Tactile Systems (NasdaqGM:TCMD) Q4 2025 Earnings call February 17, 2026 05:00 PM ET Company ParticipantsBen Haynor - Managing DirectorElaine Birkemeyer - CFOKyle Winborne - Equity ResearchSam Benzinger - Investor RelationsSheri Dodd - CEOConference Call ParticipantsBrandon Vasquez - Research AnalystNone - AnalystOperatorPlease stand by. Welcome, ladies and gentlemen, to the fourth quarter and full year 2025 earnings conference call for Tactile Medical. At this time, all participants have been placed in list ...

Financial Data and Key Metrics Changes - Total revenue for the full year 2025 was $329.5 million, a 12% increase year-over-year [4] - Adjusted EBITDA increased 21% year-over-year to $44.8 million [5] - Q4 revenue grew by 21% year-over-year to $103.6 million [29] - Gross margin for Q4 was 78.2%, up from 75.2% in Q4 2024 [29] - Net income increased 9% to $10.6 million, or $0.46 per diluted share [31] Business Line Data and Key Metrics Changes - Lymphedema revenue increased 16% year-over-year to $89.5 million in Q4 [6] - Airway clearance revenue increased 66% year-over-year to $14.1 million in Q4 [6] - For 2026, total revenue is expected to be in the range of $357 million to $365 million, representing year-over-year growth of 8% to 11% [6][32] Market Data and Key Metrics Changes - The Medicare channel remained strong in Q4, with patients moving directly to the Flexitouch Advanced pump under new NCD criteria [11] - The company expects a temporary short-term impact from the new Medicare prior authorization requirement for pneumatic compression devices [32][34] Company Strategy and Development Direction - The acquisition of LymphaTech is seen as a milestone in evolving from a product-based company to a comprehensive integrated solutions leader for lymphatic dysfunction [15][17] - Strategic priorities include improving access to care, expanding treatment options, and enhancing lifetime patient value [8][25] - The company plans to leverage AI-enabled technology to improve order processes and operational efficiency [21][22] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the new Medicare prior authorization requirements and expects to maintain growth in line with the overall lymphedema market [34][36] - The company is optimistic about the integration of LymphaTech and its potential to enhance patient care and streamline clinical workflows [15][53] Other Important Information - The company ended 2025 with $83.4 million in cash and cash equivalents and no outstanding borrowings [31] - The company repaid the full outstanding principal balance of $26.3 million on its term loan and repurchased $26.5 million of its stock [5] Q&A Session Summary Question: What drove the strong performance in the Lymphedema business in Q4? - Management noted multiple investments in people, processes, and technology, including strong CRM adoption and increased sales rep productivity [41] Question: How do the new prior authorization requirements balance with the tailwinds from the NCD? - Management indicated that the guidance reflects a balanced approach, incorporating both tailwinds from the NCD and the headwinds from prior authorization [44][45] Question: Can you elaborate on the LymphaTech acquisition and its commercialization model? - Management expressed excitement about integrating LymphaTech into their commercial engine and highlighted its potential for improving patient experience and workflow efficiency [51][53] Question: What are the expectations for EBITDA margins moving forward? - Management indicated that while EBITDA margins are expected to grow modestly, they anticipate further expansion in the long term as investments are annualized [66]

