Tactile Systems (TCMD) Conference Summary Company Overview - Tactile Systems focuses on revealing and treating patients with underserved and chronic conditions at home, specifically in lymphedema and bronchiectasis [2][3] - The company has served over 79,000 patients in a market of over 20 million undiagnosed patients, with 2 million diagnosed in lymphedema alone [3][10] Market Dynamics - The end markets for Tactile Systems are growing, with a significant underserved population [4] - The reimbursement environment is stable and acts as a tailwind for the company, with broad payer adoption [5] - Tactile Systems holds a market leadership position in lymphedema and is a strong number two in bronchiectasis [6] Financial Performance - The company is profitable with gross margins above 70%, aiming for 74% this year [8] - Tactile Systems has a strong cash position, moving from a long accounts receivable balance to efficient collections [8] Product Innovation - Tactile Systems has a variety of products in development aimed at improving patient experience and therapy benefits [7] - The company launched the Nimble pump, a portable and Bluetooth-enabled device, which has seen strong adoption [34][35] - The Flexitouch Plus offers advanced coverage for patients with head and neck lymphedema, showing significant clinical benefits [38][46] Patient Engagement and Education - The Kylie app allows patients to track symptoms and therapy sessions, enhancing engagement and continuity of care [42][44] - The company emphasizes the need for education and training for both patients and providers to improve diagnosis and treatment access [12][54] Growth Strategy - Tactile Systems aims to improve access to care, maintain a healthy reimbursement environment, and streamline processes for patients [54][56] - The company is investing in technology and expanding its sales force to enhance market reach [53][57] Industry Insights - Lymphedema and bronchiectasis are chronic conditions requiring lifelong management, presenting a significant market opportunity [28][29] - There is a high prevalence of undiagnosed patients, with significant gaps in education and access to care [10][26] Conclusion - Tactile Systems is well-positioned in a growing market with strong product offerings and a commitment to patient education and engagement, aiming for continued growth and innovation in the healthcare space [56][58]

Summary of Tactile Systems (TCMD) FY Conference Call - June 03, 2025 Company Overview - **Company**: Tactile Systems (TCMD) - **Industry**: Medical Devices, specifically focusing on lymphedema and bronchiectasis treatment Key Points and Arguments Investment Highlights - **Market Opportunity**: The company operates in a large and underserved market with significant growth potential, particularly in lymphedema and bronchiectasis, which are chronic and progressive conditions [3][4][5] - **Profitability**: Tactile Systems is a small-cap company that is profitable, with a strong cash balance and gross margins around 74% [10] - **Market Leadership**: The company is a leader in the lymphedema market, with a broad payer adoption and no significant challenges regarding coding, coverage, or reimbursement [6][7] Patient Population and Treatment Gaps - **Undiagnosed Patients**: There are approximately 20 million underdiagnosed patients with lymphedema, and only about 145,000 patients are treated annually with pneumatic compression devices [11][17] - **Chronic Conditions**: Lymphedema is often secondary to other conditions like chronic vein insufficiency and cancer treatments, making it a complex issue for patients [15][18] - **Quality of Life Impact**: The disease severely impacts patients' quality of life, leading to complications such as cellulitis and limited mobility [20][21] Product Offerings - **Basic and Advanced Pumps**: The company offers two types of pumps: basic and advanced, with the advanced pump (Flexitouch) allowing for more complex treatment needs [32][36] - **Bluetooth Connectivity**: New devices are Bluetooth-enabled, allowing for better patient engagement through the Kylie app, which tracks therapy sessions and provides educational resources [34][48] Clinical Evidence and Studies - **Clinical Trials**: Recent studies show significant benefits of using Flexitouch for head and neck cancer survivors, demonstrating improved symptom management and quality of life [43][44] - **Access to Care**: The company is focused on improving access to care through education and advocacy, addressing the lack of therapists available for patient treatment [61][62] Market Strategy - **Sales Organization**: Tactile Systems has a direct sales organization with plans to expand its sales force to enhance market penetration [53] - **Technological Investments**: Investments in technology, including a new CRM tool and AI for documentation, are aimed at improving operational efficiency and patient care [60][65] Future Outlook - **Growth Projections**: The company anticipates a 16% compound annual growth rate (CAGR) and is focused on scaling operations to meet market demand [59] - **Patient Engagement**: The Kylie app is expected to reach 1 million patient engagements, providing valuable data for improving treatment and patient outcomes [49][51] Additional Important Information - **Regulatory Changes**: Recent changes in Medicare coverage policies have improved access to advanced pumps for patients with specific needs [37] - **Competitive Landscape**: The company is positioned against competitors in both lymphedema and bronchiectasis markets, with a strong emphasis on product innovation and patient satisfaction [54][56] This summary encapsulates the key insights from the Tactile Systems FY Conference Call, highlighting the company's strategic focus on addressing significant market needs and improving patient care through innovative products and technology.

