Third Quarter 2016 Highlights:
- Total revenue of
$22.6 million , up 35% year-over-year, compared to revenue of$16.8 million in the third quarter of 2015.- Flexitouch® revenue increased 33% year-over-year to
$19.4 million , from$14.6 million . - Revenue from other products, consisting of revenue from sales of the Company’s Entré™ and ACTitouch® Systems, increased 47% year-over-year, to
$3.2 million , from$2.2 million .
- Flexitouch® revenue increased 33% year-over-year to
- Operating income of
$1.0 million , or 4.3% of total revenue, compared to$1.5 million , or 8.7% of total revenue, in the third quarter of 2015. - Net income of
$0.5 million , compared to net income of$0.9 million in the third quarter of 2015. - Adjusted EBITDA of
$1.9 million , compared to$1.8 million in the third quarter of 2015. - On
August 2, 2016 , the Company closed an initial public offering (IPO) of its common stock that resulted in the sale of 4,120,000 shares at a public offering price of$10.00 per share. The Company received net proceeds from the IPO of approximately$35.4 million , after deducting underwriting discounts and offering expenses. - On
September 22, 2016 , the Company announced that it had received 510(k) clearance from theU.S. Food and Drug Administration (FDA ) for the Flexitouch System in treating lymphedema of the head and neck, a common consequence of head and neck cancer.
“Revenue growth of 35% in the third quarter continued the impressive performance that we delivered in the first half of 2016,” said
Mr. Mattys continued: “Looking forward, we expect continued success as we focus on the core elements of our growth strategy: expanding our sales coverage to further penetrate the U.S. market, growing the portfolio of clinical and economic support for our innovative home care technologies, expanding reimbursement coverage, and introducing new products to address the unmet needs of the large and growing lymphedema and chronic venous insufficiency patient populations.”
The following table summarizes revenues by product for the three and nine months ended
| Three Months Ended September 30, | Increase / Decrease | Nine Months Ended September 30, | Increase / Decrease | ||||||||||||||||||||||||
| ($,thousands) | 2016 | 2015 | $ Change | % Change | 2016 | 2015 | $ Change | % Change | |||||||||||||||||||
| Flexitouch System | 19,387 | 14,609 | 4,778 | 32.7 | % | 47,988 | 36,098 | 11,890 | 32.9 | % | |||||||||||||||||
| Entré & ACTitouch Systems | 3,248 | 2,211 | 1,037 | 46.9 | % | 8,076 | 5,614 | 2,462 | 43.9 | % | |||||||||||||||||
| Total Revenue: | $ | 22,635 | $ | 16,820 | $ | 5,815 | 34.6 | % | $ | 56,064 | $ | 41,712 | $ | 14,352 | 34.4 | % | |||||||||||
Third Quarter 2016 Financial Results:
Total revenue increased
Gross profit increased
Operating expenses increased
Operating income decreased approximately
Net income decreased
Nine-Months 2016 Financial Results:
Total revenue for the nine months ended
Net income for the nine months ended
Cash Position at
As of
Updated Fiscal Year 2016 Outlook:
For the full year 2016, the Company expects total revenue in the range of
Conference Call:
Management will host a conference call at
About
Legal Notice Regarding Forward-Looking Statements:
This release contains forward-looking statements. Forward-looking statements are generally identifiable by the use of words like "may," "will," "should," "could," "expect," "anticipate," "estimate," "believe," "intend," or "project" or the negative of these words or other variations on these words or comparable terminology. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties outside of the Company’s control that can make such statements untrue, including, but not limited to, the adequacy of the Company’s liquidity to pursue its complete business objectives; the Company’s ability to obtain reimbursement from third party payers for its products; loss or retirement of key executives; adverse economic conditions or intense competition; loss of a key supplier; entry of new competitors and products; adverse federal, state and local government regulation; technological obsolescence of the Company’s products; technical problems with the Company’s research and products; the Company’s ability to expand its business through strategic acquisitions; the Company’s ability to integrate acquisitions and related businesses; price increases for supplies and components; and the inability to carry out research, development and commercialization plans. In addition, other factors that could cause actual results to differ materially are discussed in the Company’s filings with the
