TACTILE SYSTEMS TECHNOLOGY INC Q4 FY2024 earnings call

• Strong Q4 performance with total revenue growth. Lymphedema sales grew 11% YOY in Q4 and 18.1% sequentially. • Airway Clearance sales of AffloVest were up 3.8% YOY and 8.8% sequentially. • Q4 gross margins increased 310 basis points YOY. Adjusted EBITDA grew 5.5% YOY. • 2025 strategic initiatives include improving access to care, expanding treatment options for diagnosed patients, and supporting patients over a longer duration. • Investments in training and education for clinicians, with plans to reach over 12,000 clinicians in 2025. • Launch of Nimbl for lower extremity Lymphedema and continued development of next-generation advanced pump. • Navigating Medicare policy changes, with the retirement of LCD and move to NCD.

In the fourth quarter, total revenue was $85.6 million, up 10.2% year-over-year. For the Lymphedema business line, sales grew 11% year-over-year to $77.1 million. Airway Clearance sales were $8.5 million, up 3.8% year-over-year. Full year 2024 total revenue was $293 million, representing a 6.8% growth year-over-year. Lymphedema sales contributed significantly to the overall revenue, with Airway Clearance also making a notable contribution.

• Full year 2025 revenue expected to be in the range of $316 million to $322 million, representing 8% to 10% year-over-year growth. • Lymphedema product line growth expected to be 8% to 10%, Airway Clearance product growth expected to be 6% to 9%. • GAAP gross margins expected to be approximately 74% in 2025. • Adjusted EBITDA expected to be approximately $35 million to $37 million in 2025, assuming certain non-cash items.

• Administrative hurdles with Medicare policies, such as the stricter interpretation of LCD for PCDs. • Ongoing legal matter related to qui tam, where the government has not yet chosen to intervene but could at any time.

Q: How is patient leakage defined and what is the impact on the business?

A: Patient leakage refers to patients dropping out of the care journey due to protracted and complicated processes like documentation requirements, long qualification times, and multiple steps in the DME process. Reducing patient leakage is important for ensuring patients get qualified and onboarded quickly with the product.

Q: What is the latest update on the qui tam legal matter?

A: The qui tam remains an ongoing legal matter. The company has been served by relators' counsel and is working with counsel on a response. The government has not chosen to intervene at this time, but could intervene in the future.