Tactile Systems Technology(TCMD) - 2025 Q4 - Earnings Call Transcript

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]