Tactile Systems Technology(TCMD) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Summary & Recent Business Highlights The company reported strong Q2 2025 financial performance with nearly 8% revenue growth, driven by strategic investments and product line expansion, while also completing its share repurchase program CEO Commentary & Strategic Priorities CEO Sheri Dodd reported strong Q2 2025 financial performance with nearly 8% YoY revenue growth, exceeding expectations, and outlined key strategic priorities for 2025 - CEO highlights strong Q2 2025 financial performance with nearly 8% YoY revenue growth, exceeding expectations[3] - Company's 2025 strategic priorities include improving access to care, expanding lymphedema treatment options, and enhancing lifetime patient value[3] - Key investments include sales force expansion, new clinical data presentation (head and neck lymphedema trial), growing Nimbl adoption, and launching pilot programs for workflow simplification, with meaningful benefits expected in 2026[3] Q2 2025 Key Financial & Business Highlights Total revenue increased 7.8% year-over-year to $78.9 million, while gross margin improved to 75%, though net income and Adjusted EBITDA decreased Q2 2025 Key Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change ($M) | Change (%) | | :----- | :------ | :------ | :---------- | :--------- | | Total Revenue | $78.9M | $73.2M | $5.7M | 7.8% | | Gross Margin | 75% | 74% | 1% | - | | Net Income | $3.2M | $4.3M | $(1.1M) | (25)% | | Adjusted EBITDA | $7.7M | $9.1M | $(1.4M) | (15)% | - Announced the presentation of new data demonstrating significant benefits associated with use of Flexitouch Plus in treating patients with head and neck cancer-related lymphedema[5] - Repurchased $16.5 million of stock to complete the Company's share repurchase program[5] Second Quarter 2025 Financial Results Q2 2025 saw total revenue increase by 7.8% to $78.9 million, but net income and Adjusted EBITDA decreased due to higher operating expenses from strategic investments Total Revenue Performance Total revenue for Q2 2025 increased 7.8% year-over-year to $78.9 million, primarily driven by strong growth in the airway clearance product line and a modest increase in the lymphedema product line Q2 2025 Revenue by Product Line | Product Line | Q2 2025 Revenue ($M) | Q2 2024 Revenue ($M) | Change ($M) | Change (%) | | :------------ | :------------------- | :------------------- | :---------- | :--------- | | Airway Clearance | $12.9 | $8.5 | $4.4 | 52% | | Lymphedema | $66.0 | $64.7 | $1.3 | 2% | | Total Revenue | $78.9 | $73.2 | $5.7 | 7.8% | - Increase in airway clearance product line revenue primarily attributable to increased placements of AffloVest among the Company's durable medical equipment (DME) partners[4] - Increase in lymphedema product line revenue primarily attributable to increased headcount and improved productivity within the Company's field sales team[4] Gross Profit and Margin Gross profit for Q2 2025 increased by 9% to $58.8 million, with the gross margin improving to 75% from 74% in the prior year, mainly due to reduced manufacturing and warranty costs Q2 2025 Gross Profit and Margin | Metric | Q2 2025 | Q2 2024 | Change ($M) | Change (%) | | :----- | :------ | :------ | :---------- | :--------- | | Gross Profit | $58.8M | $54.1M | $4.7M | 9% | | Gross Margin | 75% | 74% | 1% | - | - The increase in gross profit was primarily attributable to lower manufacturing and warranty costs[7] Operating Expenses and Income Operating expenses in Q2 2025 increased by 13% to $54.7 million due to planned strategic investments, leading to a decrease in operating income to $4.1 million from $5.8 million in Q2 2024 Q2 2025 Operating Expenses and Income | Metric | Q2 2025 | Q2 2024 | Change ($M) | Change (%) | | :----------------- | :------ | :------ | :---------- | :--------- | | Operating Expenses | $54.7M | $48.3M | $6.4M | 13% | | Operating Income | $4.1M | $5.8M | $(1.7M) | (29)% | - The increase in operating expenses was primarily attributable to planned strategic investments[7] Net Income and EPS Net income for Q2 2025 decreased to $3.2 million, or $0.14 per diluted share, compared to $4.3 million, or $0.18 per diluted share, in Q2 2024 Q2 2025 Net Income and Diluted EPS | Metric | Q2 2025 | Q2 2024 | Change ($M) | Change (%) | | :---------- | :------ | :------ | :---------- | :--------- | | Net Income | $3.2M | $4.3M | $(1.1M) | (25)% | | Diluted EPS | $0.14 | $0.18 | $(0.04) | (22)% | - Weighted average shares used to compute diluted net income per share were 23.2 million in Q2 2025, down from 24.1 million in Q2 