Tactile Systems Technology(TCMD) - 2025 Q1 - Earnings Call Transcript

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]