Second Quarter 2023 Highlights:
- Revenue increased 15% year-over-year to
$68.3M - Lymphedema revenue increased 16%
- Airway Clearance revenue increased 4%
- Operating income of
$2.1M , compared to operating loss of$4.1M - Net loss of
$0.1M , compared to a net loss of$4.6M - Adjusted EBITDA of
$6.1M , up from$1.7M - Cash Balance of
$63.1M onJune 30, 2023 , compared to$55M onMarch 31, 2023 - Raised full year 2023 financial guidance
Highlights Subsequent to Quarter End:
Sherri Ferstler appointed to the position of Senior Vice President of Sales, effectiveJuly 31, 2023 - The Company’s existing credit agreement was amended on
August 1, 2023 to extend the maturity date and improve terms
“We delivered total revenue growth of 15% year-over-year, significant improvements in both our GAAP and non-GAAP profitability and cash flow from operations of more than
Second Quarter 2023 Financial Results
Total revenue in the second quarter of 2023 increased
Gross profit in the second quarter of 2023 increased
Operating expenses in the second quarter of 2023 decreased
Operating income was
Other expense was
Income tax expense was
Net loss in the second quarter of 2023 was
Weighted average shares used to compute diluted net loss per share were 23.4 million and 20.0 million for the second quarters of 2023 and 2022, respectively.
Adjusted EBITDA was
First Six Months 2023 Financial Results:
Total revenue for the six months ended
Net loss for the six months ended
Weighted average shares used to compute diluted net loss per share were 22.3 million and 20.0 million for the six months ended
Adjusted EBITDA was
Balance Sheet Summary
As of
2023 Financial Outlook
The Company now expects full year 2023 total revenue in the range of
Conference Call
Management will host a conference call at
For those unable to participate, a replay of the call will be available for two weeks at 877-660-6853 (201-612-7415 for international callers); access code 13739727. The webcast will be archived at investors.tactilemedical.com.
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,” “continue,” “confident,” “outlook,” “guidance,” “project,” “goals,” “look forward,” “poised,” “designed,” “plan,” “return,” “focused,” “prospects” or “remain” 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 impact of inflation, rising interest rates or a recession; the adequacy of the Company’s liquidity to pursue its business objectives; the Company’s ability to obtain reimbursement from third-party payers for its products; adverse economic conditions or intense competition; price increases for supplies and components; wage and component price inflation; loss of a key supplier; entry of new competitors and products; compliance with and changes in federal, state and local government regulation; loss or retirement of key executives, including prior to identifying a successor; 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; the impacts of the COVID-19 pandemic on the Company’s business, financial condition and results of operations, and the Company’s inability to mitigate such impacts; the effects of current and future
Use of Non-GAAP Financial Measures
This press release includes the non-GAAP financial measures of Adjusted EBITDA, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), and non-GAAP net income (loss), which differ from financial measures calculated in accordance with
Adjusted EBITDA in this release represents net income or loss, plus interest expense, net, or less interest income, net, less income tax benefit or plus income tax expense, plus depreciation and amortization, plus stock-based compensation expense, plus or minus the change in fair value of earn-out, and plus litigation defense costs. Non-GAAP gross profit in this release represents gross profit plus non-cash intangible amortization expense. Non-GAAP gross margin in this release represents non-GAAP gross profit divided by revenue. Non-GAAP operating income (loss) in this release represents operating income (loss) adjusted for non-cash intangible amortization expense, change in fair value of earn-out and litigation defense costs. Non-GAAP net income (loss) represents net income (loss) adjusted for non-cash intangible amortization expense, change in fair value of earn-out and litigation defense costs, and adjusted for the income tax effect on reconciling items. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures are included in this press release.
These non-GAAP financial measures are presented because the Company believes they are useful indicators of its operating performance. Management uses these measures principally as measures of the Company’s operating performance and for planning purposes, including the preparation of the Company’s annual operating plan and financial projections. The Company believes these measures are useful to investors as supplemental information and because they are frequently used by analysts, investors and other interested parties to evaluate companies in its industry. The Company also believes these non-GAAP financial measures are useful to its management and investors as a measure of comparative operating performance from period to period. In addition, Adjusted EBITDA is used as a performance metric in the Company’s compensation program.
