Tactile Systems Technology ((TCMD)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Tactile Systems Technology’s recent earnings call presented a mixed sentiment, highlighting strong positive achievements alongside notable financial challenges. The company delivered a solid Q2 performance with significant revenue growth, particularly in the airway clearance segment, and improved gross margins. However, these positives were tempered by a decline in adjusted EBITDA, limited growth in lymphedema revenue, and a cautious approach to full-year guidance increases.
Revenue Growth Exceeds Expectations
Tactile Medical reported a commendable total revenue growth of 7.8% year-over-year, reaching $78.9 million. This performance exceeded the company’s previously stated Q2 expectations, marking a significant achievement for the quarter.
Strong Airway Clearance Revenue Growth
The airway clearance segment stood out with a remarkable 51.6% increase in revenue year-over-year, totaling $12.9 million. This growth was driven by strategic partnerships with top respiratory DMEs and heightened awareness of bronchiectasis, underscoring the segment’s potential.
Improved Gross Margins
Tactile Medical’s gross margins saw an increase of 60 basis points year-over-year, reaching 74.5%. This improvement was attributed to lower manufacturing and warranty costs, as well as enhanced product design, reflecting operational efficiencies.
Strategic Sales Force Expansion
The company expanded its sales force by 11% compared to the end of Q1, aiming to employ over 300 total representatives by year-end. This strategic move is intended to drive further growth and capitalize on market opportunities.
Favorable Reimbursement Environment
The reimbursement landscape is becoming increasingly supportive for advanced pump therapy. Improved claims adjudication and engagement with payers are expected to bolster the company’s offerings in this area.
Balance Sheet Strength
Tactile Medical ended Q2 with a robust $81.5 million in cash and cash equivalents. The company also completed a $16.5 million stock buyback, demonstrating confidence in its financial position.
Decline in Adjusted EBITDA
Adjusted EBITDA experienced a 15% decline year-over-year, totaling $7.7 million. This decrease was primarily due to planned investments in technology and sales headcount, reflecting a strategic focus on long-term growth.
Challenges in Lymphedema Revenue Growth
Lymphedema revenue grew by only 2% year-over-year, with a shift in product mix affecting revenue growth relative to unit growth. This area remains a challenge for the company.
Lower Operating Income
Operating income decreased by 30% to $4.1 million, impacted by increased operating expenses driven by strategic technology investments. This highlights the financial pressures faced by the company despite revenue growth.
Limited Full Year Guidance Increase
Despite exceeding Q2 expectations, Tactile Medical’s full-year guidance was only modestly increased by $1 million at the midpoint. This cautious approach reflects the challenges of scaling the commercial organization and launching new AI tools.
Forward-Looking Guidance
For the full year 2025, Tactile Medical has revised its revenue guidance to $310-$315 million, indicating a growth of 6% to 8% year-over-year. The company anticipates a gross margin of approximately 75%, with operating expense growth of 10% to 11%, and adjusted EBITDA of $33-$35 million. Strategic initiatives include investments in sales force optimization, CRM enhancements, and AI tools to streamline operations, with a focus on expanding treatment options and improving patient care.
In conclusion, Tactile Systems Technology’s earnings call revealed a balanced mix of achievements and challenges. The company showed strong revenue growth and improved margins, yet faces financial hurdles with declining adjusted EBITDA and limited lymphedema revenue growth. The cautious full-year guidance reflects these dynamics, as the company continues to invest strategically in its future.