TCMD - Earnings call transcript Q2 2018 | Tactile Systems Technology, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Second Quarter of 2018 Earnings Conference Call for Tactile Medical. At this time, all participants have been placed on the 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 that the recording will be available on the company's website for replay shortly.

Before we begin, I would 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 that could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of our most recent annual report on Form 10-K filed with the Securities and Exchange Commission, as well as our most recent 10-Q filing. updated SEC, to our which be filings in website. may the with are factors from time time our Such available on forward-looking or otherwise. We or of to obligation new statements our our events undertake result as future publicly information, a no revise update in also GAAP. calculated with call are will financial that accounting references include This generally certain accepted to measures not accordance or principles, as refer financial measures. to these non-GAAP generally We available accordance in of most Reconciliations earnings of comparable the with these GAAP presented and our to on are non-GAAP release measures in the portion press the financial calculated Relations measures Investor website. to the like now would Mr. over I turn call to Mattys, Executive Jerry Officer. Chief Medical's Tactile Please go ahead, sir.

Gerald Mattys

Financial Thank everyone I'm Officer, to you, earnings welcome call call. and joined XXXX Good operator. our on second Chief today Lynn afternoon, Blake. quarter the our by

the performance reviewing the some six the call. intend overview with discuss to begin financial today's brief of key in also second the discuss and other each of and months by on a our second quick of during update a accomplishments our Flexitouch you I'll analysis period. during Let's commercialization off of XXXX, revenue performance neck drivers quarter. the new topics we and Flexitouch with start quarter I'll products, some Plus head first of and highlights of key the operational on our of primary

our second on we primary six the in Sales before to revenue in generating few million, and total review XX% year-over-year the of today's a of Flexitouch the reported we driver outlook year-over-year. of impressive open detail, updated greater We XXXX, to for our our our the in sales months XX% period, our growth were conclude million. growth remarks press increasing discussion, this results afternoon. by performance $XX.X for representing Systems through $XX will over of providing call for first Lynn XXXX, guidance financial Following the XXXX prepared release thoughts I'll which our walk financial half this earnings questions.

XX% We $X.X Entre sales contributions increased of to year-over-year also which Systems, modest million. our saw from and ACTitouch

half drivers benefit drivers continued our primary that to growth Flexitouch XXXX. calls the growth primary expansion sales These includes approximately we've over of the to at first important Our years, at three over impact of the end include; compared of growth dynamics as outlined in on in previous three XXXX the the first, recent XXXX field sales of earnings team our of XXX from June which XXXX. end representatives XX

high reps we've X,XXX maximize the productivity our approximately the to XX,XXX clinicians strategy on focusing our the diagnosing identified of that our United Second, organization across States. sales by in clinics

We our in essential years, plans. of that each to half increased which have fuel expect with team insurance the these the we that half And patients was by during our performance strong effectiveness lowering covered they to we our back for we enter sales the under recent commercial as in XXXX. the commercial year. Third, of the achieved of insurers sales first drivers of expenses continue enhances further coverage out-of-pocket network believe

growth sales approximately of total Flexitouch benefited XXXX. XX% approximately represented hospital sales into first XXXX the over Administration our into also our Veterans VA drivers, compared growth half Sales of in first primary very these the to revenue the of from half to the addition In strong system. XX%

has This two VA the understanding performance powerful a strategic within team factors. has These year, and and a important of the our VA their VA. network initiative building deep the our VA become we VA specialists Beginning in marketing selling our sales in earlier to continues based effective representatives local helped to more contributor at expertise a dedicated become accounts. VA last to efforts enhanced selling performance to sales hospital possess Our sales system from benefit of specialists. by

