Tactile Systems Technology (TCMD) AI Stock Analysis

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Tactile Systems Technology

(NASDAQ:TCMD)

Rating:60Neutral

Price Target:

$10.50

▲(4.58%Upside)

Tactile Systems Technology's overall stock score reflects robust financial performance and a fair valuation, yet is tempered by technical weaknesses and mixed earnings call results. Despite strong growth in certain segments and strategic investments, challenges in sales productivity and profitability weigh on the score. The stock appears undervalued but faces short-term operational hurdles.

Positive Factors

Financial Performance

With over $83.6 million in cash on its books and a durable gross margin profile, this is one of the rare profitable assets in small-cap medtech, likely providing support for the stock.

Hiring and Productivity

Management noted surge hiring to backfill lost reps and high confidence in achieving its rep goal, which should lead to increased productivity.

Revenue Growth

Total revenues increased 10% year-over-year to $85.6M, and AEBITDA increased 5.5% year-over-year to $16.2M.

Negative Factors

Growth Prospects

The downgrade from Buy to Neutral reflects concerns over the company's growth prospects and ongoing legal challenges.

Guidance and Earnings

The AEBITDA guidance for 2025 is significantly lower than expectations, implying a -3% year-over-year growth compared to the previous years of 62% and 25% growth.

Sales and CRM Challenges

The miss stemmed from weaker lymphedema sales due to higher-than-expected sales rep turnover and productivity headwinds associated with implementing a new CRM system.

Tactile Systems Technology (TCMD) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$235.04M

Dividend YieldN/A

Average Volume (3M)389.39K

Price to Earnings (P/E)15.2

Beta (1Y)1.17

Revenue Growth5.96%

EPS Growth-43.83%

CountryUS

Employees1,037

SectorHealthcare

Sector Strength42

IndustryMedical - Devices

Share Statistics

EPS (TTM)-0.13

Shares Outstanding23,248,352

10 Day Avg. Volume275,830

30 Day Avg. Volume389,388

Financial Highlights & Ratios

PEG Ratio-2.47

Price to Book (P/B)1.11

Price to Sales (P/S)0.00

P/FCF Ratio6.04

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$13.00

Price Target Upside29.48% Upside

Rating ConsensusHold

Number of Analyst Covering4

Tactile Systems Technology Business Overview & Revenue Model

Company DescriptionTactile Systems Technology, Inc. (TCMD) is a medical technology company specializing in the development and commercialization of innovative medical devices for the treatment of chronic diseases at home. The company primarily focuses on providing therapeutic solutions for patients with chronic swelling conditions like lymphedema and chronic venous insufficiency. Tactile Systems Technology's flagship product is the Flexitouch System, a pneumatic compression device designed to help patients manage their conditions effectively and improve their quality of life.

How the Company Makes MoneyTactile Systems Technology generates revenue primarily through the sale of its medical devices, particularly the Flexitouch System. The company employs a direct sales force that markets and sells its products to healthcare providers, clinics, and directly to patients. Revenue is driven by the initial sale of these devices as well as recurring revenue from replacement parts and accessories. Additionally, Tactile Systems Technology may benefit from reimbursement agreements with insurance providers and Medicare, which facilitate patient access to their products. Partnerships with healthcare institutions can also contribute to the company's earnings, as these relationships help expand market reach and drive product adoption.

Tactile Systems Technology Earnings Call Summary

Earnings Call Date:May 05, 2025

(Q1-2025)

% Change Since: -27.98%|

Next Earnings Date:Aug 11, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook. While there are positive developments in the airway clearance segment and operational improvements, challenges persist in the lymphedema segment with decreased revenue, higher costs, and lower productivity due to sales vacancies and CRM implementation. The company's strategic investments are expected to drive future growth, but current financial metrics show pressure on profitability.

Q1-2025 Updates

Positive Updates

Airway Clearance Revenue Increase

The airway clearance segment saw a significant increase in revenue, up 22% year-over-year to $10.7 million. This growth underscores the quality of the product and strategic execution.

