Tactile Systems Technology(US:TCMD)2020-11-03 04:27Financial Data and Key Metrics Changes - Total revenue for Q3 2020 was reported at $49.1 million, a decrease of 1% year-over-year, but a 40% sequential improvement from Q2 2020 [6][17] - Gross profit decreased by $400,000 to $35 million, with a gross margin of 71%, consistent with the same period last year [18] - Operating income decreased by 44% to $1.8 million compared to Q3 2019 [19] - Net income remained flat at $2.4 million or $0.12 per diluted share, with a slight increase in weighted average shares [20] - Adjusted EBITDA was approximately $6 million, down from $6.4 million in Q3 2019 [20] Business Line Data and Key Metrics Changes - Sales and rentals of Flexitouch systems accounted for 90% of total revenue, down from 92% in the prior year [17] - Entre Systems saw a 26% year-over-year increase in sales and rentals, contributing positively to overall revenue [6] Market Data and Key Metrics Changes - Revenue by payer in Q3 2020 was 70% commercial, 16% Medicare, and 14% VA, compared to 72%, 12%, and 16% respectively in Q3 2019 [17] - The company observed a strong recovery in privately-owned outpatient practices, particularly vascular clinics, which had fewer COVID-related restrictions [9] Company Strategy and Development Direction - The company aims to invest strategically in its business to capture the $5 billion market opportunity for lymphedema in the U.S. [25] - Continued focus on expanding the prescriber base through virtual education events and supporting existing clinicians [12][25] - The company plans to maintain a low 70% gross margin and an adjusted EBITDA margin of 7% to 8% for 2020 [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the business entering Q4, despite ongoing COVID-related challenges [24] - Positive trends in patient demand and clinician engagement were noted, with expectations for gradual recovery as COVID impacts lessen [15][24] Other Important Information - The company has no outstanding borrowings and a cash position of $42.2 million, positioning it well for future investments [21][24] - The company is facing a qui tam lawsuit, with a trial expected in late Q1 or early Q2 2021 [77] Q&A Session Summary Question: What is the likelihood of improvement in Q4 given recent COVID spikes? - Management indicated that while there are uncertainties, they are optimistic based on current trends and customer feedback [31][34] Question: How has the virtual education impacted new prescriber engagement? - The company reported significant participation in virtual events, which have been effective in expanding the prescriber base [36][39] Question: Can you provide insights on the increase in prescribers? - Management noted a meaningful increase in prescribers, although they did not disclose specific numbers, emphasizing the importance of this growth for future revenue [42][43] Question: What is the status of the VA channel and sales rep access? - There has been limited change in access to VA hospitals, but the company has seen a recovery in sales through community-based outpatient centers [52][53] Question: What is the update on the qui tam lawsuit? - The company filed a motion for partial summary judgment, with a trial expected in early 2021 [77]