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Investing.com -- Shares of Tactile Systems Technology (NASDAQ:TCMD) plunged 25% following the company’s release of its first quarter financial results, which fell short of analyst expectations. The medical technology firm reported a Q1 earnings per share (EPS) loss of ($0.13), which was not in line with the anticipated ($0.08) loss. Revenue for the quarter was also below the consensus, coming in at $61.3 million against expectations of $64.49 million.
The Minneapolis-based company, which specializes in therapies for chronic disorders, witnessed a meager 0.3% increase in total revenue compared to the same period last year, amounting to a slight rise from $61.1 million in Q1 2024. Despite a gross margin improvement from 71% to 74% year-over-year (YoY) and a $1.9 million increase in gross profit, operating expenses rose by $3.5 million, or 8%, leading to an operating loss of $4.5 million.
Tactile Systems also revised its full-year 2025 revenue forecast down to a range of $309 million to $315 million from the previously stated $316 million to $322 million, indicating a growth of approximately 5% to 8% YoY. This adjustment reflects a more conservative outlook compared to the 8% to 10% growth previously projected. The adjusted EBITDA expectations for the full year were also lowered to a range of $32 million to $34 million, down from the prior forecast of $35 million to $37 million.
Piper Sandler analyst JP McKim responded to the results by downgrading Tactile Systems from Overweight to Neutral, with a reduced price target of $14.00 from the previous $25.00. "The biggest reason for our downgrade is that we are concerned with the forward visibility into the business and while the company’s FY2025 guidance was lowered, we wonder if numbers may still be a touch too high," McKim commented.
Investors reacted negatively to the combination of missed targets, reduced guidance, and concerns raised by analysts regarding the company’s forward visibility and the potential overestimation of future performance figures.
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