Tactile Systems at William Blair Conference: Strategic Growth Insights

On Tuesday, June 3, 2025, Tactile Systems Technology Inc. (NASDAQ:TCMD) presented at the 45th Annual William Blair Growth Stock Conference. The company outlined its strategic initiatives focused on addressing large, underserved markets, particularly in lymphedema and bronchiectasis. While emphasizing its market leadership and robust financial position, the presentation also highlighted challenges such as patient underdiagnosis and a complex treatment journey.

Key Takeaways

• Tactile Systems is targeting a $10 billion market in lymphedema and bronchiectasis.
• The company is investing in technology, including the Kylie app, to improve patient engagement.
• A 16% compound annual growth rate (CAGR) is projected, with plans to meet 2025 guidance.
• Tactile Systems boasts a strong cash position and gross margins of approximately 74%.
• Recent product launches include the Nimble device and advancements in the Flexitouch system.

Financial Results

• Tactile Systems reported a profitable market leadership position with a strong cash balance.
• The company guides a 16% CAGR, aiming to meet all 2025 financial targets.
• Gross margins are approximately 74%, reflecting efficient revenue cycle management.

Operational Updates

• The company has 285 sales representatives and is expanding its distribution reach across the U.S.
• Recent product launches include the Nimble device, a lighter and more portable pneumatic compression device, and enhancements to the Flexitouch system.
• The Kylie patient engagement app is a key technological investment, facilitating therapy tracking and patient-clinician communication.

Future Outlook

• Tactile Systems is focused on improving access to care through clinician and patient education, expanding treatment options, and advancing payer advocacy.
• The company plans to leverage technology for scale and efficiency, with investments in both front and back office operations.
• A strategic focus on enhancing lifetime patient value through technology and care navigation is emphasized.

Market and Product Insights

• The total addressable market for Tactile Systems’ products is estimated at $10 billion, with significant growth potential.
• The company is a market leader in lymphedema and AfloVest businesses, with broad payer adoption across commercial, VA, and Medicare.
• Tactile Systems is pursuing both organic and inorganic growth opportunities to expand its product pipeline and technological capabilities.

Q&A Highlights

• The speaker addressed the underdiagnosis and undertreatment of lymphedema, noting the lack of therapists and full schedules as challenges.
• The Kylie app’s role in patient engagement and therapy tracking was highlighted as a significant advancement.
• Investments in technology, such as the upcoming launch of Salesforce for the sales organization, are aligned with the company’s growth strategy.

For a comprehensive understanding, readers are encouraged to refer to the full transcript of the conference call.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Margaret Kayser Andrew, Analyst, William Blair: Growth Stock Conference. My name is Margaret Kayser Andrew. I am the, analyst that covers Tactile Medical. For a complete list of research disclosures and conflicts of interests, please look at WilliamBlair.com. With that, I’ll turn it over to the team.

Unidentified speaker: Thank you, Margaret. So excited to be here. I’m gonna be presenting on my favorite topic. I love talking about tactile medical. Love telling the story, and I’m telling the story on behalf of tens of thousands of patients, thousands of providers, and about 1,000 employees.

Here are disclosure. So investment highlights. The business is one, and I’m often asked about this, what excites you about this, and it really is the business fundamentals. And the investment thesis here is a really attractive market, a history and ability to deliver. And being a company, a small cap company, that is profitable, profitable growth, and has a really nice cash balance.

So we are often considered a bit unique in our space. And and hopefully, by the end of this presentation, you’ll see exactly why. Let me walk through this a bit, though. First of all, really attractive end markets. So the market itself is large.

It’s growing. And it comprises a very underserved population. When we talk about underserved, it’s two fronts. And I’ll I have a slide on this. It’s both patients that are not yet diagnosed and those that are diagnosed that haven’t yet been put on appropriate therapy.

And this is not changing, unfortunately, from the patient standpoint. But fortunate for us, that’s bringing technology into the market. We have a very broad payer adoption. So this is a product that does not have a challenge with coding coverage or reimbursement. All three are in place and have been in place in both commercial, the VA, as well as Medicare.

