Forward-Looking Statements Disclosure Lymphedema & Obesity Potential GLP-1 Impact November 2023 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 o ...

[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited condensed consolidated financial statements for Q3 2023 show significant financial performance improvement year-over-year Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $66,036 | $21,929 | | Total current assets | $151,690 | $119,763 | | Total assets | $293,307 | $254,996 | | **Liabilities & Equity** | | | | Total current liabilities | $45,618 | $64,330 | | Total liabilities | $110,477 | $133,596 | | Total stockholders' equity | $182,830 | $121,400 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $69,586 | $65,262 | $196,771 | $172,885 | | Gross profit | $49,359 | $46,794 | $139,126 | $123,879 | | Income (loss) from operations | $7,989 | $(1,620) | $6,241 | $(20,608) | | Net income (loss) | $22,299 | $(2,279) | $20,313 | $(22,487) | | Diluted EPS | $0.94 | $(0.11) | $0.88 | $(1.12) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $17,503 | $1,354 | | Net cash used in investing activities | $(1,541) | $(1,844) | | Net cash provided by (used in) financing activities | $28,145 | $(4,313) | | **Net increase (decrease) in cash** | **$44,107** | **$(4,803)** | - In February 2023, the company closed a public offering of 2,875,000 shares of common stock, receiving net proceeds of **$34.6 million**[26](index=26&type=chunk) - A significant income tax benefit of **$14.7 million** was recorded in Q3 2023, primarily due to the release of a valuation allowance on deferred tax assets, as management now believes these assets are more likely than not to be realized[90](index=90&type=chunk)[92](index=92&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q3 2023's 7% revenue growth to lymphedema product increases, offsetting airway clearance product declines Revenue by Product Line (in thousands) | Product Line | Q3 2023 Revenue | Q3 2022 Revenue | % Change | 9M 2023 Revenue | 9M 2022 Revenue | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Lymphedema products | $62,506 | $54,214 | 15% | $172,257 | $146,502 | 18% | | Airway clearance products | $7,080 | $11,048 | (36)% | $24,514 | $26,383 | (7)% | | **Total** | **$69,586** | **$65,262** | **7%** | **$196,771** | **$172,885** | **14%** | - The increase in lymphedema product revenue was attributed to the increasing productivity of the field sales team and the introduction of new products[120](index=120&type=chunk) - The decrease in airway clearance product revenue was due to one large DME provider experiencing slowed placements of the AffloVest system following the expiration of the COVID-19 Public Health Emergency waiver[120](index=120&type=chunk) - Intangible asset amortization and earn-out expense shifted from a **$4.0 million expense** in Q3 2022 to a **$3.1 million benefit** in Q3 2023, primarily due to a decrease in the fair value of the AffloVest earn-out liability[132](index=132&type=chunk) - The company's credit agreement was amended in August 2023, extending the maturity date to August 2026 and providing an additional term loan of **$8.25 million**[149](index=149&type=chunk) - As of September 30, 2023, total borrowings were **$46.8 million**[150](index=150&type=chunk) - Management believes that cash, cash equivalents, and cash flows from operations will be sufficient to meet working capital, capital expenditure, and debt repayment requirements for at least the next twelve months[153](index=153&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to market risk disclosures since its 2022 Annual Report on Form 10-K - There have been no material changes in the company's market risks since the disclosures made in the Annual Report on Form 10-K for the year ended December 31, 2022[156](index=156&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal controls during the quarter - Management concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective at a reasonable assurance level[157](index=157&type=chunk) - No changes occurred in the company's internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[158](index=158&type=chunk) [PART II—OTHER INFORMATION](index=35&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The "Mart Lawsuit," a securities class action, was settled and received final court approval in August 2023, with no company funding expected - The securities class action lawsuit (Mart v. Tactile Systems) was settled, and on August 25, 2023, the court entered an order granting final approval, bringing the matter to a close[67](index=67&type=chunk)[159](index=159&type=chunk) - The company does not expect to fund the **$5 million** settlement amount[67](index=67&type=chunk)[159](index=159&type=chunk) - A stockholder derivative lawsuit (Weaver v. Moen) has reached a non-binding settlement-in-principle as of July 31, 2023, with parties working to finalize the agreement[70](index=70&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since those disclosed in the company's 2022 Annual Report on Form 10-K - There have been no material changes in risk factors from those disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022[160](index=160&type=chunk)

Tactile Systems Technology, Inc. (NASDAQ:TCMD) Q2 2023 Earnings Conference Call August 7, 2023 5:00 PM ET Company Participants Daniel Reuvers - President & Chief Executive Officer Elaine Birkemeyer - Chief Financial Officer Conference Call Participants Simran Kaur - Piper Sandler Margaret Kaczor - William Blair & Company Suraj Kalia - Oppenheimer & Co. Inc. Operator Welcome, ladies and gentlemen, to the Second Quarter of Fiscal Year 2023 Earnings Conference Call for Tactile Medical. [Operator Instructions] ...

