Tactile Systems at Jefferies Conference: Strategic Growth in Healthcare

On Wednesday, 04 June 2025, Tactile Systems Technology Inc (NASDAQ:TCMD) showcased its strategic vision at the Jefferies Global Healthcare Conference 2025. The company emphasized its dedication to addressing underserved and chronic conditions, particularly in lymphedema and bronchiectasis. While Tactile Systems highlighted its strong market position and growth prospects, it also acknowledged the challenges of market penetration and the need for continued innovation.

Key Takeaways

• Tactile Systems aims for gross margins of 74% this year, maintaining a strong cash position.
• The company forecasts revenue between $309 million and $315 million, with a 16% CAGR over recent years.
• New product launches, like the Nimble pump and AfloVest, are central to growth strategies.
• Strategic priorities include improving access to care, technology innovation, and creating lifetime value for patients.
• No Q&A session was held during this conference call.

Financial Results

• Gross Margins: Above 70%, with a commitment to reach 74% in the current year.
• Revenue Guidance: Projected between $309 million and $315 million.
• CAGR: 16% over the past several years, reflecting consistent growth.
• Investment Strategy: Focus on retaining EBITDA and OPEX levels to reinvest in business expansion and technology.

Operational Updates

• Product Launches:

- Nimble pump for upper extremity launched in October of last year.

- Nimble pump for lower extremity introduced in February.

• Sales Force Expansion: Targeting 300 sales representatives by year-end.
• Technology Implementation:

- Salesforce CRM implemented in February.

- Back office integration on Salesforce planned for the latter half of the year.

• Kylie App: Expected to have 50,000 unique profiles and 1,000,000 interactions by June.
• Clinical Evidence: Positive results from a randomized control study on head and neck lymphedema presented at ASCO.

Future Outlook

• Strategic Priorities:

- Enhance access to care through training and streamlined processes.

- Pursue technology innovation via organic growth and potential mergers and acquisitions.

- Develop lifetime value through end-to-end care continuum pilots.

• Market Access Strategy: Focus on educating physicians and patients, ensuring a supportive reimbursement environment, and simplifying the patient journey from identification to therapy.

Q&A Highlights

• No Q&A session was conducted during this call.

In conclusion, Tactile Systems remains committed to its mission of serving patients with chronic conditions, focusing on innovation and market expansion. Readers are encouraged to refer to the full transcript for more detailed insights.

Full transcript - Jefferies Global Healthcare Conference 2025:

Camden Sisler, Jefferies Healthcare Team, Jefferies: Good evening, and welcome to the Jefferies Global Healthcare Conference. My name is Camden Sisler with the Jefferies Healthcare team. It’s my pleasure to introduce Sherry Dodd, CEO of Tactile Systems.

Sherry Dodd, CEO, Tactile Systems: Thank you. Excited to have the next thirty minutes with all of you talk to you about Tactile Medical, talking to you, on behalf of, tens of thousands of patients, thousands of providers and clinicians, and over a thousand employees. Our disclosure statement. So revealing and treating patients with underserved and chronic conditions in the home is our mission. This is what our company is all about.

And our company includes two types of portfolios, one in lymphedema and one in bronchiectasis. As you see from the data below here, we participate in a very large, underpenetrated, underserved market. Up to 2024, we mentioned that we had served over 79,000 patients in a market that’s actually comprised of over twenty million patients that have yet to be diagnosed, two million patients just in lymphedema alone that have been diagnosed and then a large number of patients that have not been treated. I’m excited to go through the data with you and you’ll see not just what we’re doing from a market standpoint, you’ll also see our product innovation and you’ll see the ways that we anticipate being able to grow profitably in this space. Let’s talk about some of the key highlights.

Why I’m often asked in terms of what gets you most excited about this business and I always start with the business fundamentals and the market fundamentals. Are they strong? And indeed that’s very true for tactile. The end markets are growing and again they are with an underserved population. This is not a commoditized market.

This is not a market where even the disease state is well understood. So there’s much to be done in the market development side. There’s very broad payer adoption. So unlike other technologies where you’re looking for coding coverage and payment, we have coding coverage and payment and that payment model has been very stable over the years. And while there’s been some differences in coverage, we have been able to weather through some difficult storms in that area and are definitely in a place where that reimbursement environment is more of a tailwind for us now.