Financial Data and Key Metrics Changes - Total revenue for the full year 2025 was $329.5 million, a 12% increase year-over-year [4] - Full year gross margins expanded by 190 basis points year-over-year to 75.9% [5] - Adjusted EBITDA increased 21% year-over-year to $44.8 million [5] - Q4 total revenue grew by 21% year-over-year to $103.6 million [28] - Q4 gross margin was 78.2%, compared to 75.2% in Q4 2024 [28] - Net income increased by 9% to $10.6 million, or $0.46 per diluted share [30] Business Line Data and Key Metrics Changes - Lymphedema revenue increased 16% year-over-year to $89.5 million in Q4 [6] - Airway clearance revenue increased 66% year-over-year to $14.1 million in Q4 [6] - Sales and rentals of lymphedema products increased by $12.4 million, or 16% [28] - Sales of airway clearance products increased by $5.6 million, or 66% [28] Market Data and Key Metrics Changes - The company expects total revenue for 2026 to be in the range of $357 million to $365 million, representing year-over-year growth of 8% to 11% [6][31] - The Medicare channel remained strong in Q4, with patients moving directly to the Flexitouch Advanced pump under new NCD criteria [10] Company Strategy and Development Direction - The acquisition of LymphaTech is a significant milestone, expanding the company's capabilities in lymphedema solutions and enhancing R&D [8][15] - Strategic priorities include improving access to care, expanding treatment options, and enhancing lifetime patient value [9][25] - The company aims to leverage AI technology to improve order processes and operational efficiency [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the new Medicare prior authorization requirements, viewing them as a short-term headwind [31][46] - The company believes it is well-positioned to continue delivering growth in line with the overall lymphedema market [33] - Management highlighted the importance of ongoing investments in people and technology to support future growth [37] Other Important Information - The company ended 2025 with $83.4 million in cash and cash equivalents and generated close to $43 million in operating cash flow during the year [5] - The company has no outstanding borrowings as of the end of Q4 2025 [30] Q&A Session Summary Question: What drove the strong performance in the lymphedema business in Q4? - Management noted multiple investments in people, processes, and technology, including strong CRM adoption and increased sales rep productivity [41][42] Question: How do the new prior authorization requirements balance with the tailwinds from the NCD? - Management indicated that the guidance reflects a balanced approach, incorporating both tailwinds from the NCD and the headwinds from prior authorization [44][46] Question: Can you elaborate on the LymphaTech acquisition and its commercialization model? - Management expressed excitement about integrating LymphaTech into their commercial engine, focusing on measurement and surveillance for lymphedema [53][55] Question: What are the expectations for EBITDA margin growth moving forward? - Management indicated that while EBITDA margins are expected to grow modestly in 2026, long-term growth is anticipated as investments are completed [68]

Summary of Tactile Medical Conference Call Company Overview - **Company**: Tactile Medical - **Industry**: Medical Technology, specifically focusing on lymphedema and airway clearance products Key Points Financial Performance - Q3 results showed strong performance with beats and raises in both lymphedema and airway clearance businesses [3][4] - The company is in a healthy financial position with cash reserves, retired debt, and stock buybacks [4] Market Opportunity - The lymphedema and bronchiectasis markets are under-penetrated, presenting significant growth opportunities [3][4] - There are approximately 20 million people in the U.S. with lymphedema, but only 2 million are diagnosed, and less than 10% are on medical device therapy [34][35] Strategic Focus - The company is focusing on improving access to care, product innovation, and lifetime value [4] - Investments in CRM and sales force restructuring are aimed at enhancing sales productivity [7][9][10] Product Portfolio - The **Nimble** pump has been successful, leading to market leadership in both basic and advanced pump categories [21][22] - The **FlexiTouch** product is expected to benefit from new reimbursement policies, transitioning from a headwind to a tailwind [14][16][17] Reimbursement Changes - Transition from Local Coverage Determination (LCD) to National Coverage Determination (NCD) is expected to provide a more favorable reimbursement environment [12][14] - The company anticipates seeing positive impacts from these changes in Q4 [16] Innovation and Development - Plans for next-generation products, including enhancements to the AffloVest, are underway, with a focus on portability and connectivity [53] - The company is actively working on expanding its product offerings and improving existing products [22][63] Market Dynamics - The airway clearance market, particularly the AffloVest, is also performing well, with expectations of continued double-digit growth [46][50] - The company is leveraging partnerships with top DMEs to enhance product distribution and awareness [42][44] Future Outlook - The company expects to maintain growth in line with market trends, projecting revenue growth of around 10% for 2026 [54][55] - Continued investments in technology and infrastructure are planned, with a focus on achieving operational leverage [55][57] Capital Allocation - The company has paid down debt and is open to share repurchase programs while maintaining sufficient capital for internal growth and strategic opportunities [57][58] Additional Insights - The company is actively working to raise awareness about lymphedema and improve diagnosis rates, which is crucial for market penetration [36][37] - The competitive landscape for head and neck lymphedema treatment is favorable for Tactile Medical, as it holds unique coverage advantages [33][34] This summary encapsulates the key insights and strategic directions discussed during the Tactile Medical conference call, highlighting the company's strong market position and growth potential in the medical technology sector.