VA less focused our seasonal and be first annual on covered not most activity tends commercial than organization Because patients heavily sales in their deductibles. notably the to by with insurance our purchasing copayment of first do the also plans quarter. year VA during the We patients the half have more obligations,

increasing Our of the channel system in experience has our year of in higher shown hospital calendar that the we force early during VA a can time drive weaker. seasonably is by the the commercial focus sales the productivity year, when sales

six points $X.X growth, and profitability with in to year-over-year significant XXXX we improvements to strong generated period our same last to in operating during EBITDA margins also adjusted our first revenue our compared and margin almost maintained million improving XXX addition In our $XXX,XXX basis the months gross the our of year. up approximately

operational a We Moving financial and quarter. growth which for revenue to the the quarter XX% reported performance of of year-over-year. review of $XX.X XXXX, second our second in represented million total on

quarter. driven of QX Flexitouch XX% Our in second contributed sales also total revenue our also growing year-over-year year-over-year million. Sales ACTitouch systems Entre by our to to million of was growth and the systems, XX% to $XX.X our performance, which grew $X.X

drivers Our earlier same by that performance multiple propelled in Flexitouch first my detailed was half. commentary I the sales on our

months offered Flexitouch educate clinician during to team the these The sales of and this engaging features product while Plus, and launched network results enhancements. our our with and the next effectively both prescriptions the our more its by lymphedema from second accounts of with therapy in systems with we from Flexitouch majority interactions and following patient on garments system's continues our trainers as the system and indicator positive. complete April introduction in-home quarter sales to indicate response resonating their the them the addition, generation Notably an uptick new feedback encouraging during clinicians were very this be of the on received very to latest also the to feedback are legs patients as initial and the with clinician of time. Plus, Plus Flexitouch system, also Flexitouch We of customers. our allowing well our launch prescribers Plus early our certified team Flexitouch enhancements saw benefited to system and and which treat Overall, that generation use trainers lower the in-home and clinicians quarter, sales in existing to Xth. quarter In was successful well in market an controller introduce trained second for the reps adoption patients at the extremities. of see our the ability we appreciate Throughout as our that initial bilateral same continues the our the

Flexitouch brief neck. on Moving the of head update a our and new product other to commercialization

these of our opportunity new current of Flexitouch We're is focused, lymphedema demand adding head expertise our and new these expertise, and where and to team build in year, execution new outside on to to clinical the goal targets, leadership integral call In that existing the last development in began call we our neck dedicated recruiting our target and continuing quarter, call we an we've longer initial the areas term to of we've term Flexitouch the evidence strategy focus. for made Flexitouch points. launch will of progress sales with points saw our commercial remain expanding consistently in the play connection sales outside support with head focused of portfolio points During and neck the to steady call Since clinics May points while commercialization commercialization we of strategy. neck VA. been leadership and from longer part of our and pleased our head of

to XXXX the adjusted margins significantly half to and study, EBITDA year. Stepping the quarter, $X.X of of details made QX Flexitouch profitability, during once available with of in second complemented clinical front, we head another of results, are during publication our second neck revenue last the $X.X results back million of the On to forward later expect and this XX% with million improved the second discussing this we year. the gross clinical quarter and study look of growth compared

addition for by research way advisory important and is our achievements board University with and a connection medical second second financial Chief study areas Dr. of In several board primarily In clinical the identifying Oncology, Karni at of Dr. the an certified Surgical Otolaryngologist during that quarter operational Head scientific the strategy resonate by board of McGovern clinical advisory the the impart Ron background responsible with we we quarter. company's our UTHealth the School made strong the Flexitouch appointment System. strategy, Karni, Neck is addition performance, community. at for to of our neck, during Division and will informing with and Texas, Medical the of head our scientific to accomplished important

clinical of head to neck. for as accomplished system, Dr. important resource he As establish lymphatic understanding the neck of us possess oncology, an an will seek head we Flexitouch be comprehensive Karni a strong portfolio for expert in and and support

was compression highlight we advanced therapy which Wright position Products, that issued the leadership I'd enhance purchase agreement basic the quarter under acquired to devices. to related rights achievement during market. our Xth, several pending XX Another patterns acquisition the and This to like on benefits compression with offered Therapy and June the announced in U.S.