2024[9] Adjusted EBITDA Adjusted EBITDA for Q2 2025 was $7.7 million, a 15% decrease compared to $9.1 million in Q2 2024 Q2 2025 Adjusted EBITDA | Metric | Q2 2025 | Q2 2024 | Change ($M) | Change (%) | | :-------------- | :------ | :------ | :---------- | :--------- | | Adjusted EBITDA | $7.7M | $9.1M | $(1.4M) | (15)% | First Six Months 2025 Financial Results Year-to-date 2025 total revenue grew 4% to $140.2 million, primarily from airway clearance products, though net income and Adjusted EBITDA significantly declined Total Revenue Performance (YTD) Total revenue for the first six months of 2025 increased 4% to $140.2 million, primarily driven by a significant increase in airway clearance product sales, partially offset by a slight decrease in lymphedema product sales YTD 2025 Revenue by Product Line | Product Line | YTD 2025 Revenue ($M) | YTD 2024 Revenue ($M) | Change ($M) | Change (%) | | :------------ | :-------------------- | :-------------------- | :---------- | :--------- | | Airway Clearance | $23.6 | $17.3 | $6.3 | 37% | | Lymphedema | $116.5 | $117.0 | $(0.5) | (0.4)% | | Total Revenue | $140.2 | $134.3 | $5.9 | 4% | Net Income and EPS (YTD) Net income for the first six months of 2025 significantly decreased to $0.2 million, or $0.01 per diluted share, compared to $2.1 million, or $0.09 per diluted share, in the prior year period YTD 2025 Net Income and Diluted EPS | Metric | YTD 2025 | YTD 2024 | Change ($M) | Change (%) | | :---------- | :------- | :------- | :---------- | :--------- | | Net Income | $0.2M | $2.1M | $(1.9M) | (88)% | | Diluted EPS | $0.01 | $0.09 | $(0.08) | (89)% | Adjusted EBITDA (YTD) Adjusted EBITDA for the first six months of 2025 was $7.4 million, representing a 27% decrease from $10.1 million in the same period of 2024 YTD 2025 Adjusted EBITDA | Metric | YTD 2025 | YTD 2024 | Change ($M) | Change (%) | | :-------------- | :------- | :------- | :---------- | :--------- | | Adjusted EBITDA | $7.4M | $10.1M | $(2.7M) | (27)% | Balance Sheet & Capital Management Cash and equivalents decreased to $81.5 million, while the company completed its share repurchase program and refinanced its revolving credit facility post-quarter Cash, Borrowings, and Debt Management As of June 30, 2025, cash and cash equivalents decreased to $81.5 million, while outstanding borrowings slightly reduced, and post-quarter, the company retired its term loan and increased its revolving credit facility capacity Cash and Borrowings Summary | Metric | June 30, 2025 ($M) | Dec 31, 2024 ($M) | Change ($M) | | :------------------- | :----------------- | :---------------- | :---------- | | Cash & Equivalents | $81.5 | $94.4 | $(12.9) | | Outstanding Borrowings | $24.8 | $26.3 | $(1.5) | - On July 31, 2025, the Company paid the full outstanding principal balance of $24.0 million under, and retired, its term loan[13] - Refinanced its revolving credit facility, increasing the capacity from $25.0 million to $40.0 million[13] Share Repurchase Program The company completed its $30.0 million share repurchase program by repurchasing an additional $26.6 million of its stock during the first six months of 2025 - Repurchased $26.6 million of its stock during the six months ended June 30, 2025, to complete its $30.0 million share repurchase program[13] 2025 Financial Outlook The company updated its full-year 2025 revenue guidance to $310-$315 million and Adjusted EBITDA guidance to $33-$35 million, reflecting continued growth expectations Full Year Revenue Guidance Tactile Medical updated its full-year 2025 total revenue guidance to a range of $310 million to $315 million, representing approximately 6% to 8% year-over-year growth, an increase from the prior guidance Full Year 2025 Total Revenue Guidance | Metric | Updated FY 2025 Guidance ($M) | Prior FY 2025 Guidance ($M) | FY 2024 Actual ($M) | | :------------ | :---------------------------- | :-------------------------- | :------------------ | | Total Revenue | $310 - $315 | $309 - $315 | $293.0 | | YoY Growth | 6% - 8% | 5% - 8% | - | Full Year Adjusted EBITDA Guidance The company now expects full-year 2025 Adjusted EBITDA in the range of $33 million to $35 million, an increase from previous guidance but still below the 2024 actuals Full Year 2025 Adjusted EBITDA Guidance | Metric | Updated FY 2025 Guidance ($M) | Prior FY 2025 Guidance ($M) | FY 2024 Actual ($M) | | :-------------- | :---------------------------- | :-------------------------- | :------------------ | | Adjusted EBITDA | $33 - $35 | $32 - $34 | $37.1 | Conference Call Information Details for the August 4, 2025 conference call are provided for discussing Q2 