Tactile Systems 2025 Q1 Earnings Misses Targets as Net Loss Widens 35%

Tactile Systems (TCMD) reported its fiscal 2025 Q1 earnings on May 05th, 2025. The company faced challenges this quarter, missing the Zacks Consensus Estimate for revenue by 4.16% and reporting wider losses compared to the previous year. Net loss increased by 35% to $3.0 million, or $0.13 per share, surpassing market expectations for a smaller loss. Despite these setbacks, the company remains focused on strategic initiatives aimed at long-term growth. Tactile Systems adjusted its full-year 2025 guidance to reflect anticipated revenue growth between 5% and 8%, with projected adjusted EBITDA in the range of $32 million to $34 million.

Revenue

Revenue for Tactile Systems increased slightly by 0.3% year-over-year to $61.27 million in Q1 2025. This growth was driven by a substantial 22% rise in the airway clearance segment, bringing in additional revenue from AffloVest placements among durable medical equipment partners. However, this was offset by a 3% decline in the lymphedema product line, influenced by a decrease in the field sales team's headcount.

Earnings/Net Income

Tactile Systems' earnings report highlighted a deepening of losses, with EPS widening to $0.13 per share from $0.09 per share in Q1 2024. The company's net loss also increased by 34.6% to $2.97 million from the prior year's $2.21 million. Overall, the EPS performance was poor, signaling ongoing financial difficulties.

Post Earnings Price Action Review

The earnings report metrics significantly impacted Tactile Systems Technology's stock price, reflecting the company's financial struggles. Despite a modest increase in revenue, the figures fell short of analysts' expectations, potentially causing negative investor sentiment. Missing revenue targets often results in stock price pressure, as was observed here. In addition, the widening net loss suggests declining profitability and operational efficiency, which could further erode investor confidence. The deeper EPS loss indicates poorer financial health, adding to concerns about future growth prospects. Consequently, the stock price may face downward pressure due to these combined factors, prompting investor caution about the company's overall performance and outlook.

CEO Commentary

Sheri Dodd, Chief Executive Officer, emphasized the company's strategic adjustments and investments in optimizing its sales organization, despite facing challenges from decreased sales headcount and productivity issues with a new CRM module. She remains optimistic about long-term growth, driven by revenue from airway clearance and investments in sales and technology.

Guidance

Tactile Systems expects 2025 revenue to range between $309 million and $315 million, representing a 5% to 8% year-over-year growth. The company anticipates growing its lymphedema product line by 4% to 5% and airway clearance products by 20% to 23%. Forecasts include GAAP gross margins of approximately 74% and adjusted EBITDA of $32 million to $34 million.

Additional News

In recent developments, Tactile Systems expanded its Nimbl product line to include lower extremity lymphedema patients, addressing a larger segment of the market. The company also completed the integration of a new customer relationship management tool to enhance sales productivity. Additionally, Tactile Systems executed a $10 million stock buyback under its repurchase program, reinforcing its commitment to returning value to shareholders. These initiatives reflect the company's focus on strategic growth and maintaining its leadership position in the medical device lymphatic therapy market.