acquired expand IP portfolio. XX the First, strengthen will patterns that further we and growing our

for IP, we our several system. to Second, technological incorporate new and pursue of of devices, which may this a into covers pneumatic Flexitouch acquired develop portion us future advancements help generations that believe features compression

prescribers in positive market together from hospital for share pneumatic devices Third, a the exit while an have from were Wright And compression we incremental Products, of market the compression player with VA access Tactile for agreement Therapy purchase their to devices gain Medical. they to our a represents clinician under not fourth, terms pneumatic large perspective, the their of worked system.

this modest our another the expect going overall to we While tailwind results our forward. be productivity transition rep account sales represents to XXXX impact on it of

Blue our researchers economic of was evaluated plan Americans. patients had in venous also Blue with known Shield of a therapy comparison an device, for patients in new year alone, other claims Phlebolymphedema. with addition more our other each that and diagnose lymphedema, which therapy. notable data base, Phlebolymphedema, who months therapy with the the lower in insufficiency-related treatment compression found The captures highlight health mortalities, Surgery. or June the Intelligence have with conservative study data in benefits were chronic enrolled received a the patients XX researchers to for devices. claim simple cost examined They for pneumatic study Vascular conservative the conservative system, of of information conservative Blue a a to in than and identified the than announcement of The conservative from therapy private in included had important advanced insurance that insurance patients pneumatic system million Journal Flexitouch continuously Another Flexitouch Health XXX receive publication XXnd The therapy significantly quarter as the study Cross compression

benefits our economic the ability cost can be compression and to While just achieved mentioned. to prior significantly that using that deliver health studies reductions treatment have demonstrates mortalities Flexitouch in first devices. study this other demonstrate treatment it's that than Moreover, advanced systems' can by our other higher established deliver cost system with to the Flexitouch, I pneumatic higher comparison reductions

these benefits, devices. to with cellulitis impressive that compared over combination Flexitouch in costs also receipt modalities with of patients system rates the recommending with other conservative addition pneumatic cost compression in was by lower treatment In reduce with therapy healthcare Phlebolymphedema. to a of researchers They the concluded XX% Flexitouch found associated advanced other

of would thank growth to our the contributions last Lynn, she Before two to during for made as Officer. many like the call the Financial over our has I her the organization first development successful to valuable and Chief years turning

As very release her a a this ensure consulting role through seamless then press afternoon, forward to months. in Lynn closely Lynn time and Moen. appointed will XXXX a until of her I at Medical. CFO responsibilities support And both provide and as CFO, Brent serve March to best Brent separate the our next X Lynn Lynn? newly the our wish in Incoming transition mentioned with we Tactile over September look to following working several

Lynn Blake

Thank you, Gerry.

me professionally just our results, the been the Before having both years past to through personally help for say opportunity extremely I IPO the at of company discussion go Tactile that to two a growth have and our shareholder base I want subsequent and second Medical its quarter into had go expansion. rewarding and

like I smooth much a company. a to the I'd CFO As supporting team Medical to helping And he as forward that, part drive Brent as our assumes to execution on Tactile everyone for successful the role. very transition public thank look of

quarter second for million year-over-year second the Now the moving increased to total $XX.X revenue $X.X to XX% financial or performance, million. quarter

insurance for sales both payers. million. awareness the increased quarters or in to continued or was quarter revenue XXXX sales, lymphedema options $XX.X sales channel, coverage of the total Flexitouch Gross due quarter with expansion million treatment year-over-year the Our performance physician by second was increased XX% profit Flexitouch our second and expanded in driven VA in quarter. system regional of the and increased in $X.X contractual our to year-over-year year-over-year patient for of our system force, XX% and accounted increased Flexitouch increase to $X.X The $XXX,XXX in XX% million $X.X which Entre and growth in the sales to sales XXXX. national and of XX% million revenue XXXX. or ACTitouch of $XX.X million the System the

