Third Quarter 2017 Summary:
- Third quarter revenue increased 25% year-over-year, to
$28.3 million , compared to$22.6 million in third quarter 2016. - Flexitouch revenue increased 35% year-over-year, to
$26.2 million , compared to$19.4 million in third quarter 2016. - Operating income of
$1.2 million , compared to operating income of$1.0 million in third quarter 2016. - Net income of
$1.3 million , compared to net income of$0.5 million in third quarter 2016. - Adjusted EBITDA of
$2.5 million compared to$1.9 million in third quarter 2016. - On
July 11, 2017 the Company announced the appointment of Thomas F. O’Donnell, Jr., MD, as Chief Medical Officer (CMO), effectiveJune 19, 2017 . - On
August 1, 2017 the Company announced the appointment ofCheryl Pegus , MD, MPH, to the Company’s Board of Directors, effectiveJuly 28, 2017 . - On
September 15, 2017 the Company completed a secondary offering by certain stockholders of approximately 3.8 million shares of Tactile Medical common stock at a price to the public of$33.00 per share. - On
September 20, 2017 the Company announced the appointment ofRaymond O. Huggenberger to the Company’s Board of Directors, effectiveSeptember 20, 2017 .
“We achieved impressive revenue growth in the third quarter and first nine months of 2017, resulting in a year-to-date increase of 33%,” said
Mr. Mattys continued, “In light of our strong year-to-date performance, we are raising our revenue outlook for 2017, and we continue to expect to generate positive net income and a high single-digit adjusted EBITDA margin for the full year 2017. More broadly, we remain confident in the longer-term growth opportunities for Tactile Medical as we continue to pursue our mission to help people suffering from chronic diseases live better and care for themselves at home.”
Third Quarter 2017 Financial Results
Revenue for the third quarter of 2017 increased
Gross profit for the third quarter of 2017 increased
Operating expenses for the third quarter of 2017 increased
Operating income for the third quarter of 2017 increased
Income tax benefit for the third quarter of 2017 was
Net income for the third quarter of 2017 increased
Adjusted EBITDA for the third quarter of 2017 increased approximately
Nine-Months 2017 Financial Results:
Revenue for the nine months ended September 30, 2017 increased $18.3 million, or 33%, to $74.4 million, compared to $56.1 million for the nine months ended September 30, 2016. The increase in revenue was driven by an increase of approximately $19.9 million, or 42%, year-over-year in sales of the Flexitouch system, which was partially offset by a decrease of approximately $1.6 million, or 20%, year-over-year in sales of the Entre and Actitouch systems, compared to the nine months ended September 30, 2016.
Net income for the nine months ended September 30, 2017 increased $3.1 million, to $3.6 million, compared to net income of approximately
Adjusted EBITDA for the nine months ended
Cash Position
At
Updated 2017 Financial Outlook
For 2017, the Company now expects 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 800-585-8367 (416-621-4642 for international callers); access code 96137457. The webcast will be archived at investors.tactilemedical.com.
About
Tactile Medical is a leader in developing and marketing at-home therapy devices that treat lymphedema and chronic venous insufficiency. Our mission is to help people suffering from chronic diseases live better and care for themselves at home. Our unique offering includes advanced, clinically proven pneumatic compression devices, as well as continuity of care services provided by a national network of product specialists and trainers, reimbursement experts, patient advocates, and clinical staff. This combination of products and services ensures that tens of thousands of patients annually receive the at-home treatment necessary to better manage their chronic conditions. Tactile Medical takes pride in the fact that our solutions help increase clinical efficacy, reduce overall healthcare costs and improve the quality of life for patients with chronic conditions.
