Tactile Systems Reports Q3 Revenue of $91.9 Million, Raises EBITDA Guidance

Tactile Systems Tech (NASDAQ: TCMD ) reported third-quarter financial results on Monday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Tactile Systems Tech reported Q3 2026 revenue of $91.9 million, with a 13% year-over-year growth in the lymphedema segment, maintaining a strong market position. The company anticipates continued sequential improvement in airway clearance revenue in Q4, despite a temporary decline due to DME inventory transitions. Full-year 2026 revenue guidance remains at $360 to $366 million, with adjusted EBITDA guidance raised to $50 to $52 million due to strong lymphedema performance.

Strategic initiatives focus on expanding access to care, enhancing the patient journey, and broadening treatment options, including the recent FDA clearance for an expanded indication of the LymphaTech 3D scanner. Management expressed confidence in sustained growth, highlighting significant investments in sales, marketing, and technology to drive future performance and improve operating leverage over time. Full Transcript OPERATOR Welcome, ladies and gentlemen, to the third quarter 2026 earnings conference call for Tactile Systems Tech. At this time, all participants have been placed in a listen-only mode.

At the end of the company's prepared remarks, we will conduct a question-and-answer session. Please note that this conference call is being recorded and will be available on the company's website for replay shortly. I would now like to turn the call over to Sam Bensinger, Investor Relations at Gilmartin Group, for a few introductory comments. Please go ahead.

Sam Bensinger (Investor Relations) Good afternoon and thank you for joining today's call. With me from Tactile Systems Tech's management team are Sheri Dodd, Chief Executive Officer, and Elaine Burkemeyer, Chief Financial Officer. Before we begin, I'd like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties.

These could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of our Annual Report on Form 10-K as well as our most recent 10-Q filing to be filed with the Securities and Exchange Commission. Such factors may be updated from time to time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events, or otherwise.

This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles, or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investor Relations portion of our website. With that, I'll now turn the call over to Sheri.

Sheri Dodd (Chief Executive Officer) Thanks, Sam. Good afternoon, everyone, and welcome to our third quarter 2026 earnings call. Here with me is Elaine Burkemeyer, our Chief Financial Officer. We delivered total revenue of $91.9 million in Q3, led by a 13% year-over-year growth in lymphedema, marking our fifth consecutive quarter of above-market double-digit growth.

This consistency demonstrates the durability of our leadership and the substantial runway created by a market that remains significantly underpenetrated. Airway clearance revenue was $10 million, down year over year as anticipated due to the one-time DME inventory transition associated with the launch of our next-generation AffloVest system. The same DME customers we highlighted in Q2 continued to work through temporary excess inventory during Q3. There were no material changes in the underlying dynamics of the business, and we continue to expect airway clearance revenue to improve sequentially in the fourth quarter across the portfolio.

We continue to balance strong growth in our core lymphedema business with disciplined execution. Gross margin expanded 90 basis points year over year in Q3 to 76.7%, contributing to adjusted EBITDA of $14.3 million. This marked the 12th consecutive quarter of year-over-year gross margin expansion. Importantly, we have achieved this sustained improvement while continuing to invest in our product offerings to deliver greater value to patients and providers.

Based on our year-to-date performance and our expectations for the fourth quarter, we are maintaining our full-year 2026 revenue guidance of $360 to $366 million and raising our adjusted EBITDA guidance to $50 to $52 million. This outlook reflects our continued confidence in low double-digit growth in our business and our expectation for sequential improvement in airway clearance revenue in the fourth quarter. We expect full-year airway clearance revenue to decline mid- to high-single digits year over year. I'll now turn to a closer review of our lymphedema business line, including Q3 performance and recent progress against our three strategic priorities.

Elaine will then review our financial results and the outlook for the remainder of the year. Lymphedema remains our core business and primary growth. Our Q3 results demonstrate our market leadership in both basic and advanced pneumatic compression devices, with revenue growing 13% year over year to $81.8 million. Sequentially, lymphedema revenue grew 11%, supported by a recovery from the Medicare ordering timing disruption associated with the April implementation of prior authorization requirements.

As expected, the prior authorization process has stabilized as our teams and the MACs have gained experience with the new requirements, and we believe this timing disruption is now behind us. Medicare revenue returned to growth in Q3 of 11% year over year. Beyond Medicare stabilization, the quarter's performance was driven by execution across several key drivers. Our go-to-market investments in sales reps and CRM technology are extending the reach and impact of our commercial organization.