Core Insights - Tactile Systems Technology, Inc. presented new clinical data at ASCO 2025 Annual Meeting, highlighting significant benefits of Flexitouch Plus in treating head and neck cancer-related lymphedema compared to usual care [1][2] Company Overview - Tactile Medical focuses on developing at-home therapies for chronic conditions such as lymphedema, chronic venous insufficiency, and chronic pulmonary disease, aiming to improve patient quality of life and reduce healthcare costs [4] Clinical Trial Findings - The study involved 236 subjects and is the largest randomized controlled trial for head and neck cancer survivors in the U.S. [2] - Two-month data indicated that usual care and advanced pneumatic compression device (APCD) are similarly effective, but APCD showed faster initiation of therapy and better quality-of-life outcomes [3][5] - APCD participants began treatment in an average of 17.9 days, compared to 29.8 days for usual care participants [5] - 94.9% of APCD participants received therapy, versus 71% in the usual care group [5] - APCD demonstrated significant reductions in swelling and improved health-related quality-of-life scores compared to marginal improvements in usual care [5] Future Expectations - The company anticipates that the six-month results from the trial will support broader reimbursement coverage, inform clinical guidelines, and enhance awareness among patients and providers [3]

Core Insights - Tactile Systems Technology, Inc. will participate in two investor conferences in June 2025, presenting at the William Blair 45th Annual Growth Stock Conference and the Jefferies Global Healthcare Conference [1][2] Company Overview - Tactile Medical specializes in developing and marketing at-home therapies for chronic conditions such as lymphedema, lipedema, chronic venous insufficiency, and chronic pulmonary disease [3] - The company aims to improve the quality of life for patients by collaborating with clinicians to enhance clinical evidence, raise awareness, increase access to care, and reduce overall healthcare costs [3]

