0001027838false00010278382024-05-062024-05-06

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 6, 2024

TACTILE SYSTEMS TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-37799

 

41-1801204

(State or other jurisdiction of

 

(Commission

 

(I.R.S. Employer

incorporation)

 

File Number)

 

Identification No.)

3701 Wayzata Blvd, Suite 300, Minneapolis, MN 55416

(Address of principal executive offices) (Zip Code)

(612) 355-5100

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, Par Value $0.001 Per Share

TCMD

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02. Results of Operations and Financial Condition.

On May 6, 2024, Tactile Systems Technology, Inc. (“we,” “us,” and “our”) issued a press release disclosing our results of operations and financial condition for our most recently completed fiscal quarter. A copy of the press release is attached hereto as Exhibit 99.1.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in that filing.

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

EXHIBIT INDEX

Exhibit
No.

 

Description

 

 

 

99.1

 

Press Release dated May 6, 2024 (Earnings Release)

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

TACTILE SYSTEMS TECHNOLOGY, INC.

Date: May 6, 2024

By:

/s/ Elaine M. Birkemeyer

Elaine M. Birkemeyer

Chief Financial Officer

Exhibit 99.1

Tactile Systems Technology, Inc. Reports First Quarter 2024 Financial Results

Reaffirms Full Year 2024 Outlook

MINNEAPOLIS, MN, May 6, 2024 Tactile Systems Technology, Inc. (“Tactile Medical”; the “Company”) (Nasdaq: TCMD), a medical technology company providing therapies for people with chronic disorders, today reported financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Summary:

Total revenue increased 4% year-over-year to $61.1 million

Lymphedema product revenue increased 5% year-over-year

Airway clearance product revenue decreased 4% year-over-year

Net loss of $2.2 million versus $1.9 million in Q1 2023
Adjusted EBITDA of $1.0 million versus $0.5 million in Q1 2023

Recent Business Highlights:

Completed enrollment of 235 patients in a multi-center, randomized clinical trial evaluating Flexitouch Plus for the treatment of head and neck lymphedema patients
Journal of Vascular Surgery published largest ever peer-reviewed clinical trial investigating Flexitouch use among lymphedema patients, revealing improvements in quality of life, limb girth, and cellulitis events
Announced upcoming retirement of Dan Reuvers and appointment of Sheri Dodd as President and CEO, effective July 1, 2024

“We were pleased with our overall first quarter performance. Our lymphedema growth was in line with our expectations for the quarter, while sales of AffloVest were slightly ahead of expectations, reflecting broad-based growth among most of our DME partners,” said Dan Reuvers, President and Chief Executive Officer of Tactile Medical. “We were also pleased to demonstrate continued increases in profitability and cash-generation.”

Mr. Reuvers continued, “As we execute on our plans for 2024, we remain focused on driving improved operating efficiencies while advancing key tech-related investments, positioning us for sustained growth this year and beyond.”

First Quarter 2024 Financial Results

Total revenue in the first quarter of 2024 increased $2.2 million, or 4%, to $61.1 million, compared to $58.8 million in the first quarter of 2023. The increase in total revenue was attributable to an increase of $2.6 million, or 5%, in sales and rentals of the lymphedema product line, partially offset by a decrease of $0.3 million, or 4%, in sales of the airway clearance product line in the quarter ended March 31, 2024, compared to the first quarter of 2023.

Gross profit in the first quarter of 2024 increased $2.0 million, or 5%, to $43.4 million, compared to $41.5 million in the first quarter of 2023. Gross margin was 71.1% of revenue, compared to 70.5% of


revenue in the first quarter of 2023. Non-GAAP gross margin was 71.6% of revenue, compared to 71.0% of revenue in the first quarter of 2023.

Operating expenses in the first quarter of 2024 increased $1.1 million, or 2%, to $46.4 million, compared to $45.3 million in the first quarter of 2023.

Operating loss was $3.0 million in the first quarter of 2024, compared to $3.8 million in the first quarter of 2023. Non-GAAP operating loss in the first quarter of 2024 was $1.7 million, compared to $2.2 million in the first quarter of 2023.