Clinic visits increased 19% year over year in the third quarter, and referring clinics grew more than 10% year to date. These results are enabled by enhanced market insights that help our teams identify and prioritize referral opportunities across our account base. Our clinician-focused marketing programs are also delivering measurable returns, with select events generating 20% to 45% order growth from participating accounts in the 90 days following the event compared to the 90 days prior. And through our medical education team, we have educated more than 13,000 clinicians who treat lymphedema patients so far in 2026, already 25% more than in all of 2025.

This expands the number of providers equipped to identify patients and refer them to appropriate therapy. Additionally, broader patient access to advanced pumps remains durable following our tighter alignment with the NCD policy, and this is reflected in our product mix. As part of the next phase of our go-to-market playbook, this quarter we established a dedicated Strategic Accounts team within our broader commercial organization. This team will focus on deepening engagement with larger health systems and IDNs while expanding referral opportunities within existing high-volume regional and national accounts.

Taken together, these trends give us confidence in our ability to deliver sequential lymphedema growth in Q4. We are beginning to see benefits from investments in our operating model and order process, which are improving efficiency and service quality as patients move from referral to therapy. The strong prior-year comparison next quarter resulting from the initial benefit of our alignment with the NCD will moderate year-over-year growth but does not change our confidence in the underlying momentum of the business.

Looking beyond our third quarter results, we are executing well on our three strategic priorities designed to sustain double-digit growth: expanding access to care, creating value across the patient journey, and expanding treatment options. Together, these priorities form a compelling growth model supporting performance today while strengthening the drivers for sustained lymphedema performance over time. As with most market development opportunities, growth starts with diagnosis. Patients must first be identified, diagnosed, and referred before we can help them access clinically appropriate therapy.

Expanding access to care means helping more patients get diagnosed and referred into the care pathway, but a referral is only the beginning of the order process, and growth also requires pulling a higher percentage of referrals through to shipment. Today, not every diagnosed patient with lymphedema makes it through the documentation and order process necessary to receive therapy, and each patient lost along the way is a diagnosed patient who potentially goes underserved.

Creating value across the patient journey is about closing the gap and converting more eligible referrals to shipments, which is where we serve the patient and how we generate revenue, and expanding treatment options supports every step of that pathway. A broader portfolio gives clinicians more solutions for their patients, supports more additional referral opportunities, and extends the patient populations and disease stages we can serve. As these capabilities scale, we also expect greater productivity and operating leverage to support adjusted EBITDA growth over time.

Put simply, sustained growth in our lymphedema business is not solely a function of adding sales representatives. It comes from helping more patients get diagnosed and referred, supporting more of those referrals so they can reach therapy, and expanding the range of patients and therapy needs we can address. Our first priority is expanding access to care through earlier diagnosis and broader patient coverage. The opportunity is significant.

An estimated 20 million people in the U.S. are living with undiagnosed lymphedema, and many diagnosed patients continue to face coverage barriers. Our LymphaTech 3D scanner currently gives clinicians an FDA-cleared, quantitative way to measure limb volume and circumference, supporting earlier and more consistent identification of the disease. We are encouraged that LymphaTech is currently in use and generating revenue at leading academic medical centers, even ahead of an established reimbursement pathway, demonstrating its utility in clinical practice.

We recently achieved an important regulatory milestone, receiving FDA 510(k) clearance for an expanded indication of the LymphaTech 3D scanner. LymphaTech is now cleared to provide circumference and volume measurements to aid in the assessment of lymphedema. This expands LymphaTech's clinical positioning beyond measurement and surveillance alone, and this expanded indication strengthens the foundation for our broader diagnostic strategy, including our work on clinical adoption, reimbursement, and further integrated diagnostics on the LymphaTech 3D scanner.

Regarding reimbursement, our AMA application for a Category III CPT code was discussed during our Q2 earnings call and is scheduled for final review at the February 2027 meeting. While a Category III code is a tracking code rather than a coverage decision, it is an important step towards broader reimbursement. Together, these regulatory milestones are intended to support wider adoption of LymphaTech, enabling earlier and more objective identification of lymphedema and monitoring of fluid over time, and ultimately helping bring more patients into the care pathway.