PART I—FINANCIAL INFORMATION [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2023, showing a 15% revenue increase in Q2 2023, significantly narrowed net loss, and improved cash position due to a February 2023 stock offering [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet indicates an increase in total assets as of June 30, 2023, primarily driven by a significant rise in cash and cash equivalents, alongside a decrease in total liabilities and an increase in total shareholders' equity Key Balance Sheet Items Comparison (in thousands) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $63,212 | $21,929 | | Total Assets | $273,728 | $254,996 | | Total Liabilities | $114,965 | $133,596 | | Total Shareholders' Equity | $158,763 | $121,400 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations show year-over-year revenue growth of 15% for Q2 2023 and 18% for H1 2023, with net loss significantly narrowing, approaching breakeven in Q2, due to revenue growth and expense control Operating Performance Comparison (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $68,339 | $59,645 | $127,185 | $107,623 | | Operating Income (Loss) | $2,058 | $(4,087) | $(1,748) | $(18,988) | | Net Loss | $(100) | $(4,640) | $(1,986) | $(20,208) | | Net Loss Per Share (Diluted) | $0.00 | $(0.23) | $(0.09) | $(1.01) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement indicates $13.4 million in positive cash flow from operating activities in H1 2023, a significant improvement from the prior year, with financing activities providing $29 million in net cash from a public stock offering Cash Flow Summary (in thousands) - Six Months Ended June 30 | Item | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $13,407 | $(900) | | Net Cash Used in Investing Activities | $(1,142) | $(416) | | Net Cash from (Used in) Financing Activities | $29,018 | $(3,563) | | Net Increase (Decrease) in Cash and Cash Equivalents | $41,283 | $(4,879) | - Cash inflow from financing activities primarily resulted from the public offering of common stock in February 2023, raising **$34.6 million** in net proceeds[21](index=21&type=chunk)[26](index=26&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's financial condition and operating results, covering business nature, contingent consideration for the AffloVest acquisition, credit agreement terms, legal proceedings, and revenue breakdown by product line and channel - The company primarily manufactures and sells medical devices in the U.S. for chronic conditions, including Flexitouch® and Entre™ systems for lymphedema, and AffloVest® for chronic respiratory conditions[22](index=22&type=chunk)[23](index=23&type=chunk) - The company amended its credit agreement for the fourth time on August 1, 2023, extending the term to August 1, 2026, and modifying financial covenants, with **$47.5 million** in outstanding borrowings as of June 30, 2023[54](index=54&type=chunk)[59](index=59&type=chunk) - The company reached preliminary settlement agreements for securities class action and shareholder derivative lawsuits, with no expected cash payment from the company for the **$5 million** settlement amount[73](index=73&type=chunk)[75](index=75&type=chunk) Revenue by Product Line (in thousands) | Product Line | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Lymphedema Products | $59,999 | $51,634 | $109,751 | $92,288 | | Airway Clearance Products | $8,340 | $8,011 | $17,434 | $15,335 | | **Total** | **$68,339** | **$59,645** | **$127,185** | **$107,623** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=36&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operating results, highlighting strong revenue growth from lymphedema and airway clearance products, significantly improved profitability, enhanced liquidity from a successful stock offering and positive operating cash flow, and extended debt maturity through credit agreement revisions [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Revenue increased by 15% in Q2 2023 and 18% in H1 2023 year-over-year, driven by growth in both lymphedema and airway clearance products, while a slight decrease in gross margin was offset by controlled sales and marketing expenses and reduced intangible asset amortization and contingent consideration expenses Revenue Growth Analysis (in thousands) | Period | Total Revenue Growth | Lymphedema Product Growth | Airway Clearance Product Growth | | :--- | :--- | :--- | :--- | | Q2 2023 vs Q2 2022 | +$8.7M (+15%) | +$8.4M (+16%) | +$0.3M (+4%) | | H1 2023 vs H1 2022 | +$19.6M (+18%) | +$17.5M (+19%) | +$2.1M (+14%) | - Gross margin was **70.7%** in Q2 2023, down from **72.5%** in the prior year, and **70.6%** for H1 2023, down from **71.6%** in the prior year[131](index=131&type=chunk) - Sales and marketing expenses decreased by **2%** in Q2 2023 due to reduced travel and entertainment, while increasing by **3%** in H1 2023 primarily due to higher sales team personnel-related compensation[132](index=132&type=chunk)[135](index=135&type=chunk) - Intangible