TCMD - Earnings call transcript Q3 2019 | Tactile Systems Technology, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Third Quarter of 2019 Earnings Conference Call for Tactile Medical. At this time, all participants have been placed in a listen-only mode. At the end of the company's prepared remarks, we will conduct a question-and-answer session. Please note that this conference is being recorded and 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, as well as our most recent 10-Q filing filed today with the Securities and Exchange Commission. updated which time website. are be with our may SEC, the available factors time in to filings Such on our undertake of publicly statements to or no revise We forward-looking our otherwise. update as information, new or result future events a obligation

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

Officer. like call turn the sir. now Jerry over would Mattys, to go Chief Please ahead, Mr. I Executive to Tactile Medical's

Jerry Mattys

to Good quarter the call Operator. afternoon third earnings I'm Financial everyone Chief Moen. our welcome and Officer, joined our call. you, Brent today on XXXX of Thank by

brief press thoughts then few operational questions. this the a progress for earnings of open and some I'll on recent afternoon. third Then update outline our XXXX, you financial share quarter. discuss a drivers during provide brief the by update quarter Brent I a a provide we revenue then closing results our our of brief guidance financial release primary during highlights with I'll our commentary updated some with the for our we on me of in followed will start a Let financial performance - our call. the of today's growth. will of review review detail in before call XXXX, which

impressive million, growth total of of quarter XX% performance sales another of $XX.X in representing revenue year-over-year. of achieved QX We

was and which our primarily driven Plus to year-over-year rentals Our system of $XX.X sales million. growth revenue increased XX% Flexitouch by

$X.X in our of XX% which systems, increased growth and year-over-year saw also Entre Actitouch million. impressive to We sales

standard of by will detail, results discuss ASC our greater impacted quarter adoption XXXX our favorably contributed third points X Brent our percentage XXX, revenue were accounting to revenue growth. As which in third quarter

growth the year. in revenue achieved we to of impact, period quarter last this compared the XX% Excluding same

several Our third quarter revenue benefited growth important contributors. from

contributions that pleased the we third to field end the achieving to continue First, expanded quarter, our report force as I'm to compared sales third reps quarter. goal the field for towards we from that the of XXX strong we XXXX, during of team. make over the over sales to the investments saw end reps, our hiring of XXX year in our

low and I've experienced prior people. unemployment As on mentioned today's for harder recruit to strong sales professionals, demand calls, it's environment with been sales market in talented

Over onboarding the taken the achieve hiring goal improving evidenced proactive themselves and benefits last this processes, recruiting, people new adding XX this again and of ability sales a year our year. of our approach to approach in our I believe to we've

Second, important the clinician also we clinicians for strong bilateral our adoption year. bilateral This to during our growth. not their Plus of patients. come many Most of for market prior continued next-generation the It's note our number seen an launched Flexitouch contributor we've therapy in strong a of important Plus trends this since system notably, Flexitouch referrals remains quarter. these to system from Flexitouch have referrals system referred last generation trend have that third of that

accounts continue continue lastly, penetration in and our commercial coverage benefit we And from payers. the broad in-network we U.S. our in of Third, make coverage market. to with expand to to lymphedema efforts progress our the diagnosing highest

Medicare to also patients. the third During sales experienced strong we quarter,

to specialists our year. we internal channel team which strategy this Our from team began the pursue and Entre transition benefit performance from to our field in continued Actitouch processing of last our order to

million, and in In we third also of improvement to of gross million. achieved EBITDA XX%, our quarter, the in adjusted margins $X.X performance $X.X our addition to operating strong sales income

Turning to during our performance quarter. the operational

on peer-reviewed and on study of in continue neck We detail, focused publication three forward of of the to neck, of studies neck Building order evidence once with for the to recently look process We're publication our publication our discussing for head clinical completing the are product. clinical January in our of portfolio our broad-based clinical and head submitting and we pursuit goal manuscripts new and first for strategies XXXX, system. on progress this expanding clinical advancing medical In and commercialization Flexitouch studies in Flexitouch manuscripts year. support journals in we've two head Flexitouch in of our reimbursement to make focused for coverage them they for published. submitting completed these our

on As sales is to quarter. in our as the revenue percentage and expect consistent clinical the in we which neck we of mid-single-digits to continue our head focus performance XXXX low total building we a this portfolio, saw with