results, including live access and replay options Conference Call Details Management will host a conference call on August 4, 2025, at 5:00 p.m. Eastern Time to discuss the second quarter results, with details provided for live participation and replay access - Management will host a conference call with a question-and-answer session at 5:00 p.m. Eastern Time on August 4, 2025, to discuss the results of the quarter[16] - Participants can dial 877-407-3088 (international: 201-389-0927) with access code 13754589, or access a live webcast at investors.tactilemedical.com[16] - A replay of the call will be available for two weeks at 877-660-6853 (international: 201-612-7415) with access code 13754589, and the webcast will be archived[17] About Tactile Systems Technology, Inc. Tactile Medical is a medical technology company focused on developing and marketing at-home therapies for chronic conditions like lymphedema, aiming to improve patient quality of life Company Overview Tactile Medical is a medical technology company that develops and markets at-home therapies for chronic conditions such as lymphedema, lipedema, chronic venous insufficiency, and chronic pulmonary disease, aiming to improve patient quality of life and reduce healthcare costs - Tactile Medical is a leader in developing and marketing at-home therapies for people suffering from underserved, chronic conditions including lymphedema, lipedema, chronic venous insufficiency and chronic pulmonary disease[18] - The company collaborates with clinicians to expand clinical evidence, raise awareness, increase access to care, reduce overall healthcare costs and improve the quality of life for tens of thousands of patients each year[18] Legal Notice Regarding Forward-Looking Statements This section provides a disclaimer for forward-looking statements, including 2025 guidance, highlighting inherent risks and the company's non-obligation to update them Forward-Looking Statements Disclaimer This section cautions readers that the release contains forward-looking statements, including 2025 guidance, which are subject to numerous factors and uncertainties outside the company's control, advising against undue reliance and directing investors to SEC filings for risk discussions - This release contains forward-looking statements, including guidance for the full year 2025, which are subject to numerous factors and uncertainties outside of the Company's control[19][20] - The reader is cautioned not to put undue reliance on these forward-looking statements, as actual results could differ materially due to various risks discussed in the Company's SEC filings[19][20] - The Company undertakes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise[20] Use of Non-GAAP Financial Measures This section defines Adjusted EBITDA as a non-GAAP measure, explains its use by management for performance assessment, and clarifies its limitations compared to GAAP Definition and Rationale This section defines Adjusted EBITDA as a non-GAAP financial measure, reconciling it to net income by adding back specific expenses, and explains its use by management as a key indicator of operating performance for planning and compensation - Adjusted EBITDA is a non-GAAP financial measure representing net income (loss) adjusted for interest, income tax, depreciation and amortization, stock-based compensation expense, and executive transition costs[21] - Management uses Adjusted EBITDA as a useful indicator of operating performance for planning, annual operating plan preparation, financial projections, and as a performance metric in the Company's compensation program[22] - Non-GAAP financial measures should not be considered as an alternative to, or superior to, GAAP financial measures and have limitations, such as not reflecting cash requirements for tax payments, debt service, or capital expenditures[23][24] Condensed Consolidated Financial Statements The condensed financial statements present the balance sheets, statements of operations, and cash flows, showing changes in assets, liabilities, equity, and profitability for Q2 and YTD 2025 Condensed Consolidated Balance Sheets The balance sheet shows a decrease in total assets from $297.9 million at year-end 2024 to $273.0 million as of June 30, 2025, primarily driven by reductions in cash and accounts receivable Condensed Consolidated Balance Sheets Summary (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | | :----------------------- | :------------ | :----------- | | Total Assets | $273,048 | $297,924 | | Total Liabilities | $78,122 | $81,327 | | Total Stockholders' Equity | $194,926 | $216,597 | - Current