And market leadership. When you think about even within our lymphedema business on both the basic and the advanced pumps, we are the leader in lymphedema and have been in very strong leadership in our Aflovest business. From a unique assets standpoint, a huge body of clinical evidence. In fact, today, we, had a press release announcing the two month data from a head and neck study. I have a slide on that.

Can tell you a little bit about that. But great to see Tactile leading some of the largest prospective studies ever in this space and be able to demonstrate significant value for patients. We have a very large distribution reach. So we are across the country in The United States. We have a large sales organization.

And as we shared in our q one, we’ll be continuing to grow that sales organization out. Scalable revenue cycle management. So we have an entire back office that takes care of all of the order management pieces, which includes seeking reimbursement from our payers and all of those collections. We also have a multiple product pipeline. So we are both in the basic and the advanced pump space as well as in the Aflo business with respiratory therapy.

And then we have a a very strong tech forward digital strategy, which is gonna optimize how we do our work from a process standpoint as well as patient value on that front. Value creation, again, as I mentioned, a profitable market leader, that’s poised for scale. A lot of our investments this year have been specifically to help support that foundational, piece. Gross margins that sit at about 74% and have been healthy for a while. This is a very sustainable gross margin and then a very strong cash position.

So investment highlights. I’m really glad that you’re here. Here is the way we think about the market. It’s a classic kind of iceberg slide. And what is common across both lymphedema and bronchiectasis is very similar picture.

You have a large underdiagnosed population, so it’s under the waterline. You have a patient population that has been diagnosed per this slide. It’s two million in lymphedema and five hundred thousand in the in the bronchiectasis space. And then as you saw and will see in future slides, you’ll see where this gets very underpenetrated. Even though they finally get diagnosed, are they on standard of care?

And so large, underpenetrated US patient populations, significant gaps in patient access, and then a very long and complicated patient treatment journey. This is not a disease condition I would wish on anyone. And while many of you may not know or have lymphedema yourself, once you start to understand the disease, you start to see it everywhere. And the patient’s journey by the time they get diagnosed, by the time they get on therapy is long and arduous, and we have an opportunity of helping to support them. When we start to break down what is this market, I’m actually going to go from the bottom up.

So I mentioned that twenty million specifically in lymphedema that sit in underdiagnosed. And what we’re doing from a longer term strategy is looking at how do we go after helping support the diagnosis. This is a clinical diagnosis. The clinician sees and assesses and determines whether or not that patients have lymphedema. Often, it’s a rule out.

So in the area of cardiovascular disease and in chronic vein insufficiency, they are first assessing to understand, is this just venous insufficiency? Does this have DVT? What actually is going on here? But majority of patients with cardiovascular disease in the vascular space specifically, ultimately, if their CVI continues to progress, they will have lymphedema. It’ll be a secondary diagnosis to CVI.

For the oncology patients, they have, their their cancer treatment, which could be surgical or could be radiation. Often what happens is the lymph nodes are damaged. The lymphatic system is damaged, whether you have breast cancer or whether you have head and neck cancer, whether you have, pelvic, genital cancers, your lymphatic system is gonna be damaged, and you will have edema, and you will have lymphedema. What’s also important about this disease states, it is chronic, it is progressive, and is not reversible. So even conditions like obesity, which can help contribute to overall lymphedema, a patient could lose weight.

But once you have been obese and you have damaged the lymphatic system, there’s no amount of GLP one you can take and as skinny as you can get, and you will reverse course with the lymphedema. Once it’s there, it’s Of those that finally get diagnosis, and often it’s years in the making, especially on the vascular side, about two million of them. And so what we’re talking about here is patients who’ve been diagnosed and haven’t been treated with what we call a PCD, which is a pneumatic compression device, or an NPCD, non pneumatic. The only difference is, yeah, pneumatic versus non pneumatic. But we’re talking about medical grade compression devices.

What we’re sharing here and we haven’t actually shared this level of detail before today is this is really kind of showing what the penetration is of those that are diagnosed to treatment, which is about one hundred and forty five thousand patients annually are treated with either a pneumatic compression device or non pneumatic. And the market in this space is growing at about ten percent. Huge opportunity. Lymphedema has a lot of causes and effects. I talked about that a little bit.

