TACTILE SYSTEMS TECHNOLOGY INC Q1 FY2025 earnings call

Business Line Performances

• Lymphedema revenue declined YOY due to sales organization optimization (headcount vacancy) and the launch of the new Salesforce CRM module causing lower sales productivity.
• Airway clearance revenue grew 22% YOY with AffloVest, driven by strategic partnerships and product differentiation.

Strategic Priorities

• Improving access to care: Launched Salesforce CRM module, expanded Parachute e-prescribing to Flexitouch, clinical evidence generation for Flexitouch, and ongoing reimbursement efforts.
• Expanding treatment options: Nimbl outpaced the lymphedema market growth, sales organization optimized, and product roadmap for next-gen advanced pump progressing.
• Enhancing lifetime patient value: Centralized Patient Services team, pilot programs for patient engagement, and initiatives with Kylee Patient Engagement Tool.

Total revenue in the first quarter grew 0.3% year-over-year to $61.3 million. The lymphedema business line revenue decreased 3% year-over-year to $50.6 million, contributing approximately 82.5% to total revenue. Airway clearance revenue increased 22% to $10.7 million, contributing approximately 17.5% to total revenue. Q1 gross margins increased 290 basis points year-over-year while adjusted EBITDA decreased 125% year-over-year.

Full Year 2025 Guidance

• Total revenue expected in the range of $309 million to $315 million (5-8% YOY growth).
• Lymphedema product line growth 4-5%, airway clearance product line growth 20-23%.
• Adjusted EBITDA expected $32 million to $34 million in 2025, considering investments and less than $5 million tariff impact.

• Impact of sales organization optimization and CRM launch on sales productivity.
• Dynamic global trade policies and potential tariff impacts on cost of goods sold.

Q: Margaret Kaczor Andrew asked about revenue guidance assumptions and sales productivity metrics.

A: Elaine Birkemeyer discussed hiring speed, sales rep proficiency in the new tool, Parachute rollout, and AI tools; Sheri Dodd wrapped up on hiring and productivity momentum.

Q: Unidentified Analyst asked about guidance changes between lymphedema and AffloVest businesses.

A: Elaine Birkemeyer stated lymphedema growth revised to 4-5% and airway clearance to 20-23%.

Q: Ryan Zimmerman asked about exit rates and Nimbl performance.

A: Elaine Birkemeyer and Sheri Dodd discussed market mix, channel focus, and guidance input related to product and payer.

Q: Unidentified Analyst asked about airway clearance growth sustainability.

A: Sheri Dodd explained alignment of strategic partnerships, capital allocation, product competitiveness, and preferred placement.

Q: Anderson Schock asked about clinician outreach and Kylee tool usage.

A: Sheri Dodd stated they're on target for clinician outreach and discussed Kylee tool insights and patient engagement data.