Other income was $0.2 million in the first quarter of 2024, compared to other expense of $1.0 million in the first quarter of 2023.

Income tax benefit was $0.6 million in the first quarter of 2024, compared to $2.9 million in the first quarter of 2023.

Net loss in the first quarter of 2024 was $2.2 million, or ($0.09) per diluted share, compared to $1.9 million, or ($0.09) per diluted share, in the first quarter of 2023. Non-GAAP net loss in the first quarter of 2023 was $1.3 million, compared to $0.7 million in the first quarter of 2023.

Weighted average shares used to compute diluted net loss per share were 23.7 million and 21.3 million for the first quarters of 2024 and 2023, respectively.

Adjusted EBITDA was $1.0 million in the first quarter of 2024, compared to $0.5 million in the first quarter of 2023.

Balance Sheet Summary

As of March 31, 2024, the Company had $60.7 million in cash and cash equivalents and $28.5 million of outstanding borrowings under its credit agreement, compared to $61.0 million in cash and cash equivalents and $29.3 million of outstanding borrowings under its credit agreement as of December 31, 2023.

2024 Financial Outlook

The Company continues to expect full year 2024 total revenue in the range of $300 million to $305 million, representing growth of approximately 9% to 11% year-over-year, compared to total revenue of $274.4 million in 2023.

Conference Call

Management will host a conference call with a question-and-answer session at 5:00 p.m. Eastern Time on May 6, 2024, to discuss the results of the quarter. Those who would like to participate may dial 877-407-3088 (201-389-0927 for international callers) and provide access code 13745955. A live webcast of the call will also be provided on the investor relations section of the Company's website at investors.tactilemedical.com.


For those unable to participate, a replay of the call will be available for two weeks at 877-660-6853 (201-612-7415 for international callers); access code 13745955. The webcast will be archived at investors.tactilemedical.com.

About Tactile Systems Technology, Inc. (DBA Tactile Medical)

Tactile Medical is a leader in developing and marketing at-home therapies for people suffering from underserved, chronic conditions including lymphedema, lipedema, chronic venous insufficiency and chronic pulmonary disease by helping them live better and care for themselves at home. Tactile Medical collaborates with clinicians to expand clinical evidence, raise awareness, increase access to care, reduce overall healthcare costs and improve the quality of life for tens of thousands of patients each year.

Legal Notice Regarding Forward-Looking Statements

This release contains forward-looking statements. Forward-looking statements are generally identifiable by the use of words like “may,” “will,” “should,” “could,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “continue,” “confident,” “outlook,” “guidance,” “project,” “goals,” “look forward,” “poised,” “designed,” “plan,” “return,” “focused,” “prospects” or “remain” or the negative of these words or other variations on these words or comparable terminology. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties outside of the Company’s control that can make such statements untrue, including, but not limited to, the Company’s ability to obtain reimbursement from third-party payers for its products; the impacts of inflation, rising interest rates or a recession; the adequacy of the Company’s liquidity to pursue its business objectives; adverse economic conditions or intense competition; price increases for supplies and components; wage and component price inflation; loss of a key supplier; entry of new competitors and products; compliance with and changes in federal, state and local government regulation; loss or retirement of key executives, including transition matters related to the Company’s upcoming Chief Executive Officer change; technological obsolescence of the Company’s products; technical problems with the Company’s research and products; the Company’s ability to expand its business through strategic acquisitions; the Company’s ability to integrate acquisitions and related businesses; the effects of current and future U.S. and foreign trade policy and tariff actions; or the inability to carry out research, development and commercialization plans. In addition, other factors that could cause actual results to differ materially are discussed in the Company’s filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC’s website at http://www.sec.gov. The Company undertakes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

This press release includes the non-GAAP financial measures of Adjusted EBITDA, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), and non-GAAP net income (loss), which differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”).