Company Performance - Tactile Systems Technology reported a quarterly loss of $0.13 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.07, and compared to a loss of $0.05 per share a year ago, indicating an earnings surprise of -85.71% [1] - The company posted revenues of $61.27 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 4.16%, and showing a slight increase from year-ago revenues of $61.09 million [2] - Over the last four quarters, the company has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - Tactile Systems Technology shares have declined approximately 17.8% since the beginning of the year, while the S&P 500 has only declined by 3.3% [3] - The current consensus EPS estimate for the coming quarter is $0.16 on revenues of $78.64 million, and for the current fiscal year, it is $0.66 on revenues of $317.99 million [7] Industry Outlook - The Medical - Instruments industry, to which Tactile Systems Technology belongs, is currently ranked in the top 28% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the industry outlook can significantly impact stock performance [5][8]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 grew by 0.3% year over year to $61.3 million [5][32] - Lymphedema business line revenue decreased by 3% year over year to $50.6 million, while airway clearance revenue increased by 22% to $10.7 million [5][32] - Gross margins increased by 290 basis points year over year, while adjusted EBITDA decreased by 125% year over year [5][32] Business Line Data and Key Metrics Changes - Lymphedema product sales decreased by $1.8 million or 3% to $50.6 million, while airway clearance product sales increased by $1.9 million or 22% to $10.7 million [32] - Sales headcount in the lymphedema business decreased from 280 to 264, but is expected to increase to over 300 by the end of 2025 [10][25] Market Data and Key Metrics Changes - The company is maintaining a strong number two position in the airway clearance market, with significant growth in the bronchiectasis market [16][84] - The company expects revenue in the second quarter to be in the range of $73 million to $76 million, with full-year revenue guidance revised to $309 million to $315 million [14][34] Company Strategy and Development Direction - The company is focused on three strategic priorities: improving access to care, expanding treatment options, and enhancing lifetime patient value [17][26] - Investments in technology and human capital are aimed at streamlining sales and order management processes, including the launch of a new Salesforce CRM module [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential despite short-term challenges related to sales vacancies and CRM implementation [13][38] - The company anticipates a return to growth in the lymphedema channel as sales optimization strategies take effect [25][70] Other Important Information - The company ended the quarter with $83.6 million in cash, reflecting a decrease due to stock buybacks and annual bonus payments [6][34] - The company is actively monitoring global trade policies and assessing potential tariff impacts on cost of goods sold, expecting a total impact of less than $5 million in 2025 [35][36] Q&A Session Summary Question: Revenue guidance assumptions for the year - Management discussed the importance of hiring speed and sales rep proficiency with the new CRM tool as key drivers for revenue guidance [42][44] Question: Growth expectations for 2026 - Management indicated that while they are not ready to comment on 2026, they expect to exit 2025 with more momentum than in the first half of the year [50][52] Question: Updates on Nimble product launch - Management reported strong adoption of Nimble, with no manufacturing challenges and positive feedback from the market [61][62] Question: Airway clearance business growth sustainability - Management attributed growth in the airway clearance business to strategic partnerships and product placement agreements with DMEs [81][84] Question: Rep productivity and CRM tool impact - Management explained that the new CRM tool is designed to enhance productivity and efficiency for sales reps, which is expected to improve overall performance [92][93]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 increased by 0.3% year over year to $61.3 million [5][31] - Lymphedema business line revenue decreased by 3% year over year to $50.6 million, while airway clearance revenue increased by 22% to $10.7 million [5][31] - Gross margins increased by 290 basis points year over year, while adjusted EBITDA decreased by 125% year over year [5][31] - Net loss increased by 35% to $3 million, or $0.13 per diluted share [33] Business Line Performance Changes - Lymphedema revenue decline was attributed to a strategic optimization of the sales organization and a higher than expected vacancy rate in sales headcount [7][10] - Airway clearance performance showed strong growth, with Aflovest sales increasing by 22% year over year, supported by strategic partnerships with DMEs [14][15] Market Data and Key Metrics Changes - The company expects Q2 revenue to be in the range of $73 million to $76 million, with full-year revenue guidance revised to $309 million to $315 million [14][34] - The growth for the lymphedema product line is now projected at 4% to 5%, while airway clearance products are expected to grow by 20% to 23% [35] Company Strategy and Industry Competition - The company is focused on three strategic priorities: improving access to care, expanding treatment options, and enhancing lifetime patient value [17][26] - Investments in technology and human capital are aimed at streamlining sales and order management processes, with the launch of a new Salesforce CRM module [18][19] - The company aims to maintain its market leadership in medical device lymphatic therapy and deliver clinical effectiveness [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth strategy despite short-term challenges related to sales vacancies and CRM implementation [13][37] - The company is actively monitoring global trade policies and assessing potential impacts of tariffs on its business [35][36] Other Important Information - The company ended Q1 with a strong cash position of $83.6 million, despite a sequential decrease due to stock buybacks [6][33] - The company is committed to enhancing patient engagement through tools like Kiley, which tracks symptoms and therapy sessions [28][30] Q&A Session Summary Question: What assumptions get you to the high and low end of the revenue guidance range? - Management indicated that the speed of hiring planned sales roles and sales rep proficiency with the new tool were key factors in determining guidance [44][50] Question: Does the low end of the guidance assume more delays in hiring? - Management confirmed that the speed of hiring and productivity of the sales team were critical in shaping the guidance range [50][51] Question: Can you provide an update on Nimble's commercial launch progress? - Management reported strong adoption of Nimble, with no manufacturing challenges and positive feedback on its ease of use [61] Question: How sustainable is the growth in the airway clearance business? - Management attributed the growth to strategic partnerships and alignment with DMEs, expecting continued momentum [82][84] Question: How does the new CRM tool fit into the hiring of additional sales reps? - The CRM tool is designed to enhance productivity and efficiency, supporting the overall sales optimization strategy [94]

Forward-Looking Statements Disclosure This presentation contains forward-looking statements. Forward-looking statements are generally identifiable by the use of words like "may," "will," "should," "could," "expect," "anticipate," "estimate," "believe," "intend," "continue," "confident," "outlook," "guidance," "project," "goals," "look forward," "poised," "designed," "plan," "return," "focused," "positioned," "prospects," or "remain" or the negative of these words or other variations on these words or compar ...

