Tactile Systems Technology — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue increased 7% year-over-year to $91.9 million for the quarter ended September 30, 2026, compared to $85.8 million in Q3 2025.
• Lymphedema product line revenue increased 13% year-over-year to $81.8 million; airway clearance product line revenue decreased 25% to $10.0 million.
• Gross margin expanded to 77% from 76% in Q3 2025, driven by lower manufacturing costs and favorable product mix.
• Net income decreased to $7.2 million ($0.31 per diluted share) from $8.2 million ($0.36 per diluted share) in Q3 2025.
• Adjusted EBITDA was $14.3 million, compared to $14.4 million in Q3 2025.
• Operating expenses increased 13% year-over-year to $60.9 million, primarily due to investments in long-term growth initiatives.
• For the nine months ended September 30, 2026, total revenue increased 12% to $252.8 million, and net income increased 56% to $13.2 million ($0.57 per diluted share).
• Adjusted EBITDA for the nine months ended September 30, 2026, was $29.5 million, compared to $21.8 million in the prior year period.
• Cash and cash equivalents were $75.1 million as of September 30, 2026, down from $83.4 million as of December 31, 2025.
• The Company had no outstanding borrowings under its credit agreement as of September 30, 2026.

Guidance and Future Outlook:

• Full year 2026 total revenue is expected to be in the range of $360 million to $366 million, representing 9% to 11% year-over-year growth.
• Full year 2026 Adjusted EBITDA is now expected to be in the range of $50 million to $52 million, revised upward from the prior expectation of $49 million to $51 million.
• Management anticipates sustaining above-market lymphedema growth, driving operating leverage, and delivering shareholder value over the long term.

Business Segments and Product Lines:

• Lymphedema products represent 89% of total revenue for the quarter and 86% for the nine-month period.
• Airway clearance products represent 11% of total revenue for the quarter and 14% for the nine-month period.
• Received FDA 510(k) clearance expanding the LymphaTech 3D Scanner's indication to aid in the assessment of lymphedema.
• Submitted a 510(k) application to the FDA for Flexitouch® Pro, featuring enhancements to the advanced pneumatic compression system.
• The decrease in airway clearance sales was primarily due to the DME inventory transition associated with the launch of the next-generation AffloVest® system in the second quarter.

Market and Competitive Landscape:

• The Company describes itself as a market leader in both basic and advanced pneumatic compression categories.
• Management views the market as significantly underpenetrated with substantial opportunity ahead.
• The lymphedema business delivered its fifth consecutive quarter of double-digit year-over-year revenue growth.

Risks and Challenges:

• Forward-looking statements note risks including the ability to obtain reimbursement from third-party payers, adverse economic conditions, inflation, and supply chain disruptions.
• Potential risks include entry of new competitors, changes in government laws and regulations, technological obsolescence, and the ability to integrate acquisitions.
• The airway clearance product line faced a temporary revenue decline due to inventory transitions for new product launches.

Management Commentary and Tone:

• CEO Sheri Dodd stated that results underscore the strength and durability of the core lymphedema business and noted gross margin expansion for the 12th consecutive quarter.
• Management outlined three strategic priorities: expanding access to care, creating value across the patient journey, and broadening treatment options.
• The tone is confident regarding the company's market leadership and long-term growth prospects despite short-term operating expense increases.

Other Key Points:

• Appointed Steve Kiewiet as Chief Operating Officer, with responsibility for order operations and patient services.
• Repurchased $6.2 million of stock under the Company's share repurchase program during the third quarter.
• As of September 30, 2026, $12.5 million remained available under the $25.0 million share repurchase program, which expires November 3, 2027.
• The Company incurred $12.5 million in payments for repurchases of common stock for the nine months ended September 30, 2026.
• The Company paid $3.0 million for an exclusive distribution agreement during the nine months ended September 30, 2026.
• Goodwill increased to $39.6 million as of September 30, 2026, from $31.1 million as of December 31, 2025.