As you see here, chronic vein insufficiency, cancer treatment, trauma surgery, majority of lymphedema is secondary. So it’s secondary to something else. Very few people, about one in one hundred thousand, actually have primary lymphedema. They’re born with it. Everyone else is a secondary, and you can see the causes of that.

What you see here in the circles is that of those that have chronic vein insufficiency, very actual common disease, forty two percent of the patients who have lower lymphedema, lower extremity lymphedema, actually have chronic vein insufficiency. So direct correlation there. When you think about the breast cancer patient, actually up to forty percent of breast cancer patients are going to have lymphedema. And even a higher prevalence is in head and neck cancers, where ninety percent of people who have head and neck cancer are going to have lymphedema. It has a severe impact on patients’ quality of life as well as their symptom management.

And again, not reversible, chronic, and it’s going to be progressive. When we think about what are some of the complications associated with the disease, you see here a whole listing of cellulitis, which can turn into sepsis. You see swelling, hard to heal wounds, limb heaviness, fibrosis, etcetera, skin changes, limited range of motion in DVT. So these are conditions in sequelae that is really impactful to the health care system, but really impactful and complicates a care journey. So a patient already has lymphedema.

They already have to be managing through compression therapy. But if you have an open wound, these patients will bounce between vascular and wound clinics. A wound clinic doesn’t want to use compression because they want the wound to heal. Then but while the compression isn’t happening, that wound is potentially gonna get worse or more wounds. So you can see this whole cycle, that that happens, with these patients.

We also know that of the patients that are expressing and saying that they have symptoms, they also bounce around. Not on this slide, but a lot of these patients are showing up in primary care. And the primary care physician is thinking, I’m not sure if this is DBT. I don’t know if it’s heart failure. Let’s see.

You get worked up for it. And they finally get to a place where they’re going to get diagnosed. But there is not a lymphedema doctor. You don’t assign yourself to a physician. You have to go in as a patient somewhat educated.

Your physician has to be educated, and that will start your journey to diagnosis and treatment. These here are pictures of patients with lymphedema. What’s interesting, you see the gentlemen, two gentlemen in the top that actually have head and neck cancer. So they have lymphedema external. But lymphedema also can take place internal in the actual neck, which can prevent swallowing, can prevent speech, and obviously can prevent range of motions.

You see here other examples. One arm is bigger than the other. One leg is bigger than the other. Both legs are quite big. Sometimes we think about lymphedema as being this extreme example.

You can think about the truly, you know, very severe stage four lymphedema cases. But even in stage one and stage two, these patients are often not identified and go on with the symptoms and don’t get a diagnosis till later when actually they could be receiving therapy earlier in their care journey. Now let me switch to the other part of our business, which is our respiratory business. I’m going to talk about bronchiectasis. So bronchiectasis is actually one of the most common respiratory diseases.

You see here that one in four smokers have bronchiectasis, and about forty two percent of COPD patients are going to have it. It’s a really complex respiratory disease, of where your your airway is going to have infection. It’s gonna get inflamed. It’s gonna get scarred. You’re not gonna be able to move mucus.

And it’s this whole it’s actually called a vicious vortex where the patient just is undergoing inflammation, infection, mucus needing to kind of move move all that. It actually damages the airways very similar to lymphedema where this is not reversible. Once you have bronchiectasis, you’re not going to not have it. As well, it can get very progressive and make it very difficult for people to breathe. It’s also a disease, unfortunately, that gets misdiagnosed.

So patients that have an overlap with COPD, they tend to be frequent flyers in the emergency room with pneumonia. They try antibiotics. They try other airway clearance type of technologies. And the only way to definitively diagnose bronchiectasis is actually with a, CT scan. We’ll tell the physician that they have bronchiectasis.

