Tactile Systems Technology, Inc. Q4 FY2025 earnings call

• 2025 was pivotal for Tactile, with strong profitable revenue growth, expanded gross margins, and increased adjusted EBITDA. • Acquired LymphaTech, a company pioneering digital 3D scanning technology for chronic swelling measurement and monitoring. • Reviewed Q4 performance by business line, including lymphedema and airway clearance. • Outlined strategic priorities for 2026: improving access to care, expanding treatment options, and enhancing lifetime patient value. • Discussed updates on RCT results for head and neck lymphedema, product road map for 2026, and targeted care navigation pilots.

Total revenue for full year 2025 was $329.5 million, a 12% increase year-over-year. Full year gross margins expanded by 190 basis points to 75.9%, and adjusted EBITDA increased 21% to $44.8 million. Q4 total revenue was $103.6 million, a 21% increase year-over-year. Lymphedema revenue increased 16% year-over-year to $89.5 million, with 24% sequential growth in Q4. Airway clearance revenue increased 66% year-over-year to $14.1 million, with 6% sequential growth in Q4.

• Expect total revenue for 2026 to be in the range of $357 million to $365 million, representing year-over-year growth between 8% and 11%. • Guidance reflects strength of expanded sales force, improving sales rep productivity, market-leading positions, and potential short-term market impact from Medicare prior authorization requirement for pneumatic compression devices. • Anticipate Q1 growth to be higher than the balance of the year, with growth moderating as 2026 progresses. • Expect GAAP gross margin to be approximately 76%, GAAP operating expenses to increase 8% to 10% year-over-year, net interest income of approximately $3 million, a tax rate of 28%, and adjusted EBITDA of approximately $49 million to $51 million in 2026.

• New Medicare prior authorization requirement for pneumatic compression devices adds administrative steps to the order process for Medicare fee-for-service patients, which may have a temporary short-term impact across the broader lymphedema market. • Uncertainty in navigating the new Medicare prior authorization process and potential delays or inefficiencies in the turnaround time for prior authorizations.

Q: Drill into lymphedema business performance in Q4, including NCD interpretation tailwind.

A: Multiple investments in people, processes, and technology drove performance. CRM launched a year ago had strong adoption, increased reps with productivity showing in Q4, and modest tailwind from Medicare patients moving to Flexitouch under new NCD criteria.

Q: Balance headwinds and tailwinds for 2026 lymphedema growth.

A: Momentum and tailwinds include seasoned sales organization, strong channel strategy, and NCD tailwind. Headwinds include Medicare prior auth requirement, but prepared to address and may adjust guidance in Q3.

Q: Talk about LymphaTech acquisition commercialization model and 2026 impact.

A: LymphaTech has commercialized product, used by compression garment manufacturers and some centers. Long-term, integrate into commercial engine, strategic segmentation, and see growth in care continuum.

Q: What gets to 8% vs 11% in guidance?

A: 8% could be prior auth challenging, 11% from strong sales force, operationalizing back office, and CRM tools countering drag.

Q: Color on NCD prior auth process and impact on CMS patients?

A: Prior auth process in commercial side involves curating packages, elongating process. Medicare new to this, but prepared with experience and technology to facilitate.

Q: Impact of bronchiectasis drug launch on market?

A: Awareness driven by pharmaceutical entrants, training/education, and therapy used with drug therapy to reduce inflammation and move mucus.