important published diagnosed to each retrospective breast diagnosed The frequently data in comorbidities, cancer and of its lymphedema, Lymphatic progress the patients Intelligence work laying was known titled community commercial comorbidity. was treatment. Surgery: the of with rates lymphedema proportion medical illustrated the comorbidity. the determine, to second-most Blue was de-identified associated data database ground patients we and with Health comorbidities associated In the and most The to identified for "Lymphedema ulcers of claims study leg neck, the Disorders. cross-sectional Venus and awareness associated of of and and lymphedema efforts addition with our lymphedema with gap." from lymphedema. the both, study A analysis new Vascular study for purpose the of that Flexitouch broad Journal comorbidity analyzed the September This treatment treatment of issue adoption authors X, XX,XXX increase made patients The Research the various and educate also XXXX Venus in was head a as

notable It gaps identified for specific with patients comorbidities. also treatment lymphedema

with advance patients evidence breast detailing to-date with of is medical treatment the patients XX% and largest of population cancer of comorbidity, lymphedema treatment currently difference treatment comorbidities has the treatment the ulcers and to within to example; for statistically was rates this The any comorbidity. the to in patient diagnosed treatment. associated each leg a provides disease significant, the with only treatment based provided this compared lymphedema, lymphedema According that receiving the the understanding lymphedema For study study each. Venus of XX% received their the of With and each to exist prevalence researchers, ideology. comorbidities illustrates for on in important communities mind, gap the form

As to of among part our and its hosted during quarter. we efforts the also raise lymphedema awareness events clinicians, two important treatment of

down in attended by which in refer and treatment XX on clinical event on these neck The is or and our how first was physicians, who fact of introduce meeting purpose specialized advisory their various and to positioning physicians as to we marketing very clinicians The to The in to of obtain to held was explain vascular the this cancer. them conditions strategy. event formally our council aspects either and meeting to itself feedback the successful. medical be company proved Minneapolis market head

the coming physician event to team of and treatment. on understanding research efforts was received our feedback and very and with variety ways development many about marketing this of physician and awareness condition and lymphedema response important The product Our a clinical away assist messaging, its raising from attendees strategy, specific of efforts. including new positive education increased awareness with aspects,

educational opportunities in was Feedback are all-day programming more Additionally, the and focused very was was our that positive received the event and about seven learning attended event This event the Dumont, and its hosted in first on interested They held well in continuing Iowa we its similar by forward event. XX education education therapists in clinicians. lymphedema units and on for we future. look their hosting participation as to treatment.

our static brief with compression garment. our operational I'll on discussion conclude Airwear update today's on highlights a

commercial to incorporating treatment compression release in our into and pathway. We pack-down have innovative prepare progress for provide by to market begin the full XXXX will awareness end conservative expect of pneumatic supply product solution of the quarter in to us the Successfully establish for products the patients XXXX. securing limited our made in our first systems Airwear therapy launch of an and early Airwear medical portfolio of in their with future enable chain

call and press in this which the results our turn release over Brent to financial discuss detail in third-quarter now our updated we Brent? guidance, our me afternoon. XXXX greater review Let to

Brent Moen

revenue quarter ended for the quarter million increased XX, Thank, September the Jerry. third to Total XX% for $XX.X to $XX.X compared XXXX. million

of in total force, increasing quarter and XX% Flexitouch Flexitouch driven revenue million increase in our was revenue was $XX.X our patient expansion rentals physician Our the performance driven XX% Sales our awareness sales of our of in and coverage quarter largely broad $XX.X the by of sales by systems, The options insurance year-over-year million. to increased and of Flexitouch or which in network accounted for revenue the systems compared the XX% Medicare for prior-year to with the lymphedema, the in treatment of period. XXXX rentals channel. third payers total and growth and

and increased Entre coverage or XXXX in expanded XX% our $X.X managing million year-over-year orders of in product quarter. in performance house Actitouch category strategic the The shift Actitouch $X.X from sales with and to Entre, to the benefited million these insurance contractual payers.

to last XX% Third-quarter and Medicare, XX% XX% year. XX%, revenue XX% was XX% BA payer by respectively compared and commercial,