XX% by Flexitouch period. second decreased driven Plus the increased in largely to Sales margin to to year-over-year administrative gross marketing the quarter field prior approximately year, investment Flexitouch to These XXX the expense XX.X% Operating increased associated due clinical rate and impacted expenses million in higher year-over-year expenses reimbursement and XX% with primarily the the timing increased points by headcount, launch of the expenses. prior year-over-year, $XXX,XXX on as along expansion including higher due million marketing costs increased those million gross sales or in offset $X.X studies XX.X% was year-over-year the with by Our XX% expenses, to with and personnel the in increase million. were professional launch and the sales year basis employee compared expense. of or to team or expense in G&A due general decrease increased continued expenses This the expected. slightly of to increased marketing of along approximately Plus consulting of or $X.X XX% fees. was The and R&D increased a Reimbursement, quarter. expenses by $XX.X margin compared year-over-year, $X.X our and

the year. income share second per $X.X quarter deductible share-based lower the resulting diluted Net compute in diluted XX.X share, decreased were approximately for same used Operating $X.X million $X.X tax $X.X XXXX XXXX year-over-year decrease tax million $X.X operating income for second The benefit. quarter shares last per $XXX,XXX, of to earnings for second X.X% XX% last tax of average increased of an approximately and quarter benefit the $X.X compensation XXXX. $XXX,XXX net year-over-year basis to million year's for income activity XXXX. income in tax year-over-year points XXXX, was operating recorded compared to from margins $X quarter driven of period compared million by XXXX or We million the compared quarter by diluted tax million this to quarter of an million in the benefit to $X.XX second income XXX year-over-year of of the reduction $X.X second Weighted share per million of the $X.XX to Our quarter million compared of year. improvement second second the in of to or to income in the improved of an benefit XXXX second quarters million XX.X the quarter respectively. income in of in

Second $X second quarter $X.X million, XXXX. points the approximately million to second adjusted approximately in the quarter compared to XX% in or of adjusted last XX.X% Adjusted of EBITDA increased basis quarter year. million EBITDA EBITDA year-over-year to year-over-year XXX improved of margins $X.X

income net to adjusted reconciliation our a GAAP reminder, earnings of provided we've a in press release. As EBITDA

plus basis million the XXX a leverage $XX a which Borrowings June with our with The entered company for the Bank expand at also the outstanding commitment order cash, On August equivalents on maturity. to to a to Credit capital flexibility Credit Under could XX, secured $XX associated agreement, would XX, pay to cash to $XX to million, a Xrd, of enhanced in facility debt use the Agreement points and at includes credit were Fargo Tactile with under sheet for of bear Agreement Libor compared had points, June the Medical credit million. depending up XXX Credit financial basis expenditures, no terms at total rate revolving accordion to proceeds the As interest allow the balance the finance XXXX, into expenses Agreement XXXX, the provides of or total XX, company provide XXXX. securities growth $XX.X revolving general company marketable increased from Agreement capital year December credit and time. facility our pursue working a company's ratio may facility credit Credit and strategy. the $XX.X It senior for million Wells with and million Medical to three a corporate purposes. at Tactile feature,

borrowed As quarter this The second of available which not full of as Xth, August be agreement our Agreement. text to will the we Credit the exhibit had the filed evening. company under an XX-Q,

a now to this review revenue afternoon. of guidance, turn we our total which me our earnings Let XXXX release in updated press

For ACTitouch of XX% increased revenue low-single-digit. now sales million. XX% growth the $XXX in to growth in XX, prior to year-over-year outlook compared year-over-year to guidance our of products And prior XXXX, our full $XXX revised year to our XX% our XXXX, This expectation $XXX which XX% $XXX expect XX% of revenue our of ending million, in of approximately to to revenue the prior to XX% of Flexitouch approximately $XXX.X growth. to XXXX. to sales X% million expectation compared guidance products compares million of revenue we represents flat This million of compared assumes to to Entre approximately range range be December and

in includes approximately excess non-cash our of expect expectation full million margin gross for XX%. we rate the of expense adjusted compensation we in This of $X year. and XX% remain the stock also approximately be XXXX, year low-XX% the prior to margin for compared to Additionally to our EBITDA expect

rate GAAP comments. expect for the mid-single-digits for year for full per in expect Jerry? earnings the year. to fully we weighted tax the share diluted average a the of to back million XX lastly Jerry shares. call for closing And turn that, share, count the I'll purpose We some With approximately also calculating our be