Adjusted EBITDA in this release represents net income or loss, plus interest expense, net, or less interest income, net, less income tax benefit or plus income tax expense, plus depreciation and amortization, plus stock-based compensation expense, plus or minus the change in fair value of earn-out and plus executive transition costs. Non-GAAP gross profit in this release represents gross profit plus non-cash intangible amortization expense. Non-GAAP gross margin in this release represents non-GAAP gross profit divided by revenue. Non-GAAP operating income (loss) in this release represents operating income (loss) adjusted for non-cash intangible amortization expense, change in fair value of earn-out and executive transition expenses. Non-GAAP net income (loss) represents net income (loss) adjusted for non-cash intangible amortization expense, change in fair value of earn-out and executive transition expenses, and adjusted for the income tax effect on reconciling items. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures are included in this press release.

These non-GAAP financial measures are presented because the Company believes they are useful indicators of its operating performance. Management uses these measures principally as measures of the Company’s operating performance and for planning purposes, including the preparation of the Company’s annual operating plan and financial projections. The Company believes these measures are useful to investors as supplemental information and because they are frequently used by analysts, investors and other interested parties to evaluate companies in its industry. The Company also believes these non-GAAP financial measures are useful to its management and investors as a measure of comparative operating performance from period to period. In addition, Adjusted EBITDA is used as a performance metric in the Company’s compensation program.

The non-GAAP financial measures presented in this release should not be considered as an alternative to, or superior to, their respective GAAP financial measures, as measures of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and they should not be construed to imply that the Company’s future results will be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. In evaluating non-GAAP financial measures, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in this presentation. The Company’s presentation of non-GAAP financial measures should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company’s GAAP results in addition to using non-GAAP financial measures on a supplemental basis. The Company’s definition of these non-GAAP financial measures is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.


Tactile Systems Technology, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

    

March 31,

    

December 31,

(In thousands, except share and per share data)

    

2024

    

2023

Assets

Current assets

Cash and cash equivalents

$

60,706

$

61,033

Accounts receivable

 

40,491

 

43,173

Net investment in leases

 

14,324

 

14,195

Inventories

 

20,844

 

22,527

Prepaid expenses and other current assets

 

4,908

 

4,366

Total current assets

 

141,273

 

145,294

Non-current assets

Property and equipment, net

 

6,217

 

6,195

Right of use operating lease assets

 

18,480

 

19,128

Intangible assets, net

 

45,795

 

46,724

Goodwill

31,063

31,063

Accounts receivable, non-current

 

6,953

 

10,936

Deferred income taxes

 

19,294

 

19,378

Other non-current assets

 

2,965

 

2,720

Total non-current assets

 

130,767

 

136,144

Total assets

$

272,040

$

281,438

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$

5,488

$

6,659

Note payable

2,956

2,956

Accrued payroll and related taxes

 

11,023

 

16,789

Accrued expenses

 

6,866

 

5,904

Income taxes payable

 

725

 

1,467

Operating lease liabilities

 

2,740

 

2,807

Other current liabilities

 

3,335

 

4,475

Total current liabilities

 

33,133

 

41,057

Non-current liabilities

Note payable, non-current

25,437

26,176

Accrued warranty reserve, non-current

 

1,645

 

1,681

Income taxes payable, non-current

 

495

 

446

Operating lease liabilities, non-current

17,857

 

18,436

Total non-current liabilities

 

45,434

 

46,739

Total liabilities

 

78,567

 

87,796

Stockholders’ equity:

Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued and outstanding as of March 31, 2024 and December 31, 2023

 

 

Common stock, $0.001 par value, 300,000,000 shares authorized; 23,761,897 shares issued and outstanding as of March 31, 2024; 23,600,584 shares issued and outstanding as of December 31, 2023

 

24

 

24

Additional paid-in capital

 

176,764

 

174,724

Retained earnings

 

16,685

 

18,894

Total stockholders’ equity

 

193,473

 

193,642

Total liabilities and stockholders’ equity

$

272,040

$

281,438


Tactile Systems Technology, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended

March 31,

(In thousands, except share and per share data)

    

2024

    

2023

    

Revenue

Sales revenue

$

53,307

$

52,791

Rental revenue

 

7,781

 

6,055

Total revenue

 

61,088

 

58,846

Cost of revenue

Cost of sales revenue

 

14,944

 

14,642

Cost of rental revenue

 

2,715

 

2,736

Total cost of revenue

 

17,659

 

17,378

Gross profit

Gross profit - sales revenue

 

38,363

 

38,149

Gross profit - rental revenue

 

5,066

 

3,319

Gross profit

 

43,429

 

41,468

Operating expenses

Sales and marketing

 

27,357

 

26,302

Research and development

 

2,143

 

2,233

Reimbursement, general and administrative

 

16,261

 

15,434

Intangible asset amortization and earn-out

632

1,305

Total operating expenses

 

46,393

 

45,274

Loss from operations

 

(2,964)

 

(3,806)

Other expense

 

155

 

(993)

Loss before income taxes

 

(2,809)

 

(4,799)

Income tax benefit

 

(600)

 

(2,913)

Net loss

$

(2,209)

$

(1,886)

Net loss per common share

Basic

$

(0.09)

$

(0.09)

Diluted

$

(0.09)

$

(0.09)

Weighted-average common shares used to compute net loss per common share

Basic

23,665,829

21,283,752

Diluted

23,665,829

21,283,752


Tactile Systems Technology, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Three Months Ended March 31, 

(In thousands)

    

2024

    

2023

Cash flows from operating activities

Net loss

$

(2,209)

$

(1,886)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

1,634

1,629

Deferred income taxes

84

Stock-based compensation expense

2,039

2,023

Loss on disposal of property and equipment and intangibles

3

Change in fair value of earn-out liability

660

Changes in assets and liabilities, net of acquisition:

Accounts receivable

2,682

3,806

Net investment in leases

(129)

2,349

Inventories

1,683

3,110

Income taxes

(693)

(2,919)

Prepaid expenses and other assets

(787)

(1,056)

Right of use operating lease assets

2

71

Accounts receivable, non-current

3,983

3,078

Accounts payable

(1,396)

(403)

Accrued payroll and related taxes

(5,766)

(5,636)

Accrued expenses and other liabilities

(203)

(5,331)

Net cash provided by (used in) operating activities

924

(502)

Cash flows from investing activities

Purchases of property and equipment

(482)

(241)

Intangible assets expenditures

(20)

(50)

Net cash used in investing activities

(502)

(291)

Cash flows from financing activities

Payments on note payable

(750)

(750)

Proceeds from exercise of common stock options

1

Proceeds from issuance of common stock at market

34,625

Net cash (used in) provided by financing activities

(749)

33,875

Net (decrease) increase in cash and cash equivalents

(327)

33,082

Cash and cash equivalents – beginning of period

61,033

21,929

Cash and cash equivalents – end of period

$

60,706

$

55,011

Supplemental cash flow disclosure

Cash paid for interest

$

583

$

927

Cash paid for taxes

$

54

$

6

Capital expenditures incurred but not yet paid

$

225

$

10


The following table summarizes revenue by product line for the three months ended March 31, 2024 and 2023:

Three Months Ended

March 31,

(In thousands)

    

2024

2023

Revenue

Lymphedema products

$

52,313

$

49,752

Airway clearance products

8,775

9,094

Total

$

61,088

$

58,846

Percentage of total revenue

Lymphedema products

 

86%

 

85%

Airway clearance products

14%

15%

Total

 

100%

 

100%

The following table contains a reconciliation of GAAP gross profit and margin to non-GAAP gross profit and margin:

Tactile Systems Technology, Inc.