We also have market leadership. So both in terms of our lymphedema business where we have both a basic pump as well an advanced pump, we are the market leader in that area. And in our airway clearance business with bronchiectasis, we’re in a very strong number two position coming up on number one. Unique assets for this business, we have a wealth of clinical evidence that supports the value proposition for the patient. And this is both value for the patient as well as economic value that supports value in the healthcare system.

We have large distribution reach. We are a direct sales force in our lymphedema business as well as being the DME. We not only call on the providers, help educate on the technology in the disease state, but we process all of those claims ourselves ultimately through collection and getting paid and have fine tuned this model over time and have a very scalable revenue cycle management process in place. We have a variety of products that are in development on both sides of our business looking to advance the patient experience as well as the therapy benefits. And then our tech digital strategy, both in terms of how we operationalize our back office as well as tech development and making that process simpler for a patient has been on our roadmap significantly this year and continues to bring value and I know a lot of leverage as we go into ’26 and beyond.

From a value creation standpoint, we are profitable. So as a small cap company that is growing profitable and has a cash balance puts us in a unique position. Our gross margins are above 70% and we committed this year for them to be at 74% and are holding to that commitment. And again, very strong cash position over the past several years have moved from a long AR balance to a place where we are very strong in collections and have a growing cash balance. Despite the fact that we have also done a stock repurchase program, we continue to see that cash balance grow.

An extremely attractive company and one that I am always eager to share. When we think about the size of the market, and this is not necessarily a new story for companies of our size, but it’s a story that we have evidence to help support which is both that population that is yet to be diagnosed, the population that is diagnosed and the population that is currently treated with therapies. What’s interesting about this both on the lymphedema side as well as on the bronchiectasis side, they’re both similar in terms of that watermark on below the line kind of iceberg, a huge proportion of patients that have yet to even be diagnosed. And then a proportion of patients that have been diagnosed and then a smaller proportion of patients that actually are on appropriate therapy. This creates a huge opportunity for us to penetrate and serve patients as well as the reality of significant gaps in the access to solutions and us being in the position where we have technology and solutions again that have very strong reimbursement coverage.

The other point I want to make about these patients is that they have very long and complicated patient treatment journeys. It’s for a lot of reasons and I’ll talk about that. But by the time someone finally gets to the point of being diagnosed, it can take months and up to years. So when they get to a place of being diagnosed to have a therapy that’s available for them that is reimbursed and has the appropriate therapy benefits is a very satisfying and rewarding position to be in as an employee of Tactile Medical. So here’s some of the market fundamentals.

I talked before about that twenty million of undiagnosed patients. From a long term strategy, we are very focused on trying to go after this. How do you bring more awareness to getting the patients to a diagnosis? This is a clinical diagnosis, it’s what a clinician sees. There’s not a blood test for it.

There are ways that the patient can present in terms of symptoms and then a way that the physician actually can measure the patient and make an informed diagnostic. But that opportunity continues to be very large and it’s an opportunity that we have with our education and training assets to really help continue to uncover and move more diagnosed patients into diagnosed and that portion of the market fundamentals has been growing. Of the two million patients that have been diagnosed, again there is a big opportunity here in terms of bringing them into treatment. So a relief that they’ve been diagnosed and now what are the treatment options? For these patients with lymphedema, the treatment options start with compression garments.

So you’ve seen patients wearing stockings, pantyhose, static compression garments that’s trying to squeeze the lymphatic fluid. From a trial in conservative therapy, patients then become eligible via reimbursement coverage to actually become eligible for a basic pump or an advanced pump depending on their condition. That market of patients that have tipped into medical device pumps either pneumatic or non pneumatic, that CAGR is a ten percent. Lots of opportunity of going after more patients and getting them on the right therapy. So let me kind of back up to go forward.

So lymphedema has many causes and effects of people of all backgrounds. So we all have a lymphatic system. It enables this transportation of fluids that are heavily packed with proteins and waste to be removed from the body. Majority of patients with lymphedema have it as a secondary condition. So they typically come in a cancer diagnosis or in a non cancer diagnosis.