Gerald Mattys

we Thank into financial XXXX. In you, strong the half expect increasing Lynn. to revenue summary, over revenue on are our first to our progress performance our And profitability. and of operating we improved based leverage guidance continue

growth the our the enter drivers. we performance, fueled strong year, Flexitouch half second for primary we As sales anticipate by

the coverage of and Specifically we'll lymphedema highest in penetration our to by and ramp account United the diagnosing sales continue clinicians improving expand organization field of productivity our the States.

In with enhanced open the XXXX. economic questions. to this you of leadership market, we the for of now positioned our Thank in support today's now evidence by Operator, Plus benefit of we in of momentum coverage participation broad network commercial result on our conclusion, growth existing strong both our by driving ensuring second over will system. success continue of remainder also are our our of we efforts Flexitouch customers We portfolio, and therapy, will on our plus with the compelling IP the expanded recently payer prior relations in U.S. follow Plus to Likewise, share continuing and new our from remain the equally focused throughout our the opportunity. the call years. the of commercial in better with lymphedema Flexitouch and quarter teams call. for clinical insurers traction We'll market build reimbursement solid new the our billion clinician commercial $X system and and your grow

Operator

you. Instructions] come JP with will Piper Jaffray. of And line from [Operator our McKim first the Thank question

open. is line Your

JP McKim

question. call back just gets for the upon for just on when implies it it around into and Hi, the first plugged model, I the just afternoon. my Congrats half. half to touch thanks growth back wanted guidance, - XX% good it somewhere the taking quarter, I

is that if just for year, understand to - of the was is just than we if slowdown any there cadence or view conservatism you trying just more this anything of should anything? guidance standard So, be there throughout how reason kind

Gerald Mattys

question. Thanks the hello JP. for Hey,

we come Let have me ground just to from take a where second from. us

initial grow Our for the year company was XX% the to into XX%. guidance revenue coming to

we've XX% advising guidance new of had this to reflective with now growth, half. in the are first good XX% the performance We

as past first over have year half. you our hasn't business this we really very changed. that growth growth appreciate back strong slower years in look will performance half quarterly the in second You Every in and over the few little the seasonality our

out have of that So, place point were that same today. we're believe the about changed the the half really with ago our not in very comfortable from the we're and guidance a We the of year given second view. we expectations we've for year

we're with where at on very we're So, guidance. comfortable

JP McKim

productivity, the And you're comfortable that reps the I on to you number quarter. force know in ask on kind grow sales the sales around done it Got comfortable of especially the wanted of it, with helpful. Plus. a today, one training was that's can sales hired just still Are just And QX I you XX%? pace lot Flexitouch you call there at then force in then you the

“distractions” trained the to workers of this you in and have it's the of needed behind having all are of So, the guys people? all to and terms train you've moonlight all train you point kind kind docs at

Gerald Mattys

first with fact, are very launch So, the we all the Flexitouch yes, of in of Plus. happy

the of a still XX% suggested of now to the but terms were about level we not compared we'd this XX% to had year be quarter we up we are ago, In where hiring, pace at.

we'll our organization So, year. this additions are that that level to get we of in XX% field comfortable

product. and second around of of customers. some trainers get of all the in Flexitouch in our we certainly to yet half up launch, of to to have But been have second our we getting Plus our Your customers ordering number question front trainers our all in able and still speed the do the the product of year work that

a will yet. dynamic third in the that quarter be So,

reaching over from we've for received contract or the accounts. of our little the a we reached XX% yet from trainers of And remaining haven't Plus Flexitouch that orders disruption the half Some trained.