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $85.8 million, reflecting a 17% year-over-year growth [4][24] - Gross margins increased by 80 basis points year-over-year to 76% [5][24] - Adjusted EBITDA rose 34% year-over-year to $14.4 million [5][24] - Net income increased by 59% year-over-year to $8.2 million, or $0.36 per diluted share [25] Business Line Data and Key Metrics Changes - Lymphedema revenue grew 11% year-over-year to $72.4 million, with a sequential increase of 10% from Q2 [4][24] - Airway clearance revenue surged 71% year-over-year to $13.4 million, with a 3% sequential increase [4][24] - Sales in the Medicare channel for lymphedema increased by 130% year-over-year, while commercial and VA channels declined by 9% [8][10] Market Data and Key Metrics Changes - The payer mix for Q3 2025 indicates a return to a more normalized environment, supporting balanced year-over-year comparisons moving forward [10] - The transition from LCD to NCD is expected to drive continued improvement in Q4 and beyond [10][28] Company Strategy and Development Direction - The company’s strategic priorities include improving access to care, expanding treatment options, and enhancing lifetime patient value [5][16] - Focus on strengthening relationships with DMEs and increasing awareness of bronchiectasis to drive growth in airway clearance products [11][12] - Investments in sales organization and technology are aimed at unlocking total addressable market (TAM) and driving profitable growth [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of the business, supported by strong financial performance and operational execution [31] - The favorable Medicare policy environment is seen as a significant tailwind for growth [28] - Expectations for continued growth in both business lines, with a raised full-year revenue guidance to $317-$321 million [5][27] Other Important Information - The company has initiated a share repurchase program of up to $25 million, reflecting confidence in its growth trajectory [23] - The company ended Q3 with $66 million in cash and no outstanding borrowings [26] Q&A Session Summary Question: Insights on AffloVest performance - Management noted strong performance driven by deep relationships with top DMEs and increased awareness of bronchiectasis [34][35] Question: Guidance clarification for lymphedema - Management confirmed no one-time events in Q3 and highlighted the impact of the NCD as a tailwind for future growth [39][42] Question: Market growth rate in lymphedema - Management indicated the lymphedema market is growing at approximately 10%, with expectations to match this growth [44][45] Question: Impact of new NCD on patient access - The NCD allows patients with unique characteristics to access advanced pump therapy directly, streamlining the process [51][52] Question: Drivers of lymphedema revenue growth - Key drivers include expanded headcount, improved productivity, and the successful launch of Nimble [53][55]

Core Insights - Tactile Systems Technology reported stronger-than-expected revenue for Q2 2025, driven by growth in the airway clearance business, with GAAP revenue reaching $78.9 million, surpassing the consensus estimate of $73.9 million [1][2] - The company experienced a year-over-year revenue increase of 7.8%, but both GAAP net income and Adjusted EBITDA declined due to rising operating expenses related to strategic investments [1][2] Financial Performance - GAAP revenue for Q2 2025 was $78.9 million, compared to $73.2 million in Q2 2024, reflecting a 7.8% increase [2] - Diluted earnings per share (GAAP) were $0.14, exceeding the expectation of $0.1075, but down 22.2% from $0.18 in Q2 2024 [2] - GAAP net income fell to $3.2 million, a decrease of 25.1% from $4.3 million in Q2 2024 [2] - Adjusted EBITDA was $7.7 million, down 15.4% from $9.1 million in Q2 2024 [2] - Gross margin improved to 75%, up from 74% in Q2 2024, attributed to lower manufacturing and warranty-related costs [2][7] Business Overview - Tactile Systems Technology specializes in medical devices for lymphedema and airway clearance, with key products including Flexitouch, Entre Plus, and AffloVest [3] - The company aims to enhance daily living and clinical outcomes for patients with chronic conditions [3] Strategic Focus - Recent efforts have been directed towards expanding the product lineup, investing in technology, and strengthening the sales force to support long-term growth [4] - Key success factors include timely product launches, adoption by healthcare providers, and securing reimbursement from payers [4] Quarterly Highlights - The AffloVest sales surged by 52% year-over-year in Q2 2025, while lymphedema products accounted for 84% of total revenue [5] - The return to growth in lymphedema products was supported by an optimized sales organization and increased field sales headcount [6] Financial Outlook - The company raised its full-year 2025 revenue guidance to $310–315 million, with slower growth expected from lymphedema products but higher growth projected for airway clearance products at 20–23% [9] - Adjusted EBITDA outlook for FY2025 was raised to $33–35 million, although still below the previous year's results [9] - Management anticipates improved productivity in the latter half of 2025 due to hiring and technology investments [10]