assets decreased from $177.6 million as of December 31, 2024, to $153.0 million as of June 30, 2025, mainly due to decreases in cash and accounts receivable[26] - Common stock shares issued and outstanding decreased from 23,883,475 as of December 31, 2024, to 22,292,145 as of June 30, 2025, reflecting share repurchases[26] Condensed Consolidated Statements of Operations The statements of operations show total revenue growth for both the quarter and six-month period, but net income and diluted EPS decreased significantly year-over-year for both periods, with the six-month period showing an operating loss Condensed Consolidated Statements of Operations Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------- | :------ | :------ | :------- | :------- | | Total Revenue | $78,905 | $73,218 | $140,173 | $134,306 | | Gross Profit | $58,793 | $54,103 | $104,139 | $97,532 | | Income (loss) from operations | $4,083 | $5,849 | $(459) | $2,885 | | Net Income | $3,217 | $4,298 | $243 | $2,089 | | Diluted EPS | $0.14 | $0.18 | $0.01 | $0.09 | Condensed Consolidated Statements of Cash Flows For the first six months of 2025, net cash provided by operating activities increased, while net cash used in investing activities decreased, but net cash used in financing activities significantly increased due to stock repurchases, resulting in a net decrease in cash for the period Condensed Consolidated Statements of Cash Flows Summary (in thousands) | Metric | YTD 2025 | YTD 2024 | | :---------------------------------------- | :------- | :------- | | Net cash provided by operating activities | $15,174 | $14,066 | | Net cash used in investing activities | $(804) | $(1,027) | | Net cash used in financing activities | $(27,209) | $(454) | | Net (decrease) increase in cash | $(12,839) | $12,585 | | Cash – end of period | $81,528 | $73,618 | - Net cash used in financing activities increased significantly from $(454) thousand in YTD 2024 to $(27,209) thousand in YTD 2025, primarily due to $26.6 million in payments for repurchases of common stock[30] Supplemental Financial Data Supplemental financial data details revenue by product line, showing strong growth in airway clearance, and reconciles net income to Adjusted EBITDA for various periods Revenue by Product Line The supplemental data shows that while lymphedema products remain the largest revenue contributor, their percentage of total revenue decreased in Q2 2025 and YTD 2025, while airway clearance products demonstrated strong growth and increased their share of total revenue Revenue by Product Line (in thousands) | Product Line | Q2 2025 Revenue | Q2 2024 Revenue | YTD 2025 Revenue | YTD 2024 Revenue | | :------------------ | :-------------- | :-------------- | :--------------- | :--------------- | | Lymphedema products | $65,969 | $64,683 | $116,524 | $116,996 | | Airway clearance products | $12,936 | $8,535 | $23,649 | $17,310 | | Total | $78,905 | $73,218 | $140,173 | $134,306 | - Lymphedema products constituted 84% of total revenue in Q2 2025 (down from 88% in Q2 2024), while Airway clearance products increased their share to 16% (up from 12%)[31] Reconciliation of Net Income to Non-GAAP Adjusted EBITDA The reconciliation tables detail the adjustments made to GAAP net income to arrive at Adjusted EBITDA for both quarterly and year-to-date periods, as well as for the full year 2024, showing a decrease in Adjusted EBITDA in both Q2 and YTD 2025 compared to the prior year periods Adjusted EBITDA Reconciliation Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | FY 2024 | | :-------------- | :------ | :------ | :------- | :------- | :------ | | Net Income | $3,217 | $4,298 | $243 | $2,089 | $16,960 | | Adjusted EBITDA | $7,682 | $9,080 | $7,423 | $10,113 | $37,050 | - Adjusted EBITDA decreased by 15% in Q2 2025 and 27% in YTD 2025 compared to the respective prior periods[32] Reconciliation of FY 2025 GAAP Net Income to Adjusted EBITDA Guidance This table provides a reconciliation of the company's full-year 2025 GAAP net income guidance range to its Adjusted EBITDA guidance range, outlining the specific adjustments applied FY 2025 GAAP Net Income to Adjusted EBITDA Guidance (in thousands) | Metric | FY 2025 Guidance (Low) | FY 2025 Guidance (High) | | :-------------------- | :--------------------- | :---------------------- | | Net Income | $14,200 | $15,600 | | Interest income, net | $(1,800) | $(1,800) | | Income tax expense | $5,400 | $6,000 | | Depreciation and amortization | $6,600 | $6,600 | | Stock-based compensation | $8,100 | $8,100 | | Executive transition costs | $500 | $500 | | Adjusted EBITDA | $33,000 | $35,000 |