The non-GAAP financial measures presented in this release should not be considered as an alternative to, or superior to, their respective GAAP financial measures, as measures of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and they should not be construed to imply that the Company’s future results will be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA 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 non-GAAP financial measures, 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 non-GAAP financial measures 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 non-GAAP financial measures on a supplemental basis. The Company’s definition of these non-GAAP financial measures is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.
| Condensed Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except share and per share data) | 2023 | 2022 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 63,212 | $ | 21,929 | ||||
| Accounts receivable | 46,553 | 54,826 | ||||||
| Net investment in leases | 13,219 | 16,130 | ||||||
| Inventories | 20,315 | 23,124 | ||||||
| Income taxes receivable | 1,779 | — | ||||||
| Prepaid expenses and other current assets | 4,480 | 3,754 | ||||||
| Total current assets | 149,558 | 119,763 | ||||||
| Non-current assets | ||||||||
| Property and equipment, net | 5,771 | 6,077 | ||||||
| Right of use operating lease assets | 20,041 | 21,322 | ||||||
| Intangible assets, net | 48,559 | 50,375 | ||||||
| 31,063 | 31,063 | |||||||
| Accounts receivable, non-current | 15,430 | 23,061 | ||||||
| Other non-current assets | 3,306 | 3,335 | ||||||
| Total non-current assets | 124,170 | 135,233 | ||||||
| Total assets | $ | 273,728 | $ | 254,996 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 9,296 | $ | 9,984 | ||||
| Note payable | 2,968 | 2,968 | ||||||
| Earn-out, current | 9,280 | 13,050 | ||||||
| Accrued payroll and related taxes | 13,800 | 17,100 | ||||||
| Accrued expenses | 5,166 | 9,240 | ||||||
| Income taxes payable | — | 2,336 | ||||||
| Operating lease liabilities | 2,529 | 2,500 | ||||||
| Other current liabilities | 5,481 | 7,152 | ||||||
| Total current liabilities | 48,520 | 64,330 | ||||||
| Non-current liabilities | ||||||||
| Revolving line of credit, non-current | 24,941 | 24,916 | ||||||
| Note payable, non-current | 19,495 | 20,979 | ||||||
| Accrued warranty reserve, non-current | 1,957 | 2,207 | ||||||
| Income taxes payable, non-current | 446 | 298 | ||||||
| Operating lease liabilities, non-current | 19,606 | 20,866 | ||||||
| Total non-current liabilities | 66,445 | 69,266 | ||||||
| Total liabilities | 114,965 | 133,596 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, |
— | — | ||||||
| Common stock, |
23 | 20 | ||||||
| Additional paid-in capital | 170,347 | 131,001 | ||||||
| Accumulated deficit | (11,607 | ) | (9,621 | ) | ||||
| Total stockholders’ equity | 158,763 | 121,400 | ||||||
| Total liabilities and stockholders’ equity | $ | 273,728 | $ | 254,996 | ||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| (In thousands, except share and per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue | ||||||||||||||||
| Sales revenue | $ | 59,802 | $ | 51,265 | $ | 112,593 | $ | 92,435 | ||||||||
| Rental revenue | 8,537 | 8,380 | 14,592 | 15,188 | ||||||||||||
| Total revenue | 68,339 | 59,645 | 127,185 | 107,623 | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Cost of sales revenue | 16,865 | 13,810 | 31,507 | 25,890 | ||||||||||||
| Cost of rental revenue | 3,175 | 2,612 | 5,911 | 4,648 | ||||||||||||
| Total cost of revenue | 20,040 | 16,422 | 37,418 | 30,538 | ||||||||||||
| Gross profit | ||||||||||||||||
| Gross profit - sales revenue | 42,937 | 37,455 | 81,086 | 66,545 | ||||||||||||
| Gross profit - rental revenue | 5,362 | 5,768 | 8,681 | 10,540 | ||||||||||||
| Gross profit | 48,299 | 43,223 | 89,767 | 77,085 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing | 28,206 | 28,822 | 54,508 | 52,752 | ||||||||||||
| Research and development | 1,833 | 1,849 | 4,066 | 3,369 | ||||||||||||
| Reimbursement, general and administrative | 14,991 | 14,894 | 30,425 | 31,111 | ||||||||||||
| Intangible asset amortization and earn-out | 1,211 | 1,745 | 2,516 | 8,841 | ||||||||||||