If you have cancer, even the presence of a tumor can cause lymphedema, but mostly it’s in the surgical removal of the tumor or in radiation that can cause the patient to have a damaged lymph system. And when that happens, you’re going to have swelling. That lymphatic fluid is not able to move out of original watershed area, but actually needs to be moved to a part of the body where the lymphatic system is working. When the system is damaged, lymphatics, it is chronic, it is progressive, and it is irreversible. There’s no going back once it’s been damaged.

You have to find another place on the body to actually remove the fluid. Causes of lymphedema, as I mentioned, can come often from a secondary standpoint. It can be cancer or non cancer. In the non cancer area, often it’s with chronic vein insufficiency or CVI. Majority of patients that have late stage CVI are going to have lymphedema.

Your vascular system gets overloaded, it creates damage to your lymphatic system and again irreversible on the lymphatic side. Obesity can be a trigger also for lymphedema as can trauma and surgery and overall infection. These are both cancer and non cancer causes of patients. As you see in the circles here, about forty percent of patients who have breast cancer are going to have lymphedema. Even more striking is that ninety percent of head and neck cancer patients are going to have lymphedema.

It’s nearly guaranteed you’re going to have lymphedema if you have head and neck cancer. For the CVI patient, about forty percent of lower leg lymphedema is going to be associated with CVI. As I mentioned, there’s no cure and a vast majority of patients are left untreated. Here you see pictures of what lymphedema looks like. You can see some pictures of the two gentlemen in the top have head and neck cancer.

So you see external swelling. This can also be internal swelling. Internal swelling in a head and neck cancer patient can prevent swallowing, it can prevent an ability to speak, as well as significant limitations on range of motion. So by able to move that fluid away, we’ve seen in our clinical reports from our providers say that patients have been able to go from having a feeding tube to being removed from a feeding tube because now that they can swallow. They can go through speech therapy and actually get to a point of speaking.

So high prevalence as well as high impact from a cost perspective. But it just isn’t in head and neck cancer where those extreme conditions can happen. In patients that have limb and or trunk and or chest lymphedema, they can have cellulitis and cellulitis untreated can go into sepsis. You have swelling, hard to heal wounds. Imagine all that pressure on the skin starts to create a degradation actually in the skin which can cause seepage of the fluid and basically break down skin integrity so you get hard to heal wounds.

You don’t want to do a pump around the wounds and so often patients that have wounds are being asked to stop conservative therapy so that their wound can heal, then they still have lymphedema. Skin changes, pain and tightness, dysphagia, inability to swallow, as well as deep vein thrombosis. So very significant side effects associated with lymphedema, high cost to the health care system, and very high cost to the patient, both in terms of their quality of life as well as their actual symptoms. As you see from the very bottom, the fact that a lot of patients have these symptoms, they’re often unaware that they have lymphatic disease. The understanding of lymphatic disease isn’t something not only are patients educated on, it’s because physicians aren’t often educated on.

You now know more a little bit about lymphedema disease than others might know about lymphedema disease. So there’s a huge opportunity for training and education and it’s a big part of how we’ve been able to see our growth to date is really coming from growing the market through training and awareness and having excellent technology. Let me switch now to the other side of our business, which is in bronchiectasis. So this is airway clearance. It is one of the most common respiratory diseases.

So it’s a complex disease where you have damage to the airways that creates this abnormal widening that gets inflamed, it gets scarred and so it ends up permanently damaged. Very similar to lymphedema, once you have bronchiectasis, you can’t reverse that as a disease. Your airway is damaged, you cannot correct that. What happens with a damaged airway is you’re going to have a pattern of increased mucus which is going to create inflammation, which is going to create infection and it goes in a circular format. And so the way out of this is by having some sort of therapy that allows you to move that mucus so you reduce the infection and you reduce the inflammation.

Forty two percent of COPD patients are going to have bronchiectasis and nearly one out of four smokers are also going to have bronchiectasis. So it’s actually fairly prevalent, just under diagnosed and undertreated. One of the frustrations that a lot of patients have is why did it take so long to finally get to a diagnosis? And so bronchiectasis is often misdiagnosed. And one of the reasons it’s misdiagnosed is the only definitive way of diagnosing it is actually through CAT scan, through CT scan.