The relationship between radiology and is interesting because a pulmonologist typically has to have the radiologist, rule out bronchiectasis for that to even come up in the radiology report. Otherwise, if it’s there and hasn’t been ruled out, it’ll have to be to the pulmonologist to actually say whether they see it or not. So you can imagine a lot of education in the radiology to pulmonology. Making sure that that is a rule out is talked about before that scan is done. But a lot of patients that actually have it that are receiving some optimal care and not actually on VEST therapy.

So when we think about these two businesses, and you think about the total of lymphedema and the total of bronchiectasis in terms of that addressable market, talking about a $10,000,000,000 opportunity. And again, the patients, terms of where they have actual gaps in treatment, have a lot to do with basic market development, basic market access. How do they get access in training and education of their clinicians? How is it that we have solutions that make the patient amenable to what we are presenting to them? And how do we make sure that this therapy can get to the patient anywhere that they are?

I’m gonna talk now about a couple of our actual therapies, and this is in our lymphedema space. So we have two platforms. One is called a basic pump, and the other one is called an an advanced, an advanced pump. Actually, go across the top, not in the individual, columns. So for a long time, our basic device was called Entre and and Entre Plus.

So it was the controller. You have tubing, and you have garments. And for a basic device, your garments are basically legs and arms. So think about edema that is only located in the limbs. Very convenient, designed for patients to do their therapy in home.

It’s about a one hour program. It’s squeezing that lymphatic fluid into an area of the lymphatics that actually is functioning versus it pooling in an area where the body is unable to to process the lymphatics. We recently launched a brand new device in October for lower leg and in, February for upper extremity, and so now we have a full body system for nimble. We completely overhauled this platform. So we made the controller lighter, smaller.

We took away significant amount of less tubing. We have a travel bag for it. Patients can be on the go, and they can see themselves more in this therapy because, again, they have a basic pump needs, And it’s been wildly successful. We’re really pleased with the adoption both by patients and by physician. The other thing that we did is this device is Bluetooth connected, as is our advanced pump.

By having Bluetooth connectivity, patients are able to, connect to our patient engagement app, and I’ll talk about some of the benefit of that. But having a Bluetooth enabled technology, one that’s smaller and lighter, and being so well adopted, has really been a nice advance for patients that have basic pump needs. An advanced pump, our advanced pump is called Flexitouch. And so Flexitouch, supports patients that have additional needs. You may have swelling in your chest and trunk, and so by and you may or may not have arm or leg swelling.

So you have, edema in an area that is not limbs or could it could also be with limbs, as well as your needs, could be for more programming. So if you have a wound in the Flexitouch, you can actually program the compression around the wound. And so that allows for patient to get therapy at the same time that they that they have wound. Our Flexitouch business has been a great, business and continued to grow for a long time. Last year, we had some changes in the Medicare coverage policy, which forced patients to try a basic pump before you could go to an advanced pump.

You can imagine the frustration because if you have chest swelling and you’re not allowed to go directly to a you have to show failure of a pump that doesn’t even cover the part of the body of which you have edema for us. The good news is that policy has been retired, and now we actually have the national coverage decision, which allows patients that have a certain, unique characteristics to go directly to an advanced pump. That it has been wobbly, based on that coverage environment, but we are in a good place, since November. Our technology and where we think where we want to continue to go is how do we think about a next generation technology. Flexitouch, because of the additional programming as well as the limb and body coverage, has a heavier controller and it has more tubing.

So we continue to look at ways of how do we bring a new platform or enhancements to that device that also supports a patient experience, and supports them in their care continuum. There are a certain number of patients that will start in basic and then need to move to advanced technology. Once you’re in advanced and you meet the criteria, you’re not going to move to a basic pump. I talked before in some of those key components on market access. You have to have a great technology, and the technologies you saw aren’t even are technologies that not only work well, but they can be manufactured.

We have a very strong supply chain. We we don’t end up in back order. We can make this product and get it to the patient. And there’s great evidence behind these products. So you see here of the the reduction in in volume for patients in Flexitouch.