| Tactile Systems Technology, Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| September 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| (In thousands, except share and per share data) | (unaudited) | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 39,294 | $ | 7,060 | ||||
| Accounts receivable, net | 13,021 | 14,151 | ||||||
| Inventories | 6,248 | 5,781 | ||||||
| Deferred income taxes | 1,781 | 1,766 | ||||||
| Prepaid expenses | 808 | 602 | ||||||
| Total current assets | 61,152 | 29,360 | ||||||
| Property and equipment, net | 1,399 | 1,346 | ||||||
| Other assets | ||||||||
| Patent costs, net | 2,304 | 2,489 | ||||||
| Medicare accounts receivable – long term | 1,644 | 2,039 | ||||||
| Deferred income taxes | 387 | 402 | ||||||
| Other non-current assets | 50 | 1,337 | ||||||
| Total other assets | 4,385 | 6,267 | ||||||
| Total assets | $ | 66,936 | $ | 36,973 | ||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 4,808 | $ | 3,336 | ||||
| Accrued payroll and related taxes | 4,250 | 3,355 | ||||||
| Accrued expenses | 1,212 | 916 | ||||||
| Future product royalties | 265 | 991 | ||||||
| Income taxes payable | 172 | 904 | ||||||
| Total current liabilities | 10,707 | 9,502 | ||||||
| Long-term liabilities | ||||||||
| Deferred compensation | 150 | 193 | ||||||
| Total liabilities | 10,857 | 9,695 | ||||||
| Convertible preferred stock | ||||||||
| Series B convertible preferred stock; $0.001 par value, no shares authorized, issued or outstanding as of September 30, 2016 and 5,319,066 shares authorized and 2,733,468 shares issued and outstanding as of December 31, 2015 | — | 12,599 | ||||||
| Series A convertible preferred stock; $0.001 par value, no shares authorized, issued or outstanding as of September 30, 2016 and 3,112,153 shares authorized and 3,108,589 shares issued and 3,061,488 shares outstanding as of December 31, 2015 | — | 20,328 | ||||||
| Stockholders’ equity (deficit) | ||||||||
| Preferred stock; $0.001 par value, 50,000,000 shares authorized and no shares issued and outstanding as of September 30, 2016 | — | — | ||||||
| Common stock; $0.001 par value, 300,000,000 shares authorized, 16,812,655 shares issued and 16,746,645 shares outstanding as of September 30, 2016, and 14,184,175 shares authorized, 3,222,902 shares issued and outstanding as of December 31, 2015 | 17 | 3 | ||||||
| Additional paid-in capital | 61,214 | — | ||||||
| Accumulated deficit | (5,152 | ) | (5,652 | ) | ||||
| Total stockholders’ equity (deficit) | 56,079 | (5,649 | ) | |||||
| Total liabilities and stockholders’ equity (deficit) | $ | 66,936 | $ | 36,973 | ||||
| Tactile Systems Technology, Inc. | ||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| (In thousands, except share and per share data) | 2016 | 2015 | 2016 | 2015 | ||||||||||
| Revenues, net | $ | 22,635 | $ | 16,820 | $ | 56,064 | $ | 41,712 | ||||||
| Cost of goods sold | 6,282 | 4,466 | 15,417 | 11,839 | ||||||||||
| Gross profit | 16,353 | 12,354 | 40,647 | 29,873 | ||||||||||
| Operating expenses | ||||||||||||||
| Sales and marketing | 8,979 | 6,199 | 23,858 | 17,297 | ||||||||||
| Research and development | 1,285 | 1,094 | 3,314 | 2,922 | ||||||||||
| Reimbursement, general and administrative | 5,115 | 3,599 | 12,495 | 9,448 | ||||||||||
| Total operating expenses | 15,379 | 10,892 | 39,667 | 29,667 | ||||||||||
| Income from operations | 974 | 1,462 | 980 | 206 | ||||||||||
| Other income | 10 | 3 | 20 | 18 | ||||||||||
| Income before income taxes | 984 | 1,465 | 1,000 | 224 | ||||||||||
| Income tax expense | 492 | 589 | 500 | 90 | ||||||||||
| Net income | 492 | 876 | 500 | 134 | ||||||||||
| Convertible preferred stock dividends | 224 | 470 | 1,247 | 1,396 | ||||||||||
| Allocation of undistributed earnings to preferred stockholders | 99 | 262 | — | — | ||||||||||
| Net income (loss) attributable to common stockholders | $ | 169 | $ | 144 | $ | (747 | ) | $ | (1,262 | ) | ||||
| Net income (loss) per common share attributable to common stockholders | ||||||||||||||
| Basic | $ | 0.01 | $ | 0.05 | $ | (0.12 | ) | $ | (0.44 | ) | ||||
| Diluted | $ | 0.01 | $ | 0.03 | $ | (0.12 | ) | $ | (0.44 | ) | ||||
| Weighted-average common shares used to compute net income (loss) per common share attributable to common stockholders | ||||||||||||||
| Basic | 12,253,877 | 3,148,294 | 6,317,875 | 2,854,112 | ||||||||||
| Diluted | 13,982,799 | 4,799,308 | 6,317,875 | 2,854,112 | ||||||||||
| Tactile Systems Technology, Inc. | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (Unaudited) | ||||||||