asset amortization and contingent consideration expenses significantly decreased by **$6.3 million** in H1 2023, primarily due to reduced fair value adjustments for the AffloVest acquisition's contingent consideration[140](index=140&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, the company maintained a strong liquidity position with **$63.2 million** in cash and cash equivalents, primarily sourced from **$13.4 million** in operating cash flow and **$34.6 million** net proceeds from a February 2023 stock offering, further enhanced by an extended debt maturity through credit agreement revisions - As of June 30, 2023, primary liquidity sources included **$63.2 million** in cash and cash equivalents and **$62.0 million** in net accounts receivable[143](index=143&type=chunk) - Operating activities provided **$13.4 million** in net cash during H1 2023, compared to a net outflow of **$0.9 million** in the prior year period[144](index=144&type=chunk)[145](index=145&type=chunk) - Financing activities provided **$29.0 million** in net cash during H1 2023, primarily from **$34.6 million** in net proceeds from common stock issuance, partially offset by **$5.0 million** in contingent consideration payments and **$1.5 million** in loan repayments[148](index=148&type=chunk) - The company amended its credit agreement for the fourth time on August 1, 2023, extending the maturity date from September 8, 2024, to August 1, 2026, and securing an additional **$8.25 million** term loan to repay revolving credit[156](index=156&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the company's quantitative and qualitative disclosures about market risk during the reporting period compared to the information disclosed in the December 31, 2022 annual report on Form 10-K - No material changes to the company's market risk have occurred since December 31, 2022[163](index=163&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, assessed the disclosure controls and procedures as of June 30, 2023, concluding their effectiveness at a reasonable assurance level, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[164](index=164&type=chunk) - No material changes occurred in the company's internal control over financial reporting during the quarter ended June 30, 2023[165](index=165&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding certain legal proceedings involving the company is described in Note 10, 'Commitments and Contingencies,' to the financial statements in Part I of this report, which is incorporated herein by reference - For detailed information on legal proceedings, refer to Note 10 of the financial statements[166](index=166&type=chunk) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred during the reporting period compared to those disclosed in the December 31, 2022 annual report on Form 10-K - No material changes to the company's risk factors have occurred since the 2022 annual report disclosure[167](index=167&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not engage in any unregistered sales of equity securities during the reporting period - No unregistered securities were issued during the reporting period[168](index=168&type=chunk) [Defaults Upon Senior Securities](index=52&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable - Not applicable[169](index=169&type=chunk) [Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable - Not applicable[171](index=171&type=chunk) [Other Information](index=53&type=section&id=Item%205.%20Other%20Information) This section discloses the Fourth Amendment to the Credit Agreement, executed on August 1, 2023, extending the maturity date to August 1, 2026, modifying financial covenants, and providing an additional **$8.25 million** term loan, along with the adoption of Rule 10b5-1(c) trading plans by two company insiders - The company executed the Fourth Amendment to the Credit Agreement on August 1, 2023, extending the maturity date to August 1, 2026, modifying financial covenants, and obtaining an additional **$8.25 million** term loan[172](index=172&type=chunk)[175](index=175&type=chunk) - Senior Vice President Kristie Burns and Chairman William W. Burke adopted Rule 10b5-1 stock trading plans on May 24, 2023, and June 13, 2023, respectively[177](index=177&type=chunk)[178](index=178&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with this quarterly report on Form 10-Q, including the Third and Fourth Amendments to the Credit Agreement, executive employment letters, and CEO and CFO certifications - Exhibits filed include the Third and Fourth Amendments to the Credit Agreement (Exhibit 10.1, 10.2) and financial statement data in XBRL format[180](index=180&type=chunk)[183](index=183&type=chunk)

