Tactile Medical Q2 Revenue Exceeds Expectations, Posts $78.91M

Tactile Medical (TCMD) reported Q2 revenue of $78.91 million, exceeding the consensus estimate of $73.93 million, an almost 8% increase compared to the same period last year. CEO Sheri Dodd expressed optimism about sustaining growth momentum into the latter half of the year, driven by a supportive payer policy landscape and effective market strategies. The company's revenue growth over the past decade has been robust, with a 10-year growth rate of 12.1%. Tactile Medical's valuation metrics suggest potential undervaluation, with a P/E ratio of 14.98, P/S ratio of 0.82, and P/B ratio of 1.13.

Tactile Medical (TCMD) reported its Q2 2025 earnings, revealing a mixed financial performance. The company posted an earnings per share (EPS) of $0.14, falling short of the $0.17 forecast, marking a 17.65% miss. However, revenue reached $78.9 million, surpassing expectations by 6.72%. The stock declined by 0.52% in aftermarket trading, reflecting investor concerns over the earnings miss.

Key Takeaways
Tactile Systems missed its EPS forecast by 17.65%, but revenue exceeded expectations. The stock fell by 0.52% in aftermarket trading, nearing its 52-week low. Revenue from airway clearance products surged by 51.6% year-over-year.

Company Performance
Tactile Systems Technology showed robust revenue growth, particularly in its airway clearance segment, which increased by 51.6% year-over-year. While the EPS miss indicates potential challenges in managing operational costs, InvestingPro analysis reveals strong fundamentals with a current ratio of 4.52 and more cash than debt on its balance sheet. The company maintains its leadership in lymphedema pneumatic compression devices, supported by an impressive gross margin of 74.57% and healthy cash flows that sufficiently cover interest payments.

Financial Highlights
- Revenue: $78.9 million, up 7.8% year-over-year
- Earnings per share: $0.14, down from the forecast of $0.17
- Gross margin increased by 60 basis points to 74.5%
- Adjusted EBITDA decreased by 15% to $7.7 million

Market Reaction
Following the earnings release, Tactile Systems’ stock decreased by 0.52% in aftermarket trading, dropping to $9.6. This decline reflects investor concerns over the EPS miss, despite revenue exceeding expectations. The stock trades at a P/E ratio of 14.6x and an EV/EBITDA multiple of 6.7x, levels that InvestingPro analysis suggests may represent an attractive entry point.

Outlook & Guidance
For 2025, Tactile Systems projects total revenue between $310 million and $350 million, representing 6-8% growth. The company expects significant growth in its airway clearance product line, with a forecasted increase of 40-43%. Adjusted EBITDA is anticipated to be between $33 million and $35 million.

Executive Commentary
CEO Sherry Dodd expressed optimism, stating, "We are confident that Tactile can return to double-digit growth." CFO Elaine Burkermeyer highlighted policy pivots aimed at ensuring patients receive the right products, emphasizing the company’s commitment to improving patient outcomes.

Risks and Challenges
The EPS miss suggests potential cost management issues. The decline in adjusted EBITDA raises concerns about profitability. The stock’s proximity to its 52-week low may reflect investor apprehension. Market saturation in the lymphedema segment could limit growth. Macroeconomic pressures and reimbursement policy changes could impact future performance.

References:
[1] https://www.investing.com/news/transcripts/earnings-call-transcript-tactile-systems-q2-2025-misses-eps-beats-revenue-93CH-4169040