have still we there So, to work do well. as

JP McKim

Okay, Thank that's helpful. you. very

Operator

Margaret of William line Kaczor the from comes question next with Your Blair.

is open. line Your

Margaret Kaczor

yes, all you accomplishments, be so folks. will congrats good first Hey, of missed. on all your afternoon Lynn,

of of guys mix Plus, on what follow-up the give a to And the the years actually limb Flexitouch the the this ago, you up and the product. launch couple part improvement substantial just increase I in year? think, what's garments estimating for pretty So second half the you are of Plus in it suggestion is, any when you made us did that in demand upper percentage the it demand of can as for first resulted

So around strong it this stronger be the why time shouldn't if as features? given not

Gerald Mattys

to nice hey around nature, you. really more accounts. second but and and positive on the that still intuitive therapy. they the field easier to We're team product ease use that in-home Yes, Margaret, and the probably the the on both fit the launch strong and existing start our to on a control importantly would from training did our the in-home patients hear have came some itself, ability certainly of feedback most on bilateral trainers the we into comfort train and getting in expecting We clinicians pressure, quarter. that certifying I would say quarter, engaging of focus the with trainers

While certainly sales seen probably in I more they existing QX. we us expect than accounts would than order have in from our that some QX, - reps in focus they - did say I new I will say, on clinicians their should clinicians

year. in supply soon in said customers we is Having question Keep on of in we terms can how of more are have the schedule. still how and that'll the or is it's positive, of can get our mix early that, function replacement not front this mind, in trying the an product, a but pretty quantify very product, a impact how federal So incremental quickly additional product. get the signs of much that the launch of in to latter the early half we're

be at So, we'll next transitioned won't Flexitouch Flexitouch because have the Classic the talking year, about all, we this at time to everyone Plus.

in schedule on suggest other of end no but gain still yet. the we're of year, the as to sell and year end the the regard federal the change to patient that able supply pathway going the inclusion by to by VA of we're that So be

Margaret Kaczor

it. terms It you rep the XX% then folks like that maybe Got of follow-up in And to of hiring, some of well. the there. just as on sounds out trained

guess, impact how XX% that in as that does doing can pressure you're if only negatively much you next as ensuring So the than the QX? best ease quarter,

Gerald Mattys

up that set to be the QX, the to of is we that. our it's prove into call coming somewhat disruptive launch think pattern, going I expectation regular be to Plus

the fact deliver their that out of some spite second phenomenal our to were in were reps call quarter. able taken of usual they pattern, in pretty results So the

out take less We regular pattern customers expect trained, and suggest we QX. exposing will the allow point, on your call would their them more pattern, yet a get if taking time, less call in outside the frankly. time, now focused their much to XX% dynamic so to they keeps of front of have them got of to But it, them we've get in of, you were still which continue should that gone to to that the trainers XX%, little bit remaining

the this been we is far just affect So that has around the really the response think dynamic so will product. the second half, but QX positive

Margaret Kaczor

impacted second year. the at I more in guys of me, the the year, Great. And then of half some last look were hurricanes you if the just think by for you comps one some of

given walk similar maybe a us you easier maybe So the you while progression, through are last it so through, - Thanks going we're better shouldn't comps? a little be much. bit assuming as as year, saw why

Gerald Mattys

And VA targeting got the I have doing. remain that believe that certainly sales improving related are Who we're we our team productivity Yes, sales strong. a larger to certainly now. field

hurricanes the the the little bit positive QX item reps that's about One our in average and out we to what business, a have shores signed half second know Xst that be a of end could on second second assuming will that that on So, payer large in patterns. - taking with and our from the of exactly that an contract we're half disruption our a the regular call fact and we And is projecting. no expect disrupt have I a a the impact up selling should growth a fact the their bit additional headwind the year. in dynamic that talked our July. on price half of that on of

this news expect direct through we Unfortunately contract, immediately, up overtime volume later. we dramatically now accessed of, where that place good payer. group picks and ASP with is direct this them before contract they the now payer a have up drop So but have we volumes the will while picks with in pick a the were a member buying up

for the a little bit second expectations. another that a headwind of So half

Margaret Kaczor

Got it, thanks.