Revenue and Sales Performance - Revenue for the three months ended March 31, 2025, was $61.3 million, a slight increase of $0.2 million or 0.3% compared to $61.1 million for the same period in 2024[109] - Sales of airway clearance products increased by $1.9 million, or 22%, to $10.7 million, while lymphedema product sales decreased by $1.8 million, or 3%, to $50.6 million[113] - The AffloVest product line accounted for 17% of total revenue in the three months ended March 31, 2025, up from 14% in the same period in 2024[101] Profitability and Expenses - Gross margin improved to 74% for the three months ended March 31, 2025, compared to 71% for the same period in 2024[116] - Operating expenses rose by $3.5 million, or 8%, to $49.9 million, driven primarily by a $3.7 million increase in reimbursement, general, and administrative expenses[112] - Net loss for the three months ended March 31, 2025, was $3.0 million, compared to a net loss of $2.2 million for the same period in 2024, reflecting a 35% increase in losses[109] Research and Development - Research and development expenses decreased by $0.4 million, or 19%, to $1.7 million, primarily due to lower clinical study-related expenses[119] - The company launched the Entre Plus system in March 2024 and the Nimbl platform for lymphedema in October 2024, indicating ongoing product development[100] Financial Position and Cash Flow - As of March 31, 2025, the company had cash of $83.6 million and net accounts receivable of $35.7 million, compared to cash of $60.7 million and net accounts receivable of $47.4 million at March 31, 2024[124] - Net cash provided by operating activities was $0.4 million for the three months ended March 31, 2025, down from $0.9 million for the same period in 2024[125][126] - Net cash used in investing activities was $0.4 million for the three months ended March 31, 2025, compared to $0.5 million for the same period in 2024[127] - Net cash used in financing activities was $10.8 million for the three months ended March 31, 2025, primarily due to $10.0 million for the repurchase of common stock[128] - The company repurchased 635,603 shares for approximately $10.0 million during the three months ended March 31, 2025, with approximately $16.5 million remaining authorized under the stock repurchase program[140] Debt and Tax - As of March 31, 2025, the company had outstanding borrowings of $25.5 million under the Credit Agreement, with a required quarterly repayment of $750,000[137] - The company recorded an income tax benefit of $1.1 million for the three months ended March 31, 2025, up from $0.6 million in the same period in 2024[123] Interest Income and Expense - Interest income increased by $0.2 million, or 26%, to $0.9 million for the three months ended March 31, 2025, compared to $0.7 million for the same period in 2024[122] - Interest expense decreased by $0.2 million, or 25%, to $0.4 million for the three months ended March 31, 2025, compared to $0.6 million for the same period in 2024[122] Strategic Investments - The company continues to invest in its commercial infrastructure, including a direct sales force and reimbursement capabilities, to support growth[102] - The company estimates potential impacts of tariffs on its cost of goods sold could be up to $5.0 million for the year ended December 31, 2025[145] Workforce - The company employed 161 account managers and 103 specialists for lymphedema products as of March 31, 2025, compared to 158 account managers and 111 specialists a year earlier[104]

Revenue Performance - Total revenue for Q1 2025 increased by $180 thousand, or 0.3%, to $61.3 million compared to Q1 2024[4] - Total revenue for Q1 2025 was $61,268,000, a slight increase of 0.3% compared to $61,088,000 in Q1 2024[24] - Sales revenue decreased to $52,469,000 in Q1 2025 from $53,307,000 in Q1 2024, representing a decline of 1.6%[24] - Rental revenue increased to $8,799,000 in Q1 2025, up 13.1% from $7,781,000 in Q1 2024[24] - Lymphedema products accounted for 83% of total revenue in Q1 2025, down from 86% in Q1 2024[27] - The company expects full year 2025 total revenue in the range of $309 million to $315 million, representing growth of approximately 5% to 8% year-over-year[11] Profitability - Gross profit for Q1 2025 increased by $1.9 million, or 4%, to $45.3 million, with a gross margin of 74% compared to 71% in Q1 2024[5] - Gross profit for Q1 2025 was $45,346,000, an increase of 4.4% compared to $43,429,000 in Q1 2024[24] - Adjusted EBITDA loss for Q1 2025 was $0.3 million, compared to positive Adjusted EBITDA of $1.0 million in Q1 2024[9] - Adjusted EBITDA for Q1 2025 was $(259,000), a decrease of 125% from $1,033,000 in Q1 2024[28] - The company now expects full year 2025 adjusted EBITDA in the range of $32 million to $34 million, compared to adjusted EBITDA of $37.1 million in 2024[12] Expenses and Losses - Net loss for Q1 2025 was $3.0 million, or $(0.13) per diluted share, compared to a net loss of $2.2 million, or $(0.09) per diluted share, in Q1 2024[8] - Net loss for Q1 2025 was $2,974,000, compared to a net loss of $2,209,000 in Q1 2024, reflecting a 34.7% increase in losses[24] - Operating expenses increased by $3.5 million, or 8%, to $49.9 million, primarily due to planned strategic investments[7] - Operating expenses rose to $49,888,000 in Q1 2025, up 7.4% from $46,393,000 in Q1 2024[24] Cash and Stock Repurchase - As of March 31, 2025, the company had $83.6 million in cash and $25.5 million of outstanding borrowings under its credit agreement[10] - Cash at the end of Q1 2025 was $83,619,000, a decrease from $94,367,000 at the beginning of the period[26] - The company repurchased $10.0 million of stock during Q1 2025 under its share repurchase program[6]