Reconciliation of Gross Profit and Margin to Non-GAAP Gross Profit and Margin

(Unaudited)

Three Months Ended

March 31,

(Dollars in thousands)

    

2024

    

2023

Gross profit, as reported

 

$

43,429

$

41,468

Gross margin, as reported

71.1

%

70.5

%

Reconciling items:

Non-cash intangible amortization expense

$

316

$

314

Non-GAAP gross profit

$

43,745

$

41,782

Non-GAAP gross margin

71.6

%

71.0

%


The following table contains a reconciliation of GAAP operating loss to non-GAAP operating loss:

Tactile Systems Technology, Inc.

Reconciliation of GAAP Operating Loss to Non-GAAP Operating Loss

(Unaudited)

Three Months Ended

March 31,

(Dollars in thousands)

    

2024

    

2023

GAAP operating loss

 

$

(2,964)

$

(3,806)

Reconciling items:

Non-cash intangible amortization expense impacting gross profit

$

316

$

314

Non-cash intangible amortization expense impacting operating expenses

633

645

Change in fair value of earn-out

660

Executive transition expenses

315

Non-GAAP operating loss:

$

(1,700)

$

(2,187)

The following table contains a reconciliation of GAAP net loss to non-GAAP net loss:

Tactile Systems Technology, Inc.

Reconciliation of GAAP Net Loss to Non-GAAP Net Loss

(Unaudited)

Three Months Ended

March 31,

(Dollars in thousands)

    

2024

    

2023

GAAP net loss

$

(2,209)

$

(1,886)

Reconciling items:

Non-cash intangible amortization expense impacting gross profit

$

316

$

314

Non-cash intangible amortization expense impacting operating expenses

633

645

Change in fair value of earn-out

660

Executive transition expenses

315

Income tax expense on reconciling items*

(316)

(405)

Non-GAAP net loss

$

(1,261)

$

(672)

* The effect of income tax on the reconciling items is estimated using the Company's effective statutory tax rate.


The following table contains a reconciliation of net loss to Adjusted EBITDA for the three months ended March 31, 2024 and 2023, as well as the dollar and percentage change between the comparable periods:

Tactile Systems Technology, Inc.

Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA

(Unaudited)

Three Months Ended

Increase

March 31,

(Decrease)

(Dollars in thousands)

    

2024

    

2023

    

$

    

%

Net loss

 

$

(2,209)

$

(1,886)

$

(323)

 

17

%

Interest expense, net

(146)

993

(1,139)

 

(115)

%

Income tax (benefit) expense

(600)

(2,913)

2,313

 

(79)

%

Depreciation and amortization

1,634

1,629

5

 

0

%

Stock-based compensation

2,039

2,023

16

 

1

%

Change in fair value of earn-out

660

(660)

(100)

%

Executive transition costs

315

315

%

Adjusted EBITDA

$

1,033

$

506

$

527

 

104

%

Investor Inquiries:

Sam Bentzinger

Gilmartin Group

investorrelations@tactilemedical.com


v3.24.1.u1
Document and Entity Information
May 06, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date May 06, 2024
Securities Act File Number 001-37799
Entity Registrant Name TACTILE SYSTEMS TECHNOLOGY, INC.
Entity Incorporation, State or Country Code DE
Entity Tax Identification Number 41-1801204
Entity Address, Address Line One 3701 Wayzata Blvd
Entity Address, Address Line Two Suite 300
Entity Address, City or Town Minneapolis
Entity Address, State or Province MN
Entity Address, Postal Zip Code 55416
City Area Code 612
Local Phone Number 355-5100
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, Par Value $0.001 Per Share
Trading Symbol TCMD
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001027838
Amendment Flag false
v3.24.1.u1
N-2
May 06, 2024
Cover [Abstract]  
Entity Central Index Key 0001027838
Amendment Flag false
Securities Act File Number 001-37799
Document Type 8-K
Entity Registrant Name TACTILE SYSTEMS TECHNOLOGY, INC.
Entity Address, Address Line One 3701 Wayzata Blvd
Entity Address, Address Line Two Suite 300
Entity Address, City or Town Minneapolis
Entity Address, State or Province MN
Entity Address, Postal Zip Code 55416
City Area Code 612
Local Phone Number 355-5100
Entity Emerging Growth Company false

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