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,” “confident,” 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; or 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 | ||||||||
(Unaudited) | ||||||||
September 30, | December 31, | |||||||
(In thousands, except share and per share data) | 2017 |
2016 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 19,653 | $ | 30,701 | ||||
Marketable securities | 21,993 | 10,994 | ||||||
Accounts receivable, net | 14,579 | 15,003 | ||||||
Inventories | 9,784 | 6,554 | ||||||
Income taxes receivable | 4,768 | — | ||||||
Prepaid expenses | 932 | 981 | ||||||
Total current assets | 71,709 | 64,233 | ||||||
Property and equipment, net | 3,353 | 1,563 | ||||||
Other assets | ||||||||
Patent costs, net | 2,251 | 2,394 | ||||||
Medicare accounts receivable, long-term | 2,771 | 2,823 | ||||||
Deferred income taxes | 2,797 | 2,785 | ||||||
Other non-current assets | 201 | 137 | ||||||
Total other assets | 8,020 | 8,139 | ||||||
Total assets | $ | 83,082 | $ | 73,935 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 5,485 | $ | 5,018 | ||||
Accrued payroll and related taxes | 5,880 | 6,692 | ||||||
Accrued expenses | 2,357 | 1,193 | ||||||
Future product royalties | 26 | 67 | ||||||
Income taxes payable | — | 823 | ||||||
Other current liabilities | 218 | — | ||||||
Total current liabilities | 13,966 | 13,793 | ||||||
Long-term liabilities | ||||||||
Accrued warranty reserve, long-term | 643 | 503 | ||||||
Total liabilities | 14,609 | 14,296 | ||||||
Stockholders’ equity | ||||||||
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued and outstanding as of September 30, 2017 and December 31, 2016 | — | — | ||||||
Common stock, $0.001 par value, 300,000,000 shares authorized; 17,677,078 shares issued and 17,650,992 shares outstanding as of September 30, 2017; 16,833,737 shares issued and outstanding as of December 31, 2016 | 18 | 17 | ||||||
Additional paid-in capital | 68,114 | 62,406 | ||||||
Retained earnings (accumulated deficit) | 852 | (2,773 | ) | |||||
Accumulated other comprehensive loss | (18 | ) | (11 | ) | ||||
Less: treasury stock, at cost — 26,086 shares as of September 30, 2017 | (493 | ) | — | |||||
Total stockholders’ equity | 68,473 | 59,639 | ||||||
Total liabilities and stockholders’ equity | $ | 83,082 | $ | 73,935 | ||||
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) | 2017 |
2016 | 2017 |
2016 | |||||||||||
Revenues, net | $ | 28,283 | $ | 22,635 | $ | 74,397 | $ | 56,064 | |||||||
Cost of goods sold | 7,528 | 6,282 | 20,186 | 15,417 | |||||||||||
Gross profit | 20,755 | 16,353 | 54,211 | 40,647 | |||||||||||
Operating expenses | |||||||||||||||
Sales and marketing | 10,915 | 8,979 | 31,726 | 23,858 | |||||||||||
Research and development | 1,116 | 1,285 | 3,699 | 3,314 | |||||||||||
Reimbursement, general and administrative | 7,551 | 5,115 | 19,815 | 12,495 | |||||||||||
Total operating expenses | 19,582 | 15,379 | 55,240 | 39,667 | |||||||||||
Income (loss) from operations | 1,173 | 974 | (1,029 | ) | 980 | ||||||||||
Other income | 85 | 10 | 204 | 20 | |||||||||||
Income (loss) before income taxes | 1,258 | 984 | (825 | ) | 1,000 | ||||||||||
Income tax (benefit) expense | (84 | ) | 492 | (4,450 | ) | 500 | |||||||||
Net income | 1,342 | 492 | 3,625 | 500 | |||||||||||
Convertible preferred stock dividends | — | 224 | — | 1,247 | |||||||||||
Allocation of undistributed earnings to preferred stockholders | — | 99 | — | — | |||||||||||
Net income (loss) attributable to common stockholders | $ | 1,342 | $ | 169 | $ | 3,625 | $ | (747 | ) | ||||||
Net income (loss) per common share attributable to common stockholders | |||||||||||||||
Basic | $ | 0.08 | $ | 0.01 | $ | 0.21 | $ | (0.12 | ) | ||||||
Diluted | $ | 0.07 | $ | 0.01 | $ | 0.19 | $ | (0.12 | ) | ||||||
Weighted-average common shares used to compute net income (loss) per common share attributable to common stockholders | |||||||||||||||
Basic | 17,603,293 | 12,253,877 | 17,222,072 | 6,317,875 | |||||||||||
Diluted | 19,083,975 | 13,982,799 | 18,818,609 | 6,317,875 | |||||||||||
Tactile Systems Technology, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(Unaudited) | ||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
(In thousands) | 2017 | 2016 |
||||||