In XXX the XXXX, and X XXXX. As of percentage ASC January to our third revenue us of of any effective quarter we months from third did have by XXX, new adoption points growth standard, require benefited became the mentioned, during points that lease periods. X, the total quarter adoption ASC growth the of our prior X of accounting and XXX X benefited previously revenue not adoption the the restate respectively. total ASC first percentage on The

XXXX, rental garment rental now classified our from as sales revenue. garments revenue Beginning as we previously revenue. to revenue in This also was sold classify customers

comparability associated reclassified purposes, revenue the rental and periods. to rental For with consistency revenue prior-year agreements in garment was

to unaudited on schedule we XXXX to periods, profit prior appendix reminder, provided our filed our XK and X. assisting a an an reporting As as revenue May growth to comparing supplemental

third-quarter was of expense XXXX to sales last XXXX. quarter Turning Scientific. assets payer gross in gross XX% of quarter to of the XX% licensed primarily PNO, product non-cash from intangible $XX.X of and or in the compared year. Sun amortization margin attributable last decrease was mix to million related third margin The revenue by sales profit the $XX.X Gross to and year to to XX% compared in the increased $X.X million rest million of compared the to to third

year-over-year increase $X.X due to marketing the in spending team, operating million Third-quarter million increased driven expenses an the This increased The a legal was increase sales to initiatives. compared million to as million sales year. expenses, The on increase fees marketing expenses. compared well operating to which increased by compensation reimbursement was by in functions investments and or higher quarter $XX.X in $X increased continued due as primarily administrative in XX% to our $X.X operating general payer primarily third $XX increased reimbursement, $XX.X in impacted expense personnel-related corporate year. XX% development expenses or was million last professional million expenses field of in XX% and to $X increase also operations, expenses million or last and

to quarter or compared the compared increased share-based of the XXXX expense primarily $X.X benefits XXXX of Operating income from million period. $X.X year. prior-year XXX tax related for income last to third tax operating benefit income of of compared to for recorded million of compensation income the year. decrease $X.X third XXXX in quarter recognized an $XXX of to The an to tax XXX million third was We quarter tax the XXX% expense $XXX last

the or average net net income XXXX income of diluted third third million million share diluted to Weighted of compared diluted of third quarters shares used $X.XX XX.X for or to share per income per and quarter respectively. $X.X XXXX. XXXX Net compute to for XXXX were per and of million million quarter $X.X for XX.X $X.XX share increased

$X.X EBITDA Third-quarter quarter million adjusted million to was third the $X.X of compared XXXX. of EBITDA adjusted in

EBITDA last margin quarter the the in third compared in XX.X% XX.X% quarter was XXXX year. adjusted Our of third of to

press As to measures earnings reconciliation a non-GAAP of reminder, we have release. a certain in measures our GAAP provided

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

full-year third quarter. range performance for guidance the We stronger-than-expected in are to raising the our account

now revenue compared to in million, to $XXX revenue range which to we year-over-year to growth. our XXXX, $XXX.X XX% revenue This $XXX For million year-over-year expect $XXX the of range outlook million XX.X% compares represent total prior growth XX% in of of guidance of or to million to revised million, $XXX XXXX. XX%

total continues revenue components $X line assumptions. XX% guidance XXX item year-over-year. As of XXXX a the updated reminder, our that following will our growth revenue of total adoption benefit XXXX includes the guidance XX% for full our of to million X revenue year The of percentage by assume year-over-year which or points ASC to growth approximately calls

sales the million in be compared $XXX.X will $XXX revenue million $XXX to revenue million to XXXX. of of in range Sales

impact by to adoption the rental reminder, increase guidance expected ASC of in of be for revenue the $XX.X growth sales is of a rental approximately is expected in the of driven revenue revenue of increase of XXX, impact approximately XXXX As Operational revenue, to million the year-over-year to of be XXXX. rental compared includes Rental revenue. million XXXX rental over the $XX re-class revenue range for revenue rental representing garments for in increase in to revenue representing XX% XX% XXXX. approximately of the XXXX. the The revenue one-third rental

of garment increase was remainder operational range guidance of previously reported approximately of revenue sales assumed that revenue. revenue the The required to in XX% Our XX% XXXX. to relates reclassification to rental growth the in

revenue assumes prior compared to in XXXX our Flexitouch guidance increased sales products in to XX% range in approximately XX% products XX% approximately to range, our in our to to growth compared our of Entre/Actitouch XXXX XX% approximately range. XX% By increased our total product, sales year-over-year growth XX% and XXXX prior XX% guidance of guidance year-over-year