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| (In thousands) | 2016 | 2015 | ||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 500 | $ | 134 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 675 | 622 | ||||||
| Deferred income taxes | — | 90 | ||||||
| Stock-based compensation expense | 859 | 232 | ||||||
| Deferred compensation | — | (6 | ) | |||||
| Change in allowance for doubtful accounts | 465 | 250 | ||||||
| Changes in assets and liabilities | ||||||||
| Accounts receivable | 665 | 1,092 | ||||||
| Inventories | (467 | ) | (1,849 | ) | ||||
| Prepaid expenses and other non-current assets | (233 | ) | (708 | ) | ||||
| Medicare accounts receivable – long-term | 395 | (704 | ) | |||||
| Accounts payable | 1,695 | 1,053 | ||||||
| Accrued payroll and related taxes | 895 | 246 | ||||||
| Accrued expenses and income taxes payable | (387 | ) | (173 | ) | ||||
| Future product royalties | (726 | ) | (445 | ) | ||||
| Net cash provided by (used in) operating activities | 4,336 | (166 | ) | |||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (518 | ) | (420 | ) | ||||
| Patent costs | (24 | ) | (18 | ) | ||||
| Net cash used in investing activities | (542 | ) | (438 | ) | ||||
| Cash flows from financing activities | ||||||||
| Payments on notes payable | — | (7 | ) | |||||
| Proceeds from exercise of common stock options and warrants | 224 | 867 | ||||||
| Dividends paid on preferred stock | (8,207 | ) | — | |||||
| Fees paid for IPO | (4,777 | ) | — | |||||
| Proceeds from IPO | 41,200 | — | ||||||
| Net cash provided by financing activities | 28,440 | 860 | ||||||
| Net change in cash and cash equivalents | 32,234 | 256 | ||||||
| Cash and cash equivalents – beginning of period | 7,060 | 5,416 | ||||||
| Cash and cash equivalents – end of period | $ | 39,294 | $ | 5,672 | ||||
| Supplemental cash flow disclosure | ||||||||
| Cash paid for interest | $ | — | $ | — | ||||
| Cash paid for taxes | $ | 1,261 | $ | 226 | ||||
Use of Non-GAAP Financial Measures
This press release includes the non-GAAP financial measure of Adjusted EBITDA, which differs from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). Adjusted EBITDA represents net income less interest income, net, plus income tax expense, depreciation and amortization and stock-based compensation expense. Adjusted EBITDA is presented because the Company believes it is a useful indicator of its operating performance. Management uses the measure principally as a measure of the Company's operating performance and for planning purposes, including the preparation of the Company’s annual operating budget and financial projections. The Company believes Adjusted EBITDA is useful to investors as supplemental information because it is frequently used by analysts, investors and other interested parties to evaluate companies in its industry. The Company believes Adjusted EBITDA is useful to its management and investors as a measure of comparative operating performance from period to period.
Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to, or superior to, net income or loss as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP and it should not be construed as an inference that the Company's future results will be unaffected by unusual or non-recurring items. In addition, the measure is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. In evaluating Adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in this presentation. The Company's presentation of Adjusted EBITDA should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company’s GAAP results in addition to using Adjusted EBITDA on a supplemental basis. The Company's definition of this measure is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.
The following table contains a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure.
| Tactile Systems Technology, Inc. | ||||||||||||||||||||
| Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| ($, thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| GAAP Net Income | $ | 492 | $ | 876 | $ | 500 | $ | 134 | ||||||||||||
| Interest income, net | (6 | ) | (3 | ) | (16 | ) | (18 | ) | ||||||||||||
| Income tax expense | 492 | 589 | 500 | 90 | ||||||||||||||||
| Depreciation and amortization | 237 | 212 | 675 | 622 | ||||||||||||||||
| Stock-based compensation expense | 709 | 87 | 859 | 232 | ||||||||||||||||
| Adjusted EBITDA | $ | 1,924 | $ | 1,761 | $ | 2,518 | $ | 1,060 | ||||||||||||
Investor Inquiries:Mike Piccinino , CFA Managing DirectorWestwicke Partners 433-213-0500 [email protected]