respectively.

Long-lived assets

The Company accounts for the impairment and disposition of long-lived assets in accordance with Accounting Standards Codification, or ASC, 360 — Property, Plant, and Equipment. Long-lived assets are reviewed for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. No impairments were recorded for the three months ended March 31, 2025 and 2024.

Goodwill and other identifiable intangible assets

Goodwill

Intangible assets

Current liabilities