Otherwise these patients present with recurring pneumonia. They need non invasive vents. They continue to have airway clearance problems and it is not until the physician actually orders the CT scan sometimes that you can actually definitively diagnose bronchiectasis, but the CT scan can get you to a definitive diagnosis. And so the problem is that the longer the patient goes with the lack of intervention, the more cycles they’re going to have of this infection which is going to make the condition overall worse. So kind of a classic that they often don’t get diagnosed till later into treatment.

And so that the degree of therapy that they need is pretty significant. So earlier treatment is going to help these patients significantly. When do we think about both the lymphedema then and the bronchiectasis business, we’re talking about a $10,000,000,000 total addressable market. The gaps in patient and clinician education and access to care, I spoke briefly about this and I’m going to show you some of the strategies that we’re working on to make this better. But the reality is that these patients require lifelong care And they require lifelong care in their home for symptom management.

They’re not going to be cured, but they certainly do have an opportunity of seeing a reduction in symptoms and getting back to a higher quality of life. The solutions that we have, let me start on the lymphedema side. So we have what our existing systems are and where we have been innovating. We participate in both the basic pump and the advanced pump market. So these products have been called our Entre Plus, which is our basic and our Flexitouch Plus portfolio.

They’re for different patients. A basic pump basically covers the arms and the legs. So you can have half leg, full leg, or your arms, but it does not cover the chest and the trunk. So when you have limb edema, you can have bilateral or you can have unilateral. And so these have been our mainstays and we have been able to meet patients’ needs regardless of where their lymphedema has been triggered from.

Again, whether it’s coming from a cancer diagnosis or non cancer with these products. The advantage on the Flexitouch Plus are twofold. One is the Flexitouch Plus actually has the coverage of a head and neck, a chest and a trunk. So if that’s where your edema is, that’s where you should have coverage from the actual garment so that you can actually pull that lymphatic fluid away from you. Again, it is very much dependent on location of edema as well as often with skin.

Nice thing about Flexitouch Plus is you can program the sequencing of the pump away from a wound. So if you do have a wound, it doesn’t prevent you from getting compression therapy. You just need to have a pump that allows for programming away from that. Where we’ve been moving to is how do we advance our portfolio so we continue to meet the needs of the patient? And so we were really pleased to launch Nimble which is our next generation basic pump which we launched for upper extremity in October of last year and we launched that product for lower extremity in February.

This is an entirely new platform for patients. The size of the controller is significantly less. The amount of tubing and hose that does the pneumatic compression air is vastly smaller, as well as it’s portable, it has a battery, so you don’t have to be tethered to the wall and it’s Bluetooth enabled which allows the patient to actually have connectivity over to our Kylie engagement platform which allows that patient to actually track their therapy sessions. This has been a wildly successful launch to us. Not only has there been very strong physician adoption, but very strong patient adoption.

Patients before may have looked at the Entre plus and saw the hosing and the tubing and the weight that tethered to the wall and said, you know what, I’m not sure this is for me. But with Nimble they can identify and say, yes, I can see myself. I can travel with this. I can move around. I have more mobility, which has been very, very encouraging.

And again, we’ve had a very successful launch. We are currently working on our next generation for our Flexitouch, taking those same considerations into play. How do we make sure that the technology is approachable from a patient standpoint, we don’t change any of the therapy benefit, and we just make it a better patient experience overall. Also backing up our pump therapy is clinical evidence. Talked about that in terms of where we have differentiated assets.

On the top you can see some of the clinical data that supports the patient satisfaction. It supports the reduction in limb volume. It reports the patient’s ability to go back to activities across the board from a variety of published studies. In fact, tactile has been the leader in published clinical evidence, particularly in the advanced pump area. One thing I’m particularly proud of is just yesterday we had a press release which detailed our two month results from our randomized control study for head and neck.