In we percentage head be and Airwear low anticipated to sales new terms XXXX. to digits a contribution in we of continue revenue, neck products, of as total the to the of our immaterial in continue expect mid-single and to expect

range of which million range, of in expect margin completed related XX%. $X for our we million, margin assumes This expense Lastly, the compensation in corporate the be range $XX early headquarters we stock-based new approximately the gross expenses to to year in approximately XXXX, EBITDA to to full XX% EBITDA our adjusted QX. our low-XX% adjusted to remain of move

expenses expense and the moving will facility comprised previous As expenses, remaining million of occupancy higher year. comes year a approximately rent from XXXX related facility, expense accelerated which The is $X the new impact $XXX,XXX both, at on reminder, our full the of our the P&L. only to depreciation of and this current

earnings we million to calculating count of weighted XXXX shares. share expect purpose average be the per fully XX For share, diluted our in

the closing back With Jerry? for to that, I'll now turn Jerry remarks. some call

Jerry Mattys

In were period. that profitability during closing, were Brent. of during you, Thank performance to operations proud third with realize reimbursement the sales, improvements we're teams that impressive along our to able achieve and we able the the the quarter,

driving in accordingly, order guidance our raising We're to XXXX to rate bring growth and and a improvements continued look close. profitability to forward revenue strong

Plus As field we our commercial and our the leadership by chronic account we market the U.S. $X network with productivity our on exit lymphedema the and to insufficiency for organization, year, and our the diagnosing will targeting coverage continuing market strategy, in more Venus opportunity continue enhancing to to strong reinforce billion than sales our payers. and of Flexitouch system, capitalize response broaden high expanding

medical our we're that swelling care implementing of their in focused educate More technologies the charters the The facilitate chronic and important of latest medical the the of conditions. have and American the shared and Vascular increasing this will of is on pleased Phlebology, treating either other increased our community longer to community the Society of that seen lymphatic all lymphedema. fact updated highlight remain anecdote and term adoption products on as focus. focus or I've area also role widespread American Medicine, recent and broadly, Form, include our trend that to Venus by lymphedema lymphedema The years, College we've of One evidence the in on We to an initiatives the

that and treatment. their these The lymphedema, to of American Vein I'm American awareness The Society. are to Phlebology its societies their raising has of on committed pleased to and In Lymphatic members changed name fact, educating see College

to impressive In tailwinds their for shareholders, and everyone conclusion, we our the of of on tonight's well our the thank remainder to their Tactile come. and quarter, like employees the strong, to third attractive our the to as all for remain in during business, interest I'd excited for about for Medical. as call XXXX committed and and accomplishments opportunities are profitable sustained years we growth delivering and

we now for Operator, open the questions. will call

Operator

from [Operator Blair. William will first come Instructions] [ph] our Taxor Margaret And question from

Unidentified Analyst

guidance First this revenue kind third this in implied approach sequential quarter of one for the well. implies strong me these quarter as nicely quarter; is, really that just unit-fold and up the a very through Flexitouch walking change because also sales implies performance to

to of So, the it quarter. seems I difference, slide in traction fourth business. understand lot year conservatism there the as but in year-over-year the look uptake an is the comps and maybe but at indicators, guidance within fundamental for you I got you Then a at both, look full step appreciate you sequential the etcetera, change like

the guys walk that this continue what And I've us too. So, way got forward? in thought that going may through about follow-up kind maybe saw of you period may or not you guidance, then a

Jerry Mattys

We're calls than guidance growth year faster our full with XX% updated each year. every growth Our growth we've or XX% than for consistent on-track is expectations; to better X XX% and is months which experienced of after year-over-year. that what

just updated growth on the XX% changed our you We look seen terrific fact, really you'll and expecting but even not QX set growth XX% in expectations performance have at better quarterly if a in gave give we're expectations implied to So XXXX. for in passed see growth guidance both, very and quarter. back fourth since in the XXXX and guidance QX, guidance QX don't similar of we XXXX, in this we've that