Operator

Chris Your next of question line Guggenheim. with the Pasquale comes from

open. line Your is

Chris Pasquale

you touched IP see some to Flexitouch you bit of add talk you picked little look going on help this features Can future. Jerry, the could about you Thanks. the technology where in that a as you you overtime? to the up idea

Gerald Mattys

Yes, little not the believe IP and we brought access a field for that technology, ahead the where joining do was number terms acquired some to bit developing. thanks is of of interesting us the of hello benefits call. the I Chris, a frankly right least which in of

are of the - that strong most apply patents two value connectivity. had a in we the compression to set areas we think to pretty as the are area have around them just pneumatic So future they The product benefits development of in IP the see for how patients.

around in to have area their patient but ways positive IP this that this we physiologic two see So picked patterns the by that enter monitoring. to of areas device know patients we clinicians information be to differently. to there area that is potentially market. the might in the feeding be the used in want navigate treatment vast connect Those up, to actually a had others will to able unique pretty field treat participate that back are might who or most that able being adjust and They to some of

Chris Pasquale

up you minute to then could been Thanks. Flexitouch, And just we've what way go but know the the non-Flexitouch used the spark to it a portfolio? resurgence seeing line spend a small relative seem other on and in bit? the to of perk a that's that I it's portion

Gerald Mattys

XXX the took And up. inside see pick be team way really that Flexitouch conducted neglecting, very uptick been Good this if to reimbursement field it year those guidance sales expectation with field of so weren't bringing that at patients particular we've are nice of That folks they actually them we was not and to our of frankly flattish it by an a responsibility before. question. from the I want that dealing business. almost in brought address, kind the to going that organization served focusing because don't and we you well business, we to We'd say expert in least on process. much actually to the attention as our set internal resulted who did the bolus, XXX our line We products very were were able exclusively will, paying at in of business the of but organization

that in expectations, of increased ought X% we that a pickup kind It's weren't count our to for we're mid-single-digit QX. on this see that So year previously. now did category where growth suggesting other expecting about it we

Chris Pasquale

quarter. the Great, congrats on

Gerald Mattys

you. Thank

Operator

line of Genuity. the next Your Instructions] question from Jason with comes Mills [Operator Canaccord

open. is Your line

Cecilia Furlong

should And actually on the forward? think just and ask viewed going Jason. Lynn, quarter, about access be as what of the rate schedule And Cecilia, ahead, opportunity just well kind Jerry compares is the on going you just in impact then I this And looking for federal then another as rights the And of your forward? getting the the VA? the strong business growth impact of to VA, just VA how as a to customers, bilateral run overall to business and wanted supply this in

Gerald Mattys

Lynn, the that? bite do to Sure. you at first take want

Lynn Blake

bit expectation. in Sure. rate I can quarter the strength growth and talk the to a

revenues. XX% QX was VA of So, our

have VA having You're the again not higher not seasonal of the when co-pay. pronounced impact another as more strong we right QX as percentage quarter,

but the on continue For yet schedule supply The not in the the timing anticipate of expect than effort. that the gaining the the currently of We by the slightly probably not Plus channel knowing but to commercial not year, is exactly Flexitouch a Flexitouch fact schedule. the know as and lower sales grow it you year, the the first be faster, to federal bit federal the Plus balance we inclusion a supply focus rest of for end of as that. VA is driver half, at by stronger the part in than the rate a growth business, driven

Cecilia Furlong

also that have how the XXXX And just that, just going of following an Okay, in Wright great. and forward big opportunity customers is? up on impact can targeting