| Total operating expenses | 46,241 | 47,310 | 91,515 | 96,073 | ||||||||||||
| Income (loss) from operations | 2,058 | (4,087 | ) | (1,748 | ) | (18,988 | ) | |||||||||
| Other expense | (838 | ) | (573 | ) | (1,831 | ) | (1,029 | ) | ||||||||
| Income (loss) before income taxes | 1,220 | (4,660 | ) | (3,579 | ) | (20,017 | ) | |||||||||
| Income tax expense (benefit) | 1,320 | (20 | ) | (1,593 | ) | 191 | ||||||||||
| Net loss | $ | (100 | ) | $ | (4,640 | ) | $ | (1,986 | ) | $ | (20,208 | ) | ||||
| Net loss per common share | ||||||||||||||||
| Basic | $ | 0.00 | $ | (0.23 | ) | $ | (0.09 | ) | $ | (1.01 | ) | |||||
| Diluted | $ | 0.00 | $ | (0.23 | ) | $ | (0.09 | ) | $ | (1.01 | ) | |||||
| Weighted-average common shares used to compute net loss per common share | ||||||||||||||||
| Basic | 23,352,530 | 20,024,798 | 22,323,856 | 19,961,999 | ||||||||||||
| Diluted | 23,352,530 | 20,024,798 | 22,323,856 | 19,961,999 | ||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (Unaudited) | ||||||||
| Six Months Ended |
||||||||
| (In thousands) | 2023 | 2022 | ||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (1,986 | ) | $ | (20,208 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 3,269 | 3,015 | ||||||
| Deferred income taxes | — | 94 | ||||||
| Stock-based compensation expense | 3,831 | 5,121 | ||||||
| Loss on disposal of property and equipment and intangibles | 3 | — | ||||||
| Change in fair value of earn-out liability | 1,230 | 7,550 | ||||||
| Changes in assets and liabilities, net of acquisition: | ||||||||
| Accounts receivable | 8,273 | 321 | ||||||
| Net investment in leases | 2,911 | (864 | ) | |||||
| Inventories | 2,809 | (753 | ) | |||||
| Income taxes | (3,967 | ) | (55 | ) | ||||
| Prepaid expenses and other assets | (697 | ) | 1,925 | |||||
| Right of use operating lease assets | 50 | 106 | ||||||
| Accounts receivable, non-current | 7,631 | (2,496 | ) | |||||
| Accounts payable | (696 | ) | 4,087 | |||||
| Accrued payroll and related taxes | (3,300 | ) | 5 | |||||
| Accrued expenses and other liabilities | (5,954 | ) | 1,252 | |||||
| Net cash provided by (used in) operating activities | 13,407 | (900 | ) | |||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (1,043 | ) | (331 | ) | ||||
| Intangible assets expenditures | (99 | ) | (85 | ) | ||||
| Net cash used in investing activities | (1,142 | ) | (416 | ) | ||||
| Cash flows from financing activities | ||||||||
| Payment on earn-out | (5,000 | ) | — | |||||
| Payments on note payable | (1,500 | ) | (4,500 | ) | ||||
| Payments of deferred debt issuance costs | — | (39 | ) | |||||
| Proceeds from exercise of common stock options | 11 | 152 | ||||||
| Proceeds from the issuance of common stock from the employee stock purchase plan | 882 | 824 | ||||||
| Proceeds from issuance of common stock at market | 34,625 | — | ||||||
| Net cash provided by (used in) financing activities | 29,018 | (3,563 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | 41,283 | (4,879 | ) | |||||
| Cash and cash equivalents – beginning of period | 21,929 | 28,229 | ||||||
| Cash and cash equivalents – end of period | $ | 63,212 | $ | 23,350 | ||||
| Supplemental cash flow disclosure | ||||||||
| Cash paid for interest | $ | 1,925 | $ | 448 | ||||
| Cash paid for taxes | $ | 2,415 | $ | 28 | ||||
| Capital expenditures incurred but not yet paid | $ | 8 | $ | — | ||||
The following table summarizes revenue by product line for the three and six months ended
| Three Months Ended | Six Months Ended | |||||||||||||||
| (In thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue | ||||||||||||||||
| Lymphedema products | $ | 59,999 | $ | 51,634 | $ | 109,751 | $ | 92,288 | ||||||||
| Airway clearance products | 8,340 | 8,011 | 17,434 | 15,335 | ||||||||||||
| Total | $ | 68,339 | $ | 59,645 | $ | 127,185 | $ | 107,623 | ||||||||
| Percentage of total revenue | ||||||||||||||||
| Lymphedema products | 88 | % | 87 | % | 86 | % | 86 | % | ||||||||
| Airway clearance products | 12 | % | 13 | % | 14 | % | 14 | % | ||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
The following table contains a reconciliation of GAAP gross profit and margin to non-GAAP gross profit and margin:
| Reconciliation of Gross Profit and Margin to Non-GAAP Gross Profit and Margin | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| (Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Gross profit, as reported | $ | 48,299 | $ | 43,223 | $ | 89,767 | $ | 77,085 | ||||||||
| Gross margin, as reported | 70.7 | % | 72.5 | % | 70.6 | % | 71.6 | % | ||||||||
| Reconciling items: | ||||||||||||||||
| Non-cash intangible amortization expense | $ | 315 | $ | 311 | $ | 629 | $ | 621 | ||||||||
| Non-GAAP gross profit | $ | 48,614 | $ | 43,534 | $ | 90,396 | $ | 77,706 | ||||||||
| Non-GAAP gross margin | 71.1 | % | 73.0 | % | 71.1 | % | 72.2 | % | ||||||||
The following table contains a reconciliation of GAAP operating income (loss) to non-GAAP operating income (loss):
| Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Operating Income (Loss) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| (Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| GAAP operating income (loss) | $ | 2,058 | $ | (4,087 | ) | $ | (1,748 | ) | $ | (18,988 | ) | |||||
| Reconciling items: | ||||||||||||||||
| Non-cash intangible amortization expense impacting gross profit | $ | 315 | $ | 311 | $ | 629 | $ | 621 | ||||||||
| Non-cash intangible amortization expense impacting operating expenses | 641 | 645 | 1,286 | 1,291 | ||||||||||||
| Change in fair value of earn-out | 570 | 1,100 | 1,230 | 7,550 | ||||||||||||
| Litigation defense costs | — | 245 | — | 2,349 | ||||||||||||
| Non-GAAP operating income (loss): | $ | 3,584 | $ | (1,786 | ) | $ | 1,397 | $ | (7,177 | ) | ||||||
| Non-GAAP operating margin | 5.2 | % | (3.0 | )% | 1.1 | % | (6.7 | )% | ||||||||
The following table contains a reconciliation of GAAP net loss to non-GAAP net income (loss):
| Reconciliation of GAAP Net Loss to Non-GAAP Net Income (Loss) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| (Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| GAAP net loss | $ | (100 | ) | $ | (4,640 | ) | $ | (1,986 | ) | $ | (20,208 | ) | ||||
| Reconciling items: | ||||||||||||||||
| Non-cash intangible amortization expense impacting gross profit | $ | 315 | $ | 311 | $ | 629 | $ | 621 | ||||||||
| Non-cash intangible amortization expense impacting operating expenses | 641 | 645 | 1,286 | 1,291 | ||||||||||||
| Change in fair value of earn-out | 570 | 1,100 | 1,230 | 7,550 | ||||||||||||
| Litigation defense costs | — | 245 | — | 2,349 | ||||||||||||
| Income tax expense on reconciling items* | (382 | ) | (575 | ) | (786 | ) | (2,953 | ) | ||||||||
| Non-GAAP net income (loss) | $ | 1,044 | $ | (2,914 | ) | $ | 373 | $ | (11,350 | ) | ||||||
| * The effect of income tax on the reconciling items is estimated using the Company's effective statutory tax rate. | ||||||||||||||||
The following table contains a reconciliation of net loss to Adjusted EBITDA for the three and six months ended
| Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA | ||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||
| Three Months Ended | Increase | Six Months Ended | Increase | |||||||||||||||||||||||||||
| (Decrease) | (Decrease) | |||||||||||||||||||||||||||||
| (Dollars in thousands) | 2023 | 2022 | $ | % | 2023 | 2022 | $ | % | ||||||||||||||||||||||
| Net loss | $ | (100 | ) | $ | (4,640 | ) | $ | 4,540 | (98 | )% | $ | (1,986 | ) | $ | (20,208 | ) | $ | 18,222 | (90 | )% | ||||||||||
| Interest expense, net | 838 | 584 | 254 | 43 | % | 1,831 | 1,040 | 791 | 76 | |||||||||||||||||||||
| Income tax (benefit) expense | 1,320 | (20 | ) | 1,340 | N.M. | % | (1,593 | ) | 191 | (1,784 | ) | N.M. | % | |||||||||||||||||
| Depreciation and amortization | 1,640 | 1,508 | 132 | 9 | % | 3,269 | 3,015 | 254 | 8 | % | ||||||||||||||||||||
| Stock-based compensation | 1,808 | 2,892 | (1,084 | ) | (37 | )% | 3,831 | 5,121 | (1,290 | ) | (25 | )% | ||||||||||||||||||
| Change in fair value of earn-out | 570 | 1,100 | (530 | ) | (48 | ) | 1,230 | 7,550 | (6,320 | ) | (84 | ) | ||||||||||||||||||
| Litigation defense costs | — | 245 | (245 | ) | (100 | )% | — | 2,349 | (2,349 | ) | (100 | )% | ||||||||||||||||||
| Adjusted EBITDA | $ | 6,076 | $ | 1,669 | $ | 4,407 | N.M. | % | $ | 6,582 | $ | (942 | ) | $ | 7,524 | N.M. | % | |||||||||||||
Investor Inquiries:Mike Piccinino , CFA ICR Westwicke 443-213-0500 [email protected]
Source: Tactile Systems Technology, Inc.