You can see some great numbers in the 80s and 90s here on satisfaction with Flexitouch, as well as the overall benefit. And then you even see some economic data showing that we’re able to demonstrate a reduction in total cost of care with patients who are going on our technology. What you see below the line is some exciting data that we just, again, did a press release today on. So about three years ago, Tactile undertook to conduct a randomized controlled study in head and neck cancer survivors, and wanted to look at the difference between what is usual care. And usual care with these patients is going to a physical therapist, massage therapist, and getting manual drainage on your head and neck area as well as potentially using wraps and and self and self massage.

Patients in this study were randomized to usual care in both academic and community centers, as well. And then the other arm of the study was for patients, that actually got Flexitouch and went directly to, therapy. These results that we press released today were the two month data. This is a six month study. Those six months results will be looking for conferences as well as in publication.

But really great to see this benefit for patients. And it really boils down to three areas of benefit. First is all patients got better, whether you went to usual care or whether you had Flexitouch. There was some symptom improvement, which was great to see. But what we see here is that with Flexitouch, there was actually more significant reduction in swelling as measured by imaging.

So you get swelling internal. You can’t see it external. But that reduction in swelling internal, you can imagine how that can help improve the use of feeding tubes and being able to swallow and speak really significantly. So significant improvement in that area. We also saw the number of patients that were able to have quality life benefits as well on the subscale improved more than those.

But I want to point, here to that middle bucket because this is a thesis. What we had understood was the problem, but it really came out here in the in the study. Patients who were randomized to usual care, only seventy nine percent of them actually got an appointment with a therapist at randomization. There is a lack of therapists. There aren’t that many.

They have very full schedules. And so even getting access to a therapy, a therapist, is really challenging versus for these patients versus people being able to get access to a pump. It goes much faster. So we can’t solve the number of therapists that are out there, but we can solve the time to therapy by actually having a product that is able to effectively treat the symptoms and actually show improvement on quality of life and on symptom reduction. Kylie.

So I don’t know how many presentations you’ve been to where someone’s talking about. There’s an app for it. I know iTuneOut on things like that, but I do wanna talk about our patient engagement platform, which we call, Kylie. So Kylie is a resource that anyone can get. You can all download it now and check it out.

What we have found is that, the Kylie app is really to help the patient engage with their lymphedema therapy, which could be a therapist. It may not be actually on a pump. So you can actually get on the app, and you can start tracking your therapy sessions. You can send pictures of your swollen parts of your body to your clinician, and you’re able to actually show your therapy times and see how you’re tracking with therapy. Obviously, patients that are going on to being on our therapy with the Bluetooth enablement, it automatically is uploading your therapy session, and it’s tracking all of that.

And then tons of information on education, awareness, training is all on that app. So it really helps that patient with self management at home. I think on the q one call, we announced that we have and we’ll be hitting a milestone with 50,000 patients have signed up on the Kylie app that have a unique profile. That’s them doing it themselves or their therapist encouraging them to do it. We will be hitting 1,000,000 patient engagements probably by July.

So that means 1,000,000 touch points we now have of a patient recording their symptoms or their therapy sessions. This is really significant. And on the Google App Store, we’re four stars. So do not put one star. Do not change this for me.

So we’re really excited with the Kylie app. It’s a service. It’s but it’s becoming a a product for us. You could imagine all the things that we’re going to learn about these patients as we’re able to see what happens prior to them getting pump therapy, if they don’t go on pump therapy, when they go on pump therapy, and what happens to them after therapy. So when we think about kind of the space here, we’ve been around a long time, and that doesn’t give us a right to own the space.

But it certainly gives us a lot of knowledge about this market. And we do sit at number one market share for both combining our basic and our advanced pumps. It’s a huge market to go after. We have the we have the products. We have the evidence, as you saw.

We have a very large sales reach. Our q two guidance support us being at two eighty five sales reps. This is a direct sales organization. We have a scalable back office multichannel referrals. So we call on vascular surgeons, vein clinics, oncologists, therapists, and the VA, and have really significant impressive coverage in The US for reimbursement of these products.

Aflavest business, also a great technology. You see these circles here in terms of the number of patients that are saying how much they use the best therapy, how much they have satisfaction, and then great data that also kind of shows the treatment effectiveness. There’s a drug coming out, from a company called Insmed. They’ve been doing a lot of promotion on bronchiectasis. It’s not a curative product.