We are also making progress in broadening payer access for patients who already have been diagnosed with lymphedema. Following publication of the six-month results from our randomized control trial of Flexitouch therapy for head and neck cancer—related lymphedema, we have begun to see movement among commercial payers, with a small number removing restrictive experimental and investigational designation from their policies. Significant work remains, but these early policy changes demonstrate that our clinical evidence and payer engagement can expand coverage over time, opening access to therapy for more eligible patients and supporting additional referral opportunities.

Our second priority is creating value across the patient journey. While we see opportunities to improve the experience at every stage of care, our current focus is on the highest-impact stage of the journey: helping more eligible patients successfully start therapy. By reducing friction in the upfront documentation and order process, we can improve conversion from referral to shipment and ensure more patients receive the therapy prescribed by their clinician. This benefits patients, simplifies the experience for referring clinicians and their staff, and supports a more efficient and stable operating model.

Ultimately, increasing access to therapy is a key driver of both patient value and sustainable growth. During the quarter, we made organizational and operating model changes to strengthen how orders move from referral to shipment. We also continue to re-platform our end-to-end order process through our AI-enabled order management platform and care navigation. Together, these efforts are designed to reduce friction, improve visibility into patient progression, and strengthen execution across the referral-to-shipment process.

We are already seeing tangible results in medical record review, one step within the broader order process, where technology-enabled improvements have reduced average review time by approximately 50%. While meaningful work remains, this early result demonstrates the potential to improve service levels, increase capacity, and support future order growth more efficiently as we extend these capabilities across the end-to-end process. Building on this progress, we are taking another important step in the evolution of our operating model. As announced today, Steve Kiewit is joining Tactile Systems Tech as Chief Operating Officer.

In this newly created role, Steve will lead our order operations and patient services teams, connecting capabilities that support a patient from referral through shipment into one operating organization. This structure will enable more coordinated decision-making across the full journey and help us extend process improvements more broadly, creating a better experience, greater capacity, and a more scalable operating model. Steve brings breadth and depth of experience in revenue cycle management, field-based patient educators, call center, and DME operations.

This is the right time to bring an executive-level enterprise operations leader to our team, and we are excited to have him on board. Our third priority is expanding treatment options. A broader innovation portfolio allows us to address more patient needs, support additional referral opportunities, and serve patients across a broader range of disease stages. We are advancing opportunities that complement our core pneumatic compression therapies and expand the patient populations we can address.

Consistent with our previously stated commitment, a significant milestone came in October when we filed a 510(k) application for Flexitouch Pro, a meaningful enhancement to our advanced pneumatic compression system. Flexitouch Pro is designed to improve the patient and clinician experience through usability and connectivity enhancements that simplify therapy administration while delivering the clinical effectiveness that has made Flexitouch the long-standing market leader. Subject to completion of the regulatory process, we are targeting a commercial launch of Flexitouch Pro in the second half of 2027.

This innovation is intended to reinforce our leadership in advanced pneumatic compression and increase the value we deliver through our core franchise. We are also preparing to introduce MyoSleeve in the U.S. through our partnership with Elastomed. Our next milestone is a focused VA pilot beginning in late Q4, which will help us evaluate the patient experience, clinical fit, and appropriate go-to-market model before broader commercialization.

MyoSleeve is not reflected in our 2026 guidance, and we expect its contribution to build gradually over time. Strategically, it represents an opportunity to serve additional patients and expand the range of therapy needs our portfolio can address. Overall, we remain confident in the durability of our lymphedema business and the opportunities ahead in 2027 and beyond. Each of our strategic priorities is at a different stage of development, and their impact will build over time.

Collectively, they are designed to strengthen the fundamental drivers of our lymphedema business: more patients being identified and referred, more eligible patients receiving therapy, and a broader range of patients and care needs we can serve. That is the growth model we believe can support durable revenue growth and improving profitability over time. With that, I'll turn the call over to Elaine to review our financial results and full-year outlook. Elaine Burkemeyer (Chief Financial Officer) Thanks, Sheri.

Unless noted otherwise, all references to third quarter financial results are on a GAAP and year-over-year basis. Third quarter total revenue was $91.9 million, up $6% million or 7.1% as double-digit growth in lymphedema more than offset the expected decline in airway Clearance by product line.