Financial Performance - Total revenue for Q1 2023 increased by 23% year-over-year to $58.8 million, exceeding expectations [10][36] - Lymphedema products revenue grew by 22% year-over-year to $48.9 million, while airway clearance products revenue increased by 24% year-over-year to $9.1 million [10][36] - Operating loss decreased by 74% to $3.8 million, with non-GAAP operating loss down by 59% to $2.2 million [39] - Adjusted EBITDA was positive for the first time in Q1 since 2019, amounting to $0.5 million compared to a loss of $2.6 million in the previous year [11][57] Business Line Performance - Strong retention and engagement within the sales team contributed to the growth in lymphedema products, with a consistent headcount of 250 sales representatives [12] - New product launches, particularly ComfortEase, positively impacted sales performance in the lymphedema segment [13] - Airway clearance product line benefited from improved supply chain stability, allowing for expanded production capacity [16] Market Dynamics - The company observed improvements in patient throughput at clinics, indicating a recovery in staffing and patient volume [15] - A recent policy change by CMS eliminated the requirement for certificates of medical necessity, reducing administrative burdens for prescribers [14] Strategic Direction - The company aims to enhance productivity in the lymphedema sales team and deepen relationships with DME providers for airway clearance products [81] - Continued focus on product innovation, including the launch of the next-generation Entre system and enhancements to the Kylee mobile application [27][30] Management Commentary - Management expressed optimism about the operating environment and future growth, citing strong performance in Q1 and a positive outlook for the remainder of 2023 [80] - The company raised its full-year revenue guidance based on a strong start to the year, projecting growth of approximately 10% to 11.5% [58] Other Important Information - The company raised $35 million in net proceeds through a public offering, strengthening its balance sheet [31][42] - New appointments to the leadership team were announced, including a new CFO with extensive healthcare experience [33][34] Q&A Session Summary Question: What is the current patient adoption rate for Kylee and its intended use? - Management indicated that Kylee serves as both a compliance tool for patients and a data-gathering tool for payers, with ongoing enhancements to improve patient engagement [56][79] Question: How does the elimination of the certificate of medical necessity impact sales? - Management noted that the elimination of this requirement is expected to streamline the process for prescribers, potentially increasing patient access to therapies [67][70] Question: What are the expectations for seasonality in the upcoming quarters? - Management expects incremental growth throughout the year, with Q4 typically being the strongest quarter due to lower co-pays [75] Question: What are the near-term goals for the new CFO? - The new CFO aims to leverage her healthcare experience to improve revenue cycle management and drive top-line growth while expanding profitability [78] Question: How is the company positioned to meet market demand for AffloVest? - Management confirmed that they are in a strong position to supply the market without backorders, following improvements in supply chain capacity [96]

PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Q1 2023 revenue grew 23% to $58.8 million, net loss significantly narrowed, and cash increased to $55.0 million [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets reached $275.5 million by March 31, 2023, driven by cash, while liabilities decreased, boosting equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $55,011 | $21,929 | | Total current assets | $145,433 | $119,763 | | Total assets | $275,501 | $254,996 | | **Liabilities & Equity** | | | | Total current liabilities | $51,404 | $64,330 | | Total liabilities | $119,339 | $133,596 | | Total stockholders' equity | $156,162 | $121,400 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2023 revenue grew 23% to $58.8 million, significantly narrowing net loss to $1.9 million due to higher revenue and lower expenses Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Total revenue | $58,846 | $47,978 | | Gross profit | $41,468 | $33,862 | | Loss from operations | $(3,806) | $(14,901) | | Net loss | $(1,886) | $(15,568) | | Net loss per share (Basic & Diluted) | $(0.09) | $(0.78) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity rose to $156.2 million by March 31, 2023, primarily from $34.6 million net proceeds of a public stock offering - A follow-on public offering of 2,875,000 shares of common stock resulted in net proceeds of **$34.6 million**, significantly boosting stockholders' equity[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2023 cash and equivalents increased by $33.1 million, primarily from $33.9 million in financing activities, improving operating cash flow Summary of Cash Flows (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(502) | $(3,206) | | Net cash used in investing activities | $(291) | $(175) | | Net cash provided by (used in) financing activities | $33,875 | $(3,698) | | **Net increase (decrease) in