It actually helps with some of the infection. But you still are infection and inflammation and mucus development. So it’s going to be an and out there. But on a benefit side, because market development is tough, it’s actually been nice to have more awareness of the disease state. And we believe strongly that our best therapy will provide a great benefit to this newly recognized population in this area.

Aflovest as well sitting at number two in the market. So Baxter is number one. LifeVest has been around for about or the best, sorry, has been around about thirty years. Very small innovation happening in this area, but we are in a in a in a dead heat here. Coming up on number one, what patients really like about our product is it’s a portable design.

It’s the only nontethered vest. So a patient can move around. They don’t need to be plugged into the wall. We have broad DME channel. This is an indirect sales force for us.

We have our own sales rep, but we sell through the respiratory DME partners. It definitely fits in terms of this entire respiratory patient that’s on service for them anyway, whether it’s from oxygen or nebulizers or vents, and then very strong reimbursement in this area as well, both payment, coding and and coverage. Some recent milestones that’s happened with our launches. You can see here this is a combined of both our bronchiectasis and our lymphedema business, But we have continued to look at how do we enhance and add value to the overall patient experience through technology. So while we continue to streamline our back office and we go after that addressable market, one way of getting that is to make sure that you’ve got the very best products on the market, and we feel very confident with that, not only with our recent launches, but continuing to improve the the overall patient experience.

From a revenue standpoint, this is a long, timeline, but a 16%, CAGR. You can see, where we sit right now on our 2025 guidance. We had made more investment this year than in previous years from an OpEx standpoint, biting the bullet and saying, look. There’s so much to get after that’s in the market. Not only do we need to add the the field headcount, but we also need to add the technology that helps service both the front office as well as the back office.

Everything we’re investing in is meant for scale and for leverage, and all of our investments are are currently on track that we had planned to do in 2025, which includes launching our CRM tool Salesforce for our sales organization. We’ll be launching, Salesforce for our back office in the back half of the year. We had e prescribing, platform out there already for the basic pump. We’ll be adding e prescribing for our advanced pump in the back half of the year and adding AI, that helps with that medical documentation review, which helps streamline that whole process for making sure the documentation is there and that we can bill and and collect. Our strategies are very clear, outlined at the end of last year, but it really comes in three flavors.

The first is improve access to care. I talked about that pretty substantially. This is not anything, I would think surprising at all. This is a basic market, access plan where you’re making sure that your clinicians and your patients understand the disease that they have and what treatment options are available. You expand your evidence, and you bake them into guidelines.

You continue to advance your payer advocacy and policy, and then you ultimately make it a simple process for people to get your product. So seems easy. It’s hard work, but it’s definitely where we’re focused. We know that we can, grow and and improve overall. Expand treatment options.

So, you know, you have to have technology to win in this space. We’ve showed, what we have done from an organic standpoint. And so we think about this as both being an organic and an inorganic opportunity. And then lifetime value. So these are patients that have had a tremendous journey getting to the point of diagnosis.

They were underwater in the iceberg. They’re above water, and now they’re finally getting into treatment. We have an opportunity through Kylie and others through CareNavigation of connecting with this patient and making sure that, they get the therapy that they need, that they stay on the therapy, and that we learn more about what their total needs are. So very excited, about these strategies. They’re all designed to improve the patient experience, and there’s an underbelly of technology across all.

Our investments to penetrate often said, well, how are you gonna go after that that TAM? The improved access to care details are here. It’s really foundational doing it. It’s gonna be people in technology. I called out already some of the enhancements that we’ve made.

We’re gonna continue to make these, and, again, very leverageable as we not only see some benefit for this year but into next year. With that, I really want to thank you all for attending. I know there’s a lot of presentations today. As I shared, this is my most favorite topic to talk about. Having this amount of time, is a privilege to get to share this journey with you.

And, Margaret, thanks again for the invitation.

Margaret Kayser Andrew, Analyst, William Blair: Perfect. Thank you. We’re gonna cut the the, audio for the folks on the line and just do the breakout right here since we are the the last presentation of the day in this room.

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