Gross Margins Improvement

Gross margins increased by 290 basis points year-over-year, attributed to lower manufacturing and warranty costs.

Strong Cash Position

The company ended the quarter with a solid cash position of $83.6 million.

Salesforce CRM Implementation

Successful on-time launch of Salesforce CRM module to enhance sales productivity and operational efficiency.

AffloVest Market Growth

AffloVest sales increased 22% year-over-year, supported by strategic partnerships and market penetration.

Negative Updates

Lymphedema Revenue Decline

Lymphedema product sales decreased by 3% to $50.6 million due to sales headcount vacancies and lower sales productivity from the CRM transition.

Adjusted EBITDA Decrease

Adjusted EBITDA decreased by 125% year-over-year, driven by planned technology investments and other strategic initiatives.

Sales Headcount Challenges

Decline in sales headcount due to strategic optimization led to a higher than expected vacancy rate, impacting sales productivity.

Revised Revenue Guidance

Full-year revenue guidance revised down to $309 million to $315 million due to the impacts of sales headcount vacancies and CRM implementation.

Net Loss Increase

Net loss increased by 35% to $3 million, reflecting increased operating expenses and strategic investments.

Company Guidance

During the first quarter of 2025 earnings call, Tactile Medical provided updated guidance reflecting anticipated revenue growth and strategic investments. Total revenue for Q1 grew 0.3% year-over-year to $61.3 million, with lymphedema revenue decreasing by 3% to $50.6 million and airway clearance revenue increasing by 22% to $10.7 million. Gross margins improved by 290 basis points, while adjusted EBITDA decreased by 125% due to planned investments in technology, including the launch of a new Salesforce CRM module. The company ended the quarter with a robust cash position of $83.6 million. As a result of sales vacancies and CRM implementation impacts, Tactile adjusted its full-year revenue guidance to a range of $309 million to $315 million, representing a growth rate of approximately 5% to 8%. Lymphedema product line growth is expected to be 4% to 5%, while airway clearance is projected to grow 20% to 23%. The strategic investments aim to enhance sales productivity and efficiency, with over 300 reps expected by year-end 2025, the highest in the company's history.

Tactile Systems Technology Financial Statement Overview

Summary

Tactile Systems Technology exhibits solid financial performance with notable revenue and profit growth, effective cost management, and strong cash flow generation. The company has strengthened its financial stability over time, reducing leverage and enhancing equity strength. Despite moderate debt risks, the financial health is robust, supporting future growth.

Income Statement

Positive

Tactile Systems Technology has shown robust revenue growth from 2020 to 2025, with an increase from $187.13 million to $293.16 million in TTM, highlighting a positive growth trajectory. The company improved its gross profit margin significantly over the years, indicating effective cost management. However, the net profit margin shows some volatility, with substantial improvements in recent years compared to losses in earlier periods. The EBIT and EBITDA margins have similarly improved, reflecting enhanced operational efficiency.

Balance Sheet

Positive

The balance sheet of Tactile Systems Technology demonstrates a strong equity position, with a rising stockholders' equity and a decreasing debt-to-equity ratio, indicating a healthy capital structure. Despite this, the company still carries a moderate level of debt, which could pose risks if not managed carefully. The equity ratio has improved, suggesting a strong asset base relative to liabilities.