Core Insights - Tactile Systems Technology, Inc. reported strong financial performance in Q2 2025, with total revenue growth of nearly 8% year-over-year, reaching $78.9 million, exceeding previous expectations [3][4] - The company is focused on three strategic priorities for 2025: improving access to care, expanding treatment options for lymphedema patients, and enhancing lifetime patient value [3] - The company expects to benefit from its strategic investments and initiatives starting in 2026 [3] Financial Performance - Total revenue for Q2 2025 increased by $5.7 million, or 7.8%, compared to Q2 2024, driven by a 52% increase in airway clearance product sales and a 2% increase in lymphedema product sales [4] - Gross profit for Q2 2025 rose by $4.7 million, or 9%, to $58.8 million, with a gross margin of 75% compared to 74% in Q2 2024 [5] - Operating expenses increased by $6.5 million, or 13%, to $54.7 million, primarily due to planned strategic investments [6] Income and Earnings - Operating income for Q2 2025 was $4.1 million, down from $5.8 million in Q2 2024 [6] - Net income for Q2 2025 was $3.2 million, or $0.14 per diluted share, compared to $4.3 million, or $0.18 per diluted share, in Q2 2024 [7][8] - Adjusted EBITDA for Q2 2025 was $7.7 million, down from $9.1 million in Q2 2024 [9] Year-to-Date Performance - For the first six months of 2025, total revenue increased by $5.9 million, or 4%, to $140.2 million compared to the same period in 2024 [10] - Net income for the first half of 2025 was $0.2 million, or $0.01 per diluted share, compared to $2.1 million, or $0.09 per diluted share, in the first half of 2024 [11] Balance Sheet and Cash Flow - As of June 30, 2025, the company had $81.5 million in cash and cash equivalents, down from $94.4 million at the end of 2024 [12] - The company repurchased $26.6 million of its stock during the first half of 2025 to complete its share repurchase program [12] - Cash flows from operating activities for the first half of 2025 were $15.2 million, compared to $14.1 million in the same period of 2024 [31] Financial Outlook - The company updated its 2025 financial outlook, now expecting total revenue in the range of $310 million to $315 million, representing growth of approximately 6% to 8% year-over-year [14] - Adjusted EBITDA for 2025 is expected to be in the range of $33 million to $35 million, compared to $37.1 million in 2024 [15]

Core Insights - Tactile Systems Technology, Inc. reported a total revenue increase of 0.3% year-over-year to $61.3 million for Q1 2025, driven by a 22% increase in airway clearance product sales, while lymphedema product sales decreased by 3% [4][9][12] - The company is focused on strategic growth initiatives, including the launch of Nimbl for lower extremity lymphedema and optimization of its sales organization [3][4] - The net loss for Q1 2025 was $3.0 million, compared to a net loss of $2.2 million in Q1 2024, reflecting ongoing investments in strategic initiatives [7][10] Financial Performance - Gross profit increased by 4% to $45.3 million, with a gross margin of 74%, up from 71% in Q1 2024, primarily due to lower manufacturing and warranty costs [5][9] - Operating expenses rose by 8% to $49.9 million, attributed to planned strategic investments, resulting in an operating loss of $4.5 million [6][9] - Adjusted EBITDA loss was $0.3 million in Q1 2025, compared to a positive Adjusted EBITDA of $1.0 million in Q1 2024 [10][9] Balance Sheet and Cash Flow - As of March 31, 2025, the company had $83.6 million in cash and $25.5 million in outstanding borrowings, down from $94.4 million in cash at the end of 2024 [11] - The company repurchased $10.0 million of its stock during the first quarter, with $16.5 million remaining under its share repurchase program [11][9] 2025 Financial Outlook - The company updated its 2025 revenue guidance to a range of $309 million to $315 million, representing a growth of approximately 5% to 8% year-over-year [12] - Adjusted EBITDA for 2025 is now expected to be in the range of $32 million to $34 million, down from previous expectations of $35 million to $37 million [13]