cash** | **$33,082** | **$(7,079)** | [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business operations, product lines, seasonality, debt, revenue, and legal proceedings, including a class action settlement - The company manufactures and distributes medical devices for chronic diseases, including the Flexitouch® and Entre™ systems for lymphedema and the AffloVest® for chronic respiratory conditions[23](index=23&type=chunk)[24](index=24&type=chunk) - In February 2023, the company closed a public offering of 2,875,000 shares of common stock, receiving net proceeds of **$34.6 million**[27](index=27&type=chunk) - The company's business is seasonal, with substantially reduced demand in the first quarter due to insurance deductibles resetting, and higher revenue in the third and fourth quarters[28](index=28&type=chunk) - A securities class action lawsuit (Mart Lawsuit) has been settled for **$5 million**, subject to final court approval. The company does not expect to fund any portion of the cash payment[69](index=69&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported Q1 2023 revenue growth of 23% to $58.8 million, significantly narrowing net loss, with strong liquidity [Overview](index=35&type=section&id=Overview) The company develops medical devices for chronic diseases, utilizing direct-to-patient and DME provider models for its product lines - The company's therapeutic focus is on vascular disease, oncology, and chronic respiratory conditions, with a mission to improve at-home care for patients[101](index=101&type=chunk) - As of March 31, 2023, the company's field staff grew to **289** employees, up from 271 in the prior year, to support its commercial infrastructure[104](index=104&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Q1 2023 revenue grew 23% to $58.8 million, driven by product lines, with stable gross margin and reduced operating loss Revenue by Product Line (in thousands) | Product Line | Q1 2023 | Q1 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Lymphedema products | $49,752 | $40,654 | $9,098 | 22% | | Airway clearance products | $9,094 | $7,324 | $1,770 | 24% | | **Total** | **$58,846** | **$47,978** | **$10,868** | **23%** | - Gross margin remained consistent year-over-year at **70.5%** in Q1 2023 compared to 70.6% in Q1 2022[118](index=118&type=chunk) - Intangible asset amortization and earn-out expense decreased by **$5.8 million** (82%) year-over-year, primarily due to a smaller fair value adjustment to the earn-out liability in the current period[123](index=123&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved in Q1 2023, with cash and equivalents reaching $55.0 million, primarily from a public stock offering - Net cash provided by financing activities was **$33.9 million**, primarily from a **$34.6 million** public stock offering, which significantly improved the company's cash position[131](index=131&type=chunk) - As of March 31, 2023, the company had outstanding borrowings of **$48.3 million**, consisting of a **$23.3 million** term loan and **$25.0 million** under its revolving credit facility[138](index=138&type=chunk) - The company is obligated to pay the remaining **$5.0 million** of the initial AffloVest earn-out, plus **$250,000** in interest, on or before May 26, 2023[141](index=141&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risks were reported since the Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes in market risk since the end of the previous fiscal year[148](index=148&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2023[149](index=149&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[150](index=150&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference from Note 10 – 'Commitments and Contingencies' in the financial statements - Details on legal proceedings are provided in Note 10 of the condensed consolidated financial statements[151](index=151&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported from those disclosed in the Annual Report on Form 10-K for 2022 - No material changes in risk factors were reported from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[152](index=152&type=chunk) [Other Items (Items 2, 3, 4, 5, 6)](index=49&type=section&id=Other%20Items) The company reported no unregistered equity sales, no defaults on senior securities, and no mine safety or other material disclosures - The company reported no activity for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)