This is the largest prospective randomized control study ever in patients that are head and neck cancer survivors with lymphedema. Those results are based on a six month study of which we are currently working on that analysis, but was pleased to have the two month data presented at ASCO, one of the largest clinical oncology conferences. And as you see below here, already starting to see some differentiation of patients who were randomized to Flexitouch versus randomized to usual care. Usual care for this population is working with a therapist to do manual massage, Actually moving the lymphatic fluid away from their head and neck and moving that fluid to an area on their body where they have a intact lymphatic area of the body that can process those fluids. So we were able to show even with this two month study that by imaging on internal swelling, we had a significant reduction in internal swelling versus usual care.

We also saw benefits in quality of life. I should say all patients showed benefits in quality of life but showed statistical significance in some of those subscales. And then also want to point out the fact that of the patients that were randomized to usual care or to our therapy, only seventy one percent of patients that were randomized to usual care, again seeing a therapist, a massage therapist actually had an appointment and saw that person by two months. There is a huge time backlog of being able to get into a therapist for massage therapy. And so you’ve been you finally got diagnosed, you have the symptoms, you have significant disability, and yet only seventy one percent of patients were actually even able to start their therapy by two months.

We’ll see what that looks like at the six month time point. You can see the value of actually being able to have a technology you’re able to put on the patient earlier than having to wait for that opportunity of getting to a therapist. And I don’t believe that’s going to change over time. Not more therapists and lymphatic therapists are going to be joining the workforce to keep up with that twenty million patients that are going to move from being undiagnosed into diagnosed. So having a therapy option that a patient can start therapy early will be critical for overall outcomes.

Patient engagement, very important piece because again, this is a lifelong disease of where the patient is managed in their home. So several years ago, two and a half years ago, we launched what’s called the Kylie app. The Kylie app allows a patient not just to learn about lymphedema in the disease state, is incredibly important, but it also allows them to track their symptoms as well as their therapy sessions. And then allows them to share this data with their clinician, which includes an opportunity of sharing pictures of their swellings or potentially wound with their provider. This is an app that’s available to anyone, anyone with lymphedema at all.

And what we’re finding in some of the cancer centers, those physical therapists are asking the patients to download and get on Kylie to track their symptoms and their manual massage therapy sessions so that they can see whether how the patient is doing in between sessions. And then using that then to continue the patient on with a referral onto Flexitouch. And so that continuity of care can be tracked. We recently reported on our Q1 earnings call that we will have 50,000 patients having set up a unique profile. It’s going to happen in June.

And we have 1,000,000 interactions on this app. So when a patient goes in and is recording symptoms or looking at education, those become an interaction as well as because of the Bluetooth enablement both for Nimble and for Flexitouch, the sessions with the pneumatic compression device are automatically recorded into the device. I will tell you having 1,000,000 interactions when I heard about this, I was a bit surprised. I didn’t know we had that many. So I would say we’re very early in understanding all that we can do with that data.

Imagine we will learn a lot about what is happening to the patient in their home, what type of symptoms they continue to have, or what type of treatment modalities they continue to have post getting a pump, but also for the patients that are using it prior to getting our therapy. Also understanding their care pathway and some of the symptoms and the therapy exposure that they have that’s driving them to our product. So with 5,000,000,000 in total TAM in this space and having products that fit both in basic as well as advanced pump, we really see ourselves as being in a position to really own the space in lymphedema solutions. We have a clinically proven pneumatic compression brand that is well known in the market. We have this expansion of clinical evidence, as I mentioned the press release yesterday, as well as we’ll have the six month data that’s specifically on head and neck.

I should mention that head and neck is not a new indication for us. Head and neck has been an area where we have the garments we’ve been able to treat patients. The challenge with the head and neck space and why we did this study was specifically to help with coverage mostly on the commercial side. Many commercial health plans still consider head and neck compression therapy with a pump as being experimental and investigational. With data we will be able to show that it is neither experimental nor investigational and be able to help change that coverage into what is the coverage which should be providing accessible access for patients to get that product.

We have very large sales reach. Again, we have a sales organization that is highly tenured. We are committed to being at 300 sales reps by the end of the year. And our sales reps call on all channels where we are apt to see the patients getting diagnosed. This is oncology channel, it’s a physical therapist, massage therapist, it’s in vein centers, it’s in vascular, and it’s in the VA.