Gerald Mattys

with Yes, we've Cecilia, the to has in not we that Wright team up customers it I introducing expecting within would familiar sales with the to results. positive that to once business to of that list I clinicians us in And have on think place. it's we Tactile. earn VA that the working been introduction yielded some say positive us a be are system overall, are

it So, will I for first strong with channel bodes a a think in position XXXX really and QX. quarter you into the if tailwind as should well going VA us

Cecilia Furlong

just And as taking on you're just questions. opportunity terms you. in that as commercial a side, you for quick you're of how Thanks it, bilateral I in our contribution but bring centers? thank you seeing the much into Plus so the far. this touched follow-up, in know what just is Great, left to those seeing continue

Gerald Mattys

You Cecilia. bet,

So, again, treating the prescribing certainly extremity objection over some seen Flexitouch simultaneously we've in the to clinicians had has start it's things patients And One, limbs that for clinicians bilateral patients. Plus lower for - done with capability us. for their the about an overcome VA quarter. that our do - of device bilateral lymphedema second two

our opportunity that becoming number us by to also a vendor, do a competitor the - out given prescribe that able vendor before the become where source for out of were single our of single to they clinicians. move of source customer. so. So, to started hesitant It's products And to we're

all be a we've of is with to a early comfortable Plus that but far, going the is positive little and the product, our XXXX. terms XXXX again into So, impact of so we're this seen in in the response very later launch big

Cecilia Furlong

both much. you very thank Great,

Operator

question comes line next Jaffray. the Piper JP McKim from with of Your

line open. Your is

JP McKim

- that on on facility addressed incoming the Fargo a Entellus question. we then thanks and such to the Brent deal credit I call. remembers questions Hi, there. everyone several just now the Wells follow-up he the with for Spirox I've part and wanted topic was had of from But you got the

the anything M&A? bring channel. you building platform you're thought a do - have your I under has product originally on company that theory another changed So on could to know sell

- So, has timing perked be the happen interest happen or this your there coincidence? to up

Lynn Blake

This is Lynn. Hi, JP.

give was Let line for company little wasn't me the objective. a or had size small the Twin historically work. right capital local here very Cities had just sized our growth really with a backdrop for a on facility the today Tactile credit in that bank, working We

to a have for I larger at support the So some obviously additional both objective. longer item governance growth term quite actually provide to been in the good time something alternative working and and future looking for and company meaningful just as to more get flexibility place company's

in it I'll able fact list we forward that. second relates that the So speak were as quarter us with close our conjunction for kind to on of on release maybe to Jerry it let complete. certainly was my to that was positive view the to

Gerald Mattys

Yes, thank you, Lynn. JP, good question.

have been we this looking build presented platform uncover. at to at always able to from that and been have a over opportunities have we number that last two So or years looked themselves as of have a the

have I those capital, for attractive potential close relationships. appreciate, As to think now of on to some it and us more difficult that strategic we you can partner access a these additional are makes

arrival in wouldn't but process find because all, at a up say will that has something We been our path well evolution, have I point already. on fits we that some Brent's speeding at that the company

we're the ideally back add to organization, those other opportunistically field not leverage that to our office. sales also So, basket only our but also products that looking

we'll to time tuned know, So, when you announced, available. take that's know of yourself ahead them of terms first but certainly and let you get stay getting can't those in be the

JP McKim

you one potentially see Okay on in CE then start moving XXXX more to and expect just international, XXXX? internationally do still in that's helpful. sometime then mark And

Gerald Mattys

certainly States outside that I the believe opportunities United there are significant.

to a on manufacture. path that our on CE are get products we We mark the

guidance. timeline CE yet. be mark, think not to QX a in in discussion XXXX current as I But XXXX that'll has of XXXX for of the us our the get

JP McKim

you. helpful, Very thank

Gerald Mattys

Welcome.

Operator

conclude for your for That you today. our does conference Thank participation.

Tactile Systems Technology (TCMD) 6 Aug 182018 Q2 Earnings call transcript