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    TCMD
    Earnings call· Jun 2026(Q2 FY26)

    TACTILE SYSTEMS TECHNOLOGY Q2 FY26 earnings call TCMD

    Aug 10, 2026 Source

    Executive summary

    Tactile Systems Technology Q2 FY26 — Strong Lymphedema Growth and Profitability Expansion Offset Airway Clearance Headwinds

    Tactile Medical delivered a strong second quarter, driven by robust performance in its lymphedema business and significant profitability expansion. While the airway clearance segment faced temporary headwinds from DME inventory adjustments related to a new product launch, the company reaffirmed its full-year adjusted EBITDA guidance. Strategic initiatives, including an expanded distribution agreement and LymphaTech's FDA submission, aim to broaden treatment options and improve patient access, positioning the company for sustainable long-term growth.

    Highlights

    5

    • Total revenue increased 9% year-over-year to $85.7 million.

    • Lymphedema revenue grew 12% year-over-year to $73.6 million.

    • Gross margin improved 180 basis points year-over-year to 76.3%.

    • Adjusted EBITDA increased 49% to $11.4 million.

    • Net income increased 142% to $7.8 million or $0.34 per diluted share.

    Concerns

    3

    • AffloVest revenue declined 7% year-over-year to $12.1 million due to temporary inventory management dynamics among DME partners.

    • Medicare prior authorization requirement introduced additional administrative steps, contributing to near-term moderation in Medicare order volumes.

    • Airway clearance revenue is now expected to be closer to flat year-over-year for FY26, revised from prior expectations.

    Guidance & targets

    9
    CategoryTargetConfidence
    Total Revenue
    $360 million to $366 million
    high materiality
    High
    Lymphedema Revenue Growth
    low double-digit range
    medium materiality
    High
    Airway Clearance Revenue Growth
    closer to flat
    medium materiality
    Medium
    GAAP Gross Margins
    76% to 76.5%
    medium materiality
    High
    GAAP Operating Expenses Growth
    increase 10% to 12%
    medium materiality
    High
    Net Interest Income
    approximately $2.4 million
    low materiality
    High
    Tax Rate
    28%
    low materiality
    High
    Fully Diluted Weighted Average Share Count
    approximately 23 million shares
    low materiality
    High
    Adjusted EBITDA
    approximately $49 million to $51 million
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Lymphedema
    Continued strong execution, healthy referral trends, improved territory productivity, and NCD-driven Flexitouch adoption were primary drivers. Medicare prior authorization introduced near-term moderation in order volumes, but initial impacts are expected to normalize.
    Revenue increase: $7.7MNCD-driven Flexitouch adoptionHealthy referral trendsImproved territory productivity
    		$73.6M12%——
    Airway Clearance
    Sales decline due to temporary inventory management dynamics among several large DME partners associated with the launch of the next-generation AffloVest system. Underlying fundamentals remain strong, with TTM revenue up 32% YoY.
    Revenue decrease: $0.9MTemporary inventory management dynamics among DME partnersNext-generation AffloVest system launch
    		$12.1M-7%——

    Operational metrics

    18
    Cash and cash equivalents
    $69.9Mvs $83.4M as of Dec 31, 2025
    Q2 FY26

    Decline reflects upfront payments for ElastiMed and share repurchases.

    Adjusted EBITDA
    $11.4Mup 49% YoY
    Q2 FY26

    Driven by revenue growth, gross margin expansion, and disciplined expense management.

    Gross margin
    76.3%up 180 bps YoY
    Q2 FY26

    Increase attributable primarily to lower manufacturing costs, stronger collections reflected in revenue, and favorable mix benefits.

    Operating expenses growth
    7%YoY
    Q2 FY26

    Reflecting continued strategic investments to support long-term growth.

    Operating income growth
    67%YoY
    Q2 FY26

    Operating income increased due to revenue growth, gross margin expansion, and disciplined expense management.

    Net income growth
    142%YoY
    Q2 FY26

    Net income increased significantly year-over-year.

    Net income per diluted share
    $0.34vs $0.14 prior year
    Q2 FY26

    Diluted EPS for the quarter compared to the prior year.

    Interest income
    $0.6Mdecreased $0.3M or 34% YoY
    Q2 FY26

    Decrease due to decreased cash position.

    Interest expense
    $19,000decreased $0.4M or 95% YoY
    Q2 FY26

    Significant decrease in interest expense.

    Share repurchases
    —
    Q2 FY26

    Share repurchases completed during the quarter under the repurchase program, contributing to cash decline.

    AffloVest TTM revenue growth
    32%YoY
    Q2 FY26

    Trailing 12-month AffloVest revenue growth, underscoring the durability of the underlying growth trend despite near-term inventory dynamics.

    AffloVest TTM CAGR
    28%
    past 2 years

    Compound annual growth rate for AffloVest on a trailing 12-month basis over the past 2 years.

    Medicare business performance
    downYoY
    Q2 FY26

    Reflective of the impact from the Medicare prior authorization requirement.

    Stock compensation expense
    $8.6M
    FY26

    Assumed non-cash item for adjusted EBITDA expectation.

    Intangible amortization
    $4.2M
    FY26

    Assumed non-cash item for adjusted EBITDA expectation.

    Depreciation expense
    $3.3M
    FY26

    Assumed non-cash item for adjusted EBITDA expectation.

    Litigation-related costs
    $1M
    FY26

    Assumed non-cash item for adjusted EBITDA expectation.

    One-time acquisition related and integration cost
    $1.3M
    FY26

    Assumed non-cash item for adjusted EBITDA expectation.

