Workflow
Tactile Systems Technology(TCMD) - 2022 Q4 - Earnings Call Transcript
TCMDTactile Systems Technology(TCMD)2023-02-21 16:37
Filings

Financial Data and Key Metrics - Total revenue increased 20% year-over-year to 73.9millioninQ42022,exceedingthehighendoftheupdatedfiscalyearguidancerange[13]−Lymphedemaproductrevenuegrew1473.9 million in Q4 2022, exceeding the high end of the updated fiscal year guidance range [13] - Lymphedema product revenue grew 14% year-over-year to 65.8 million, while airway clearance product revenue surged 90% year-over-year to 8.1million[6][42]−GAAPnetincomewas8.1 million [6][42] - GAAP net income was 4.6 million (0.23perdilutedshare),comparedtoanetlossof0.23 per diluted share), compared to a net loss of 7.5 million in the prior year period [46] - Adjusted EBITDA increased 27% year-over-year to 12.1million,representing1612.1 million, representing 16% of sales [46] - Free cash flow generated was 3.8 million, helping fund a 5millionmilestonepaymentrelatedtotheAffloVestacquisition[15]BusinessLinePerformance−Lymphedemaproductlinereturnedtodouble−digitrevenuegrowthinQ42022,drivenbyimprovedsalesteamproductivityandstabilizationofclinicthroughput[7][22]−Airwayclearanceproductlineachieved1095 million milestone payment related to the AffloVest acquisition [15] Business Line Performance - Lymphedema product line returned to double-digit revenue growth in Q4 2022, driven by improved sales team productivity and stabilization of clinic throughput [7][22] - Airway clearance product line achieved 109% annual growth in 2022 following the AffloVest acquisition, with strong demand from DME distributors [22][21] - ComfortEase lower extremity garments and Kylee Mobile Application launched in July 2022, contributing to strong sales of lymphedema systems for lower extremities [17][27] Market and Channel Performance - Revenue by channel: 41.4 million from commercial payers, 18millionfromMedicare,18 million from Medicare, 8.1 million from DME distributors, and 6.4millionfromtheVA[43]−VAcentersshowedanecdotalsignsofresumingpatientvisits,thoughnotyetabroadtrend[66]−CMSdiscontinuedthepolicyrequiringcertificatesofmedicalnecessityforpneumaticcompressiondeviceclaims,providinganopportunityforincreasedengagementwithprescribers[34]StrategicPrioritiesandIndustryCompetition−Keystrategicprioritiesfor2023includeimprovinglymphedemasalesteamproductivity,deepeningrelationshipswithDMEproviders,introducingnewproducts,andenhancingoperationalefficiency[30]−Thecompanyaimstodeliveratleast6.4 million from the VA [43] - VA centers showed anecdotal signs of resuming patient visits, though not yet a broad trend [66] - CMS discontinued the policy requiring certificates of medical necessity for pneumatic compression device claims, providing an opportunity for increased engagement with prescribers [34] Strategic Priorities and Industry Competition - Key strategic priorities for 2023 include improving lymphedema sales team productivity, deepening relationships with DME providers, introducing new products, and enhancing operational efficiency [30] - The company aims to deliver at least 350 million in total revenue and 50 million of adjusted EBITDA by 2025, with a focus on underserved chronic conditions [54][69] - New product innovations, such as Bluetooth-enabled Flexitouch Plus and Kylee app updates, aim to enhance patient experience and compliance [8][102] Management Commentary on Operating Environment and Future Outlook - Management expressed cautious optimism for 2023, citing potential tailwinds from sales productivity expansion, new product traction, and payer policy improvements [32] - Supply chain constraints for AffloVest are expected to ease in 2023, with production capacity expanded through a second supplier [16][74] - Macroeconomic uncertainties, such as potential recession impacts on consumer spending and co-pays, were factored into the 2023 guidance [55][80] Other Important Information - The company hosted 43 educational programs in Q4 2022, attended by approximately 1,300 clinicians, and trained nearly 6,500 participants throughout the year [28] - A continuing education unit course on obesity-related lymphedema was launched in December 2022, drawing 266 attendees [28] - CFO Brent Moen announced his intention to retire in 2023, with a successor search underway [40][41] Q&A Session Summary Question: 2023 Revenue Guidance and Assumptions - 2023 revenue guidance assumes 9%-11% growth, with lymphedema products growing 8%-9% and airway clearance products growing 18%-22% [47][72] - Supply chain headwinds for AffloVest are expected to diminish, with no significant revenue contribution from new product launches factored into the guidance [72][74] Question: Sales Team Productivity and Headcount - The company ended 2022 with 250 sales representatives, consistent with Q4 headcount, and expects to maintain this level through at least the first half of 2023 [15][75] - Sales productivity improved in Q4, with the team engaging previously unrepresented accounts and benefiting from reduced turnover compared to 2021 [7][113] Question: VA Center Reopening Impact - Anecdotal evidence suggests some VA centers have resumed patient visits, but the impact on 2023 results remains uncertain [66][73] Question: Adjusted EBITDA and Free Cash Flow Expectations - Adjusted EBITDA is expected to grow over 30% in 2023, driven by improved cost management and reduced legal expenses [57][110] - Free cash flow generation is anticipated to support growth investments, with a cumulative 75 million expected from 2023 to 2025 [69][108] Question: New Product Pipeline - The company plans to introduce a size extension for AffloVest in H1 2023, refresh the Entree device, and launch upper extremity ComfortEase garments in H2 2023 [100][112] - Kylee app updates will include measurement tracking, reminders, and encouragement prompts to enhance patient compliance and reduce cost to serve [102][114]