Tactile Systems Technology, Inc. Q2 FY2025 earnings call

Business Line Performance - Lymphedema: Revenue grew 2% year-over-year and over 30% sequentially, with strong adoption of Nimbl. The sales force was rebalanced to 293 reps, aiming for over 300 by year-end. - Airway clearance: AffloVest sales increased 52% year-over-year and 21% sequentially, driven by secured partnerships with top respiratory DMEs and growing awareness of bronchiectasis. ### Strategic Priorities - Improve access to care: Investments in CRM, e-prescribing tool Parachute, and AI-based technology for order intake and medical record review. - Expand treatment options for lymphedema patients: Strong adoption of Nimbl, with development of a next-generation advanced lymphedema pump underway. - Enhance lifetime patient value: Patient services organization, care navigation pilot, and patient engagement tool Kylee for improved connectivity.

Total revenue for Tactile Medical in the second quarter of 2025 was $78.9 million, representing a 7.8% year-over-year growth. By business line, lymphedema revenue was $66 million, up 2% year-over-year, contributing approximately 83.6% of total revenue. Airway clearance revenue was $12.9 million, up 51.6% year-over-year, contributing approximately 16.4% of total revenue. Q2 gross margins increased to 74.5%, up 60 basis points year-over-year. Adjusted EBITDA was $7.7 million, down 15% year-over-year due to planned technology and sales headcount investments.

For full-year 2025, total revenue is expected to be in the range of $310 million to $315 million, representing 6%-8% year-over-year growth. Lymphedema growth is projected at 1.5%-3%, and airway clearance growth at 40%-43%. GAAP gross margin is expected to be approximately 75%. Adjusted EBITDA is expected to be $33 million to $35 million. The full-year tariff impact is estimated at $1 million to $1.5 million, with an ongoing annual impact beyond 2025 of roughly half that amount.

Forward-looking statements involve inherent risks and uncertainties, including those in annual reports and 10-Q filings. Early disruption from CRM implementation and sales force rebalance. Dependence on successful adoption of new technologies and workflows. Payer policy changes could impact reimbursement and patient access.

Q: Push on guidance, why more Q2 upside not pushed through for full year?

A: Thoughtful approach due to CRM rollout disruption lessons, hedging against short-term variability, but confident in momentum.

Q: Head and neck data timeline and payer impact?

A: 6-month data submission in early Q4; commercial payers take time to update policies, but manuscript and abstracts help.

Q: Lymphedema market share and growth reconciliation?

A: Nimbl growing faster than market CAGR, but revenue growth muted by unit mix; expect revenue to mirror unit growth as mix stabilizes.

Q: Drivers of AffloVest growth and bronchiectasis trends?

A: Secured partnerships, financial alignment with DMEs, increased awareness of bronchiectasis, and product differentiation.

Q: Use of cash and capital deployment?

A: Exhausted share buyback, looking for strategic opportunities for shareholder returns, durable cash balance.