Tactile Systems Tech (NASDAQ:TCMD) reported first-quarter financial results on Monday. The transcript from the company’s first-quarter earnings call has been provided below.
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The full earnings call is available at https://edge.media-server.com/mmc/p/jb5atvev/
Summary
Tactile Systems Tech reported Q1 2026 revenue of $75.3 million, a 23% year-over-year increase, with lymphedema revenue at $62.2 million and airway clearance revenue at $13 million.
Gross margins improved by 250 basis points to 76.5%, and adjusted EBITDA rose to $3.7 million, indicating strong operational execution and margin expansion.
The company updated its full-year 2026 revenue guidance to $360-$368 million, reflecting confidence in commercial execution and the inclusion of revenue from the Lymphotek acquisition.
Tactile Systems Tech accelerated its AI platform for Medicare prior authorization, demonstrating operational agility and readiness for new Medicare requirements.
Management expressed confidence in strategic initiatives, such as the launch of next-generation AfloVest and integration of Lymphotek’s technology, aimed at driving long-term growth.
Full Transcript
Sam Bensinger (Investor Relations)
Good afternoon and thank you for joining the call today. With me from Tactile’s management team are Sherry Dodd, Chief Executive Officer, and Elaine Berkemeyer, Chief Financial Officer. Before we begin, I’d like to remind everyone that our remarks and responses to your questions today may contain forward looking statements that are based on the current expectations of management and involve inherent risks and uncertainties. These could cause actual results to differ materially from those indicated, including those identified in the Risk Factors SECtion of our Annual report on Form 10K as well as our most recent 10Q filing to be filed with the SECurities and Exchange Commission. Such factors may be updated from time to time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly update or revise our forward looking statements as a result of new information, future events or otherwise. This call will also include references to certain financial measures that are not calculated in accordance with Generally Accepted Accounting Principles or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to Most comparable measures calculated and presented in accordance with GAAP are available in the Earnings Press release on the Investor Relations portion of our website. With that, I’ll now turn the call over to Sherry.
Sherry Dodd (Chief Executive Officer)
Thanks. Good afternoon everyone and welcome to our first quarter 2026 earnings call. Here with me is Elaine Berkemeyer, our Chief Financial Officer.
Elaine Berkemeyer (Chief Financial Officer)
Thanks, Sherry. Unless noted otherwise, all references to first quarter financial results are on a GAAP and year over year basis. Total revenue in the first quarter increased by $14 million, or 23% to $75.3 million by product line. Sales and rentals of lymphedema products, which includes our Flexitouch, Entre, Nimble and lymphotex systems, increased $11.7 million, or 23% to $62.2 million, and sales of our airway clearance products, which includes our AfloVest system increased $2.3 million, or 22% to $13 million. Growth was broad based and reflected strength across both volume and revenue per unit, including higher shipments, strong collections and a favorable mix across payer and product categories. Continuing down the P and L Gross margin was 76.5% of revenue compared to 74% in the first quarter of 2025. The increase in gross margin was attributable to primarily to lower manufacturing costs, stronger collections and favorable product and payer mix reflected in our revenue. Importantly, these improvements reflect structural enhancements in the business rather than temporary cost actions. First quarter operating expenses increased $9.3 million, or 19% to $59.1 million. The change in GAAP operating expenses reflected a $5.2 million increase in sales and marketing expenses, a $1 million increase in research and development expenses, and a $3 million increase in reimbursement, general and administrative expenses. As we discussed previously, we are annualizing investments made in 2025 while continuing to invest in IT infrastructure and automation to support long term growth. Despite these ongoing investments, operating loss decreased $3 million to 66% to $1.5 million. Interest income decreased $0.2 million or 26% to $0.7 million due to our decreased cash position. Interest expense decreased $0.4 million or 93% to $28,000. Income tax expense was $0.9 million compared to an income tax benefit of $1.1 million. Net loss decreased to $1.2 million or 41% to $1.8 million or $0.08 per diluted share compared to $3 million or $0.13 per diluted share. Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) increased to $3.7 million compared to an adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) loss of $0.3 million in the prior year, with margin expanding to 4.9% from negative 0.4% reflecting a meaningful improvement in operating leverage. With respect to our balance sheet, we had $75 million in cash and cash equivalents and no outstanding borrowings at quarter end. This compares to $83.4 million in cash and no outstanding borrowings as of December 31, 2025. The change in cash during the quarter primarily reflects the LymphaTech acquisition share repurchases and normal seasonal items such as bonus payments. We continue to see improvement in working capital efficiency, including a meaningful reduction in days sales outstanding. Turning to review of our 2026 outlook for the full year 2026, we are raising our guidance and now expect total revenue in the range of 360 to $368 million, representing growth of approximately 9% to 12% year over year. This guidance assumes both our lymphedema and airway clearance businesses will grow in a similar overall range, with airway clearance growing modestly faster. The increase in guidance is driven by three primary factors. First, we continue to expect strength in the commercial execution across the business. Second, we have included the contribution from lymphoteg. Third, we have incremental early confidence in how the Macs are navigating the new prior authorization requirements we discussed on our last call. More broadly, we believe underlying demand remains durable and our tools and processes designed to support prior authorizations are tracking well against plan. While prior authorization approval data is still early and continuing to take shape, our outlook appropriately reflects discipline until we have a longer track record of consistent outcomes for modeling purposes. For the full year 2026, we expect our GAAP gross margins to be 76% to 77%, our GAAP operating expenses to increase 10 to 12% year over year. The increase relative to our prior outlook reflects one time acquisition and legal related costs, net interest income of approximately $3 million, a tax rate of 28%, and a fully diluted weighted average share count of approximately 22 to 23 million shares. We continue to expect to generate adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of approximately 49 to $51 million in 2026. This outlook reflects the annualization of 2025 investments and continued strategic investments in 2026 which we believe are important to support long term growth and operating leverage. Our adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) expectation assumes certain non cash items including a stock compensation expense of approximately $9 million, intangible amortization of approximately $3.6 million, depreciation expense of approximately $3.2 million, litigation related expenses of approximately $1 million and one time acquisition related and integration cost of $1.3 million. With that, I’ll turn the call back to Sherri for some closing remarks. Sherry thank you Elaine.
Sherry Dodd (Chief Executive Officer)
We are encouraged by a strong balanced start to the year and the trajectory of our business. Our Q1 results demonstrated broad based performance and reflect disciplined execution, improving productivity from a fully built commercial organization and the increasing benefits from investments we have made in technology and infrastructure. As we look ahead, our focus remains on the fundamentals that matter most expanding access to care, innovating across our product portfolio and enhancing lifetime patient value. While we remain mindful of near term adjustments related to Medicare prior authorization. Ultimately, we believe this change reinforces our emphasis on clinical rigor, access, durability and long term reimbursement stability and we are well positioned to navigate it. We are operating from a position of strength supported by a resilient balance sheet, multiple growth levers in motion and a clear strategy to translate consistent execution into sustained growth over time. With that operator, we’ll now open the call for questions.
OPERATOR
Thank you. We will now be conducting a question and answer session. If you would like to a question,sk a question, question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys again. That is Star one to ask a question and our first question will come from Ryan Zimmerman with btig.
Ryan Zimmerman (Equity Analyst)
Good afternoon and congrats on a nice start to the year here. I want to ask about some of the dynamics that are starting to occur in second quarter. Sherry, I think you called out some pull forward dynamic with lymphedema sales ahead of 2Q. And so one I think if I look at the beat versus where you’re raising guidance came in, there’s about a $1.7 million difference there. I just want to understand if that was the pull forward effect. And then just anecdotally kind of what you’re seeing with the Macs in 2Q, how they’re responding to this, how physicians …
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