Tactile Systems Technology ((TCMD)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Tactile Systems Technology’s recent earnings call painted a predominantly positive picture, marked by significant revenue growth and strategic advancements. Despite facing some challenges, such as declines in certain channels and limited immediate impact from Medicare policy changes, the overall sentiment was optimistic, with positive developments outweighing the negatives.
Strong Revenue Growth
In the third quarter of 2025, Tactile Systems Technology reported total revenue of $85.8 million, marking a 17% increase from the previous year. The company’s lymphedema revenue rose by 11% to $72.4 million, while its airway clearance revenue saw a remarkable 71% surge, reaching $13.4 million. This growth underscores the company’s robust market presence and effective sales strategies.
Gross Margin and EBITDA Increase
The company achieved an 80 basis point increase in gross margins, reaching 76%. Additionally, adjusted EBITDA saw a 34% year-over-year rise, amounting to $14.4 million. These financial metrics highlight Tactile Systems Technology’s operational efficiency and profitability improvements.
Guidance Raised
Tactile Systems Technology raised its full-year 2025 revenue guidance to a range of $317 million to $321 million, representing an 8% to 10% growth year-over-year. This upward revision reflects the company’s confidence in its strategic initiatives and market potential.
Increase in Sales Force
The company expanded its sales force by 25%, bringing the total to 329 representatives. This increase enhances the company’s ability to meet demand in strategic markets, demonstrating its commitment to growth and customer engagement.
Innovative Product Developments
Tactile Systems Technology submitted a 510(k) for its next-generation AffloVest, featuring enhancements like reduced weight and digital connectivity. This innovation positions the company to capture a leading market position and meet evolving customer needs.
Clinical Evidence Advancements
The company reported successful long-term data from a head and neck lymphedema RCT, demonstrating the effectiveness of its Flexitouch Plus product. This evidence supports future reimbursement and coverage, bolstering the company’s competitive edge.
Decline in Commercial and VA Channels
Despite overall growth, the company experienced a 9% decline in its commercial and VA channels within the lymphedema business. This was attributed to documentation challenges and policy shifts, highlighting areas for potential improvement.
Interest Income Decline
Interest income fell by 31% to $0.7 million, primarily due to a lower cash position following the repayment of a term loan. This decline underscores the financial adjustments the company is navigating.
Medicare Policy Impact
The transition from LCD to NCD presents a positive tailwind for the company, although the initial impact on revenue has been limited. The full benefits of this policy change are expected to materialize over time.
Forward-Looking Guidance
Tactile Systems Technology’s forward-looking guidance remains optimistic, with a raised full-year revenue projection between $317 million and $321 million, indicating 8% to 10% growth year-over-year. The company continues to focus on strategic initiatives, including sales force expansion and product innovation, to sustain its growth trajectory.
In conclusion, Tactile Systems Technology’s earnings call highlighted a strong financial performance and strategic advancements, despite some challenges. The company’s positive outlook, driven by revenue growth, sales force expansion, and product innovation, suggests a promising future. Investors and market watchers will be keen to see how these developments unfold in the coming quarters.