    Industry KPIs

    6
    MetricValueDetails
    New product launch rampLaunched
    FCF conversion leverage guidance$49M to $51MUSD
    Segment franchise organic growth12%%
    Sales force commercial capacity buildflat
    Indicated addressable patient population20 millionpatients
    Pivotal trial clinical evidence milestones6-month manuscript published

    Product announcements

    2
    ProductTypeDetails
    Next-generation AffloVest systemlaunch
    MyoSleevelaunch

    Deals & partnerships

    1
    ElastiMedExclusive U.S. distribution agreement for MyoSleeveUpfront payments made (not quantified)

    Agreement to bring MyoSleeve, a novel compression therapy device, specifically to veterans, active duty service members, and other beneficiaries served through the Department of Defense. MyoSleeve is a discreet, wearable, non-pneumatic compression device for the lower leg.

    Risks & headwinds

    2
    Airway Clearance Inventory Management DynamicsExpected to continue through Q3 FY26, normalize in Q4 FY26.

    AffloVest revenue declined 7% year-over-year to $12.1 million.

    Mitigation: Working closely with DME partners; good visibility on inventory levels; underlying business fundamentals remain strong.

    Medicare Prior Authorization RequirementInitial impacts expected to moderate; operational efficiency to improve as teams and MACs gain familiarity.

    Medicare order volumes experienced near-term moderation; Medicare business was down in the quarter.

    Mitigation: Company prepared for requirements ahead of effective date; well-positioned to execute new process; initial impacts expected to moderate.

    What to watch in Q3 FY26

    5

    Airway Clearance Ordering Patterns

    Q4 FY26
    CurrentTemporary inventory management dynamics causing -7% YoY revenue decline in Q2.
    TargetNormalization of ordering patterns.

    Why it matters

    Normalization of ordering patterns is crucial for the recovery of the airway clearance segment and achieving full-year guidance.

    Based on our visibility today, we expect these inventory management dynamics to continue influencing ordering patterns throughout the third quarter, with purchasing activity beginning to normalize📎 in the fourth quarter as their inventory levels rebalance.

    Q&A highlights

    6

    Quantify any order/revenue shift between Q2 and Q3 due to prior authorization and assess if strong underlying momentum offset turbulence.

    Lymphedema's strong performance was driven by healthy referrals, improved territory productivity, and NCD-driven Flexitouch adoption. The Medicare prior authorization did cause a timing impact on orders, but this is normalizing, and the team was well-prepared, with MACs also improving. The Medicare business was down in Q2, reflecting this impact, and sequential Q3 growth is expected to be larger due to this timing push.

    “So, a couple of things. Definitely, lymphedema was a primary driver of the upside, and we continue to see really strong execution across our commercial organization, which is both healthy referral trends. We have improved territory productivity, and then the continued NCD-driven Flexitouch adoption.”

    asked by Kyle Edward Winborne · answered by Sheri Dodd

    2 min read5 chapters

    Detailed Narrative

    01

    Lymphedema Business Performance and Medicare Prior Authorization

    The lymphedema business demonstrated strong momentum with 12% year-over-year revenue growth in Q2 FY26, driven by healthy referral trends, improved territory productivity, and NCD-driven Flexitouch adoption. The April 13th Medicare prior authorization requirement introduced administrative steps, causing near-term moderation in Medicare order volumes. However, the company prepared for these requirements, and initial impacts are expected to moderate📎 as operational efficiency improves and MACs gain familiarity with the new process.

    02

    Airway Clearance Segment Headwinds and Next-Gen AffloVest Launch

    Sales of AffloVest declined 7% year-over-year in Q2 FY26, primarily due to temporary inventory management dynamics among several large DME partners. This was associated with the launch of the next-generation AffloVest system, which prompted DMEs to assess existing inventory. The company expects these dynamics to continue influencing ordering patterns through Q3, with normalization anticipated in Q4. Despite this, underlying business fundamentals, patient demand, and the competitive position of AffloVest remain strong.

    03

    LymphaTech Acquisition and Strategic Expansion

    The LymphaTech acquisition aims to address unmet needs in lymphedema diagnosis and monitoring. Its FDA-cleared platform provides objective, quantitative assessment of limb volume and circumference, generating 3D models for disease progression tracking. The company has submitted for an expanded indication as a diagnostic aid for lymphedema, with FDA approval expected in 2027, and is pursuing a Category III CPT code to establish a reimbursement pathway and support broader adoption. This initiative targets the 20 million undiagnosed lymphedema patients in the U.S.

    04

    Clinical Evidence and Market Access Initiatives

    Tactile Medical published the 6-month manuscript for its head and neck clinical evidence program in a peer-reviewed journal, demonstrating Flexitouch's efficacy in treatment-naive patients. This study supports expanding awareness and improving access to care for head and neck lymphedema patients, particularly by engaging commercial payors to remove restrictive experimental and investigational designations. The Medicare NCD policy already allows coverage for these patients, and the publication is expected to drive clinician awareness.

    05

    New Treatment Option: MyoSleeve Distribution Agreement

    The company announced an exclusive U.S. distribution agreement with ElastiMed for MyoSleeve, a discreet, wearable, non-pneumatic compression device for lower leg lymphedema. This product is specifically targeted at veterans, active duty service members, and other beneficiaries through the VA channel, where Tactile Medical has established relationships. MyoSleeve expands the company's portfolio of lymphatic care solutions, offering an additional treatment option for earlier-stage patients and complementing existing pneumatic compression therapies.

    AI-generated summary of the company’s earnings call. Not investment advice.