Financial Data and Key Metrics - Total revenue increased 20% year-over-year to $73.9 million in Q4 2022, exceeding the high end of the updated fiscal year guidance range [13] - Lymphedema product revenue grew 14% year-over-year to $65.8 million, while airway clearance product revenue surged 90% year-over-year to $8.1 million [6][42] - GAAP net income was $4.6 million ($0.23 per diluted share), compared to a net loss of $7.5 million in the prior year period [46] - Adjusted EBITDA increased 27% year-over-year to $12.1 million, representing 16% of sales [46] - Free cash flow generated was $3.8 million, helping fund a $5 million milestone payment related to the AffloVest acquisition [15] Business Line Performance - Lymphedema product line returned to double-digit revenue growth in Q4 2022, driven by improved sales team productivity and stabilization of clinic throughput [7][22] - Airway clearance product line achieved 109% annual growth in 2022 following the AffloVest acquisition, with strong demand from DME distributors [22][21] - ComfortEase lower extremity garments and Kylee Mobile Application launched in July 2022, contributing to strong sales of lymphedema systems for lower extremities [17][27] Market and Channel Performance - Revenue by channel: $41.4 million from commercial payers, $18 million from Medicare, $8.1 million from DME distributors, and $6.4 million from the VA [43] - VA centers showed anecdotal signs of resuming patient visits, though not yet a broad trend [66] - CMS discontinued the policy requiring certificates of medical necessity for pneumatic compression device claims, providing an opportunity for increased engagement with prescribers [34] Strategic Priorities and Industry Competition - Key strategic priorities for 2023 include improving lymphedema sales team productivity, deepening relationships with DME providers, introducing new products, and enhancing operational efficiency [30] - The company aims to deliver at least $350 million in total revenue and $50 million of adjusted EBITDA by 2025, with a focus on underserved chronic conditions [54][69] - New product innovations, such as Bluetooth-enabled Flexitouch Plus and Kylee app updates, aim to enhance patient experience and compliance [8][102] Management Commentary on Operating Environment and Future Outlook - Management expressed cautious optimism for 2023, citing potential tailwinds from sales productivity expansion, new product traction, and payer policy improvements [32] - Supply chain constraints for AffloVest are expected to ease in 2023, with production capacity expanded through a second supplier [16][74] - Macroeconomic uncertainties, such as potential recession impacts on consumer spending and co-pays, were factored into the 2023 guidance [55][80] Other Important Information - The company hosted 43 educational programs in Q4 2022, attended by approximately 1,300 clinicians, and trained nearly 6,500 participants throughout the year [28] - A continuing education unit course on obesity-related lymphedema was launched in December 2022, drawing 266 attendees [28] - CFO Brent Moen announced his intention to retire in 2023, with a successor search underway [40][41] Q&A Session Summary Question: 2023 Revenue Guidance and Assumptions - 2023 revenue guidance assumes 9%-11% growth, with lymphedema products growing 8%-9% and airway clearance products growing 18%-22% [47][72] - Supply chain headwinds for AffloVest are expected to diminish, with no significant revenue contribution from new product launches factored into the guidance [72][74] Question: Sales Team Productivity and Headcount - The company ended 2022 with 250 sales representatives, consistent with Q4 headcount, and expects to maintain this level through at least the first half of 2023 [15][75] - Sales productivity improved in Q4, with the team engaging previously unrepresented accounts and benefiting from reduced turnover compared to 2021 [7][113] Question: VA Center Reopening Impact - Anecdotal evidence suggests some VA centers have resumed patient visits, but the impact on 2023 results remains uncertain [66][73] Question: Adjusted EBITDA and Free Cash Flow Expectations - Adjusted EBITDA is expected to grow over 30% in 2023, driven by improved cost management and reduced legal expenses [57][110] - Free cash flow generation is anticipated to support growth investments, with a cumulative $75 million expected from 2023 to 2025 [69][108] Question: New Product Pipeline - The company plans to introduce a size extension for AffloVest in H1 2023, refresh the Entree device, and launch upper extremity ComfortEase garments in H2 2023 [100][112] - Kylee app updates will include measurement tracking, reminders, and encouragement prompts to enhance patient compliance and reduce cost to serve [102][114]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-37799 Tactile Systems Technology, Inc. (Exact name of registrant as specified in its charter) Delaware (State or o ...

Tactile. MEDICAL® Investor Presentation November 2022 NASDAQ: TCMD 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 n ...

Tactile Systems Technology, Inc. (NASDAQ:TCMD) Q3 2022 Earnings Conference Call November 7, 2022 5:00 PM ET Company Participants Dan Reuvers - President and Chief Executive Officer Brent Moen - Chief Financial Officer Conference Call Participants Ryan Zimmerman - BTIG Margaret Kaczor - William Blair Suraj Kalia - Oppenheimer Operator Welcome, ladies and gentlemen to the Third Quarter of Fiscal Year 2022 Earnings Conference Call for Tactile Medical. [Operator Instructions] At the end of the company’s prepare ...