Cash flows from operating activities | ||||||||
Net income | $ | 3,625 | $ | 500 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 1,073 | 675 | ||||||
Stock-based compensation expense | 3,104 | 859 | ||||||
Change in allowance for doubtful accounts | (36 | ) | 465 | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 460 | 665 | ||||||
Inventories | (3,821 | ) | (467 | ) | ||||
Income taxes | (5,591 | ) | (732 | ) | ||||
Prepaid expenses and other assets | 130 | 499 | ||||||
Medicare accounts receivable – long-term | 52 | 395 | ||||||
Accounts payable | 370 | 1,695 | ||||||
Accrued payroll and related taxes | (812 | ) | 895 | |||||
Accrued expenses | 1,520 | (387 | ) | |||||
Future product royalties | (41 | ) | (726 | ) | ||||
Net cash provided by operating activities | 33 | 4,336 | ||||||
Cash flows from investing activities | ||||||||
Proceeds from sales of marketable securities | 1,000 | — | ||||||
Purchases of marketable securities | (12,051 | ) | — | |||||
Purchases of property and equipment | (1,953 | ) | (518 | ) | ||||
Patent costs | (44 | ) | (24 | ) | ||||
Other investments | (145 | ) | — | |||||
Net cash used in investing activities | (13,193 | ) | (542 | ) | ||||
Cash flows from financing activities | ||||||||
Taxes paid for net share settlement of restricted stock units | (278 | ) | — | |||||
Proceeds from exercise of common stock options and warrants | 673 | 224 | ||||||
Proceeds from the issuance of common stock from the ESPP | 2,210 | — | ||||||
Shares repurchased to cover taxes from restricted stock award vesting | (493 | ) | — | |||||
Dividends paid on preferred stock | — | (8,207 | ) | |||||
Proceeds from IPO | — | 41,200 | ||||||
Fees paid for IPO | — | (4,777 | ) | |||||
Net cash provided by financing activities | 2,112 | 28,440 | ||||||
Net change in cash and cash equivalents | (11,048 | ) | 32,234 | |||||
Cash and cash equivalents – beginning of period | 30,701 | 7,060 | ||||||
Cash and cash equivalents – end of period | $ | 19,653 | $ | 39,294 | ||||
Supplemental cash flow disclosure | ||||||||
Cash paid for interest | $ | 1 | $ | — | ||||
Cash paid for taxes | $ | 923 | $ | 1,261 | ||||
Non-cash investing activities: | ||||||||
Acquisition of assets included in accounts payable | $ | 97 | $ | 37 | ||||
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 in this release represents net income less interest income, net, and income tax expense, plus income tax benefit, 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 this measure 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 to imply 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 Net Income.
Tactile Systems Technology, Inc. | ||||||||||||||||
Reconciliation of Net Income to Non-GAAP Adjusted EBITDA | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2017 | 2016 |
2017 |
2016 |
||||||||||||
Net Income | $ | 1,342 | $ | 492 | $ | 3,625 | $ | 500 | ||||||||
Interest (income)/expense, net | (136 | ) | (6 | ) | (255 | ) | (16 | ) | ||||||||
Income tax (benefit) expense | (84 | ) | 492 | (4,450 | ) | 500 | ||||||||||
Depreciation and amortization | 409 | 237 | 1,073 | 675 | ||||||||||||
Stock-based compensation | 967 | 709 | 3,104 | 859 | ||||||||||||
Adjusted EBITDA | $ | 2,498 | $ | 1,924 | $ | 3,097 | $ | 2,518 | ||||||||
Tactile Systems Technology, Inc. | ||||||||||||||||||||||||||||
Supplemental Financial Information | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
The following table summarizes revenues by product for the three and nine months ended September 30, 2017 and 2016: | ||||||||||||||||||||||||||||
($ In thousands) | Three Months Ended September 30, |
Increase / Decrease | Nine Months Ended September 30, |
Increase / Decrease | ||||||||||||||||||||||||
2017 | 2016 | $ Change | % Change | 2017 | 2016 | $ Change | % Change | |||||||||||||||||||||
Flexitouch System | $ | 26,202 | $ | 19,387 | $ | 6,815 |
35.2% | $ | 67,936 | $ | 47,988 | $ | 19,948 |
41.6% | ||||||||||||||
Entre/Actitouch systems | 2,081 | 3,248 | (1,167) | (35.9)% | 6,461 | 8,076 | (1,615) | (20.0)% | ||||||||||||||||||||
Total Revenue | $ | 28,283 | $ | 22,635 | $ | 5,648 |
25.0% | $ | 74,397 | $ | 56,064 | $ | 18,333 |
32.7% | ||||||||||||||
Investor Inquiries:
Managing Director
Westwicke Partners
443-213-0500
[email protected]