So very large reach. Because we are our own DME, we have a scaled very efficient back office where we’re continuing to simplify that process with technology, multi channel referrals and we also have very supportive coverage about eighty percent of all payers have both coverage as well as meaningful payment for patients in this area. Bronchiectasis as well, very strong position from a product and a market standpoint. We have the high velocity chest wall oscillation. It basically mimics what would happen if a therapist was going to be pounding on your chest trying to loosen up that mucus.

It can be used with other treatments including some drug therapy that’s coming out. The drug therapy supports one aspect of bronchiectasis but doesn’t help with all. These will be adjacent therapies. And the tactile vest, this Aflovest is the only fully mobile vest. It is not tethered into the wall.

A patient can wear the vest and move about and complete their session as they wish. The evidence here is also very supportive of patients compliance as well as the effectiveness and how it fits with their overall lifestyle. One important aspect of our growth is really by increasing market share. And in the Aflovest side, I mentioned the portable design is incredibly important. That’s where patients want to be, is not tethered to the wall, which is also very similar to our nimble product on the lymphedema side.

And this broad DME channel. With the Aflovest business we are indirect and we have partnered with the top 10 respiratory DMEs. These respiratory DMEs carry a portfolio of products for the respiratory patient. They have oxygen, they have non invasive vents and they have AfloVest. So it fits in very well especially as these patients tend to be frequent flyers, potentially oxygen, have been on non invasive vents and that DME rep respiratory focus is able to help identify patients.

And we also have very strong reimbursement in this area and has been stable for a long time. We have some recent milestones with our business that are reflective of both our technology development over time, how we continue to enhance both the product experience as well as building out our own evidence plan as well as the simplicity that we’re looking for for an entire process both for our patients and our providers and quite frankly for our own business. We are end to end on the product from getting the sales and marketing out all the way into collections. It’s in our interest to understand workflow related tools from the front office as well as the back office. And as we look to 2025, we continue to look at both technology innovation as well as our opportunity of simplifying the process and expanding market access.

Over the past multiple years, you’ve seen for this business a 16% overall CAGR. Our guidance right now is sitting at that three zero nine to three fifteen from a overall revenue standpoint. We specifically made the determination to invest in the business this year. So, we are holding our EBITDA and OPEX at a percentage where we were able to take those dollars and invest back in the business in both headcount by putting more reps into the field as well as technology that again helps support the overall simplification of both the selling process as well as the order management process. Our strategic priorities are very clear.

These are our growth drivers. We will be looking to improve access to care. This is a basic market access strategy. It’s not anything that should be a surprise or feel overly complicated. It takes time, but it does involve training and educating physicians, providers, and patients on the disease state and the therapy options.

It is making sure that reimbursement environment stays healthy so that there remains appropriate coding coverage and payment for these patients. It is also around how we just streamline the entire process. How do you make it go faster? Take the friction out from the patient being identified to the patient actually getting the therapy. We’re also very interested and we know that you have to be innovative in technology in this area.

So we continue to look at both with our organic opportunities of how do we enhance and look at technology to improve the patient experience but also looking at our cash balance of what opportunities might we want to find from an M and A standpoint that helps build out the portfolio. And then last this lifetime value. These are patients again, chronic progressive disease. They have a long journey to get to getting a pump and they have a journey after pump. How do we think about creating more lifetime value on an end to end care continuum for these patients and we have a number of pilots that are underway.

Our near term strategic investments are only double down in these strategic priorities. Everything we do and every investment we’re making has to align to those three strategies. So, the market development activities are well underway. We have a number and are committed to a number of forums and engagements with clinicians. We recently did a rebalance and optimization of our sales force making sure we had the right people in the right location doing the right job.

We actually started with Salesforce, a new CRM tool. So now we have modern technology for our Salesforce. We implemented that in February and we’ll be putting the back office on that here in the last half of the year. And then looking at the data that continues to support the value proposition of our therapies is going to be key to how we continue to drive overall growth in this area. I know we only have a few seconds, but I’m happy to take any questions or we could meet right after.

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