Cash Flow

Positive

The cash flow statement shows consistent free cash flow generation, with a notable increase in free cash flow from 2020 to TTM, indicating strong cash management. The operating cash flow to net income ratio is favorable, suggesting efficient conversion of earnings into cash. The free cash flow to net income ratio is also strong, reflecting solid cash earnings.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
293.16M	292.98M	274.42M	246.78M	208.06M	187.13M
	Gross Profit
210.57M	216.69M	195.13M	175.98M	148.21M	132.81M
	EBIT
20.60M	22.18M	18.04M	-4.59M	-1.76M	-3.63M
	EBITDA
24.05M	32.37M	24.54M	-9.21M	1.92M	-834.00K
	Net Income Common Stockholders
16.20M	16.96M	28.52M	-17.87M	-11.81M	-620.00K
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
41.24M	108.91M	61.03M	38.06M	40.71M	58.56M
	Total Assets
87.07M	297.92M	281.44M	255.00M	244.27M	174.09M
	Total Debt
0.00	45.11M	50.38M	72.23M	83.86M	21.39M
	Net Debt
-25.31M	-49.26M	-10.66M	50.30M	55.63M	-26.46M
	Total Liabilities
13.91M	81.33M	87.80M	133.60M	116.04M	49.34M
	Stockholders Equity
73.16M	216.60M	193.64M	121.40M	128.23M	124.75M
Cash Flow		Free Cash Flow
37.76M	38.15M	33.37M	3.29M	276.00K	503.00K
	Operating Cash Flow
40.15M	40.66M	35.85M	5.21M	2.63M	2.79M
	Investing Cash Flow
-2.40M	-2.50M	-2.48M	-1.91M	-82.18M	20.18M
	Financing Cash Flow
-14.83M	-4.82M	5.73M	-9.60M	59.93M	2.11M

Tactile Systems Technology Technical Analysis

Technical Analysis Sentiment

Negative

Last Price10.04

Price Trends

50DMA

11.92

Negative

100DMA

13.79

Negative

200DMA

14.61

Negative

Market Momentum

MACD

-0.54

Negative

RSI

39.57

Neutral

STOCH

68.28

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TCMD, the sentiment is Negative. The current price of 10.04 is above the 20-day moving average (MA) of 9.92, below the 50-day MA of 11.92, and below the 200-day MA of 14.61, indicating a neutral trend. The MACD of -0.54 indicates Negative momentum. The RSI at 39.57 is Neutral, neither overbought nor oversold. The STOCH value of 68.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TCMD.

Tactile Systems Technology Risk Analysis

Tactile Systems Technology disclosed 71 risk factors in its most recent earnings report. Tactile Systems Technology reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Tactile Systems Technology Peers Comparison

Overall Rating

UnderperformOutperform

Sector (54)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VMD	69 Neutral	$260.46M	22.53	9.79%	―	19.97%	17.21%
CLPT	61 Neutral	$362.64M	―	-76.21%	―	23.22%	9.54%
TCMD	60 Neutral	$235.04M	15.16	8.12%	―	5.96%	-43.83%
VREX	56 Neutral	$347.35M	―	-7.46%	―	-3.31%	-199.23%
Sector *	54 Neutral	$5.31B	3.29	-45.39%	2.79%	16.77%	-0.07%
TLSI	51 Neutral	$202.06M	―	271.41%	―	85.03%	53.73%
NPCE	50 Neutral	$435.56M	―	-128.49%	―	22.05%	29.86%

* Healthcare Sector Average

Performance Comparison

TCMD

Tactile Systems Technology

10.04

-1.99

-16.54%

CLPT

ClearPoint Neuro

13.93

8.19

142.68%

VREX

Varex Imaging

8.42

-7.29

-46.40%

VMD

Viemed Healthcare

6.72

-0.40

-5.62%

TLSI

TriSalus Life Sciences

5.39

-0.77

-12.50%

NPCE

NeuroPace

13.15

6.72

104.51%

Tactile Systems Technology Corporate Events

Executive/Board ChangesShareholder Meetings

Tactile Systems Technology Holds 2025 Annual Stockholders Meeting

Neutral

May 9, 2025

On May 7, 2025, Tactile Systems Technology held its 2025 Annual Meeting of Stockholders, where several key decisions were made. The stockholders elected directors to serve until the 2026 meeting, ratified Grant Thornton LLP as the independent auditor for 2025, approved the compensation of named executive officers, and decided to hold annual advisory votes on executive compensation. Additionally, the 2025 Equity Incentive Plan was approved.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.