Unidentified Analyst

range, thought a channel of from it a now low-XXs question this but this of fourth the be cadence historically the understood it's and may and I little XX% in the process. has right bit two a the for different basis I and it. the Got sequential think part of think last genesis the quarter I whereas is in on of implied been the years

attended, newer So, into so thing - with shouldn't that And the of in you in change investments to on pretty practice; be a The a lymphedema [ph] us assume maybe think year more been better patterns? wanted these? actually events terms quarter, as those the have cause upon and then, kind was and I able that. we about growth anything this and one is many other we that go of focused as hosted two within patients you you those therapists, should why for their we as clinicians see event of, little to for this call of ROI next prescription how move nice identifying maybe that

Jerry Mattys

Thanks, Certainly, it's customers patients, question. this themselves in then what to education they we how the expectation an providing Difficulty] and on our we own can to teach excellent well opportunity do, take the [Technical new their perform. learn

we a our see excited are do doing this business in to way these as the So, expand more about future. and of

Malgorzata Kaczor

a of kind sneak in I'll some steady? from And you're enthusiasm kind growth bilateral the But the on maybe same it of of the that kind seeing or it on the a traction much just Okay. Congrats you're still like Has patients, it been maybe seems one of into where experience didn't the topic. dynamic few start gets as relatively quarter. that. and more seeing Flexitouch because so of quarters to same Plus, from took clinicians have and incremental lot that

Jerry Mattys

Yes. Margaret. Thanks,

set contributor we product continue to the our are forward. benefits Plus patients give giving that business in our of and and those to their more before. such competitors of in we and patients, we even that versus business those I us with clinicians, expect bilateral terrific more think proven that seeing play who we XXXX, a that be of bilateral driver believe - in our features. throughout out seat are going has growth maybe didn't us that to feature Flexitouch around The And are terms

results continue good from of the had system we've the Plus Flexitouch forward. expect that to launch So, and going

Operator

Instructions]. [Operator

of is next from question Our line [indiscernible].

Unidentified Analyst

growth call, with year. full ask question not for today's going Flexitouch but levers you're Airwear lot top was going appears JP. Plus, Recognizing for there about next a launch, international to could be to guidance others. line that some on a Adam It's expansion a forward to give I XXXX maybe on among impact of hoping

then Just different we you level high at us of hoping year. I start to and the could as puts help some a And next ahead to look have follow-up. takes frame a up

Brent Moen

be on of I'd context Brent. that. it's a to bit Adam, happy you provide little

for drivers fortunate do You're feel but growth far that we're the experiencing right. providing guidance XXXX, given throughout not year. absolutely We're thus we the

on Some we've of the those that got. growth based drivers headcount are really sales

So, no.

prepared It's reps That in the mentioned the facilities us. tailwind questions, Jerry insured Flexitouch over a on nice Margaret's field. for addressing just that is just that penetration sales U.S. his high we for the Plus mentioned Jerry further certainly over adoption XXX talked in the population. have As the remarks, about and in-network we've then diagnosing XX% but the had also being provider of

into we believe certainly, drivers XXXX. growth that So continue those will

certainly, on as terms bullish gross about reiterate, continuing and as to adjusted can then And XX% so through that EBITDA think in down grow where on Adam, you we're XX%-plus to mean, us just And then leverage. top margins P&L., grower. I line of the a you that goes. And guidance

Unidentified Analyst

just then my for hiring. force And on sales follow-up,

you're of on Was market that or that. was just QX. We competitive hire now reps some color at it's to medtech for churn? a reps. And more end lower How in mentioned continue the of turnover you QX. get obviously, much adds hoping than XXX at to more sales versus So,

XX to XX reps next can So to just their in add level continue confidence it, call year of onwards. you that

Jerry Mattys

field since improved the of third XXXX. question, of quarter QX XX We with both did that's and the over Adam. of say turnover. in Keep Good the the increase reduced in field. Yes. people a would mind, end hiring Thank I you. in of end that's combination XXX

them Medical but them now, had and they're to loved challenging we're full environment these certainly goal Tactile into points guys you being year, particularly up have despite bring the way. something or hiring on-boarding brought the of. we're is this these in a proud on about it the hiring year continuing would speed achieving earlier folks So, up have to to and We on

would we to bodes So, strategy year. our ability which for it to think next well our hire, be continue

we We will the at did continue about year. pace this to expand same our sales organization

Operator

And question line from of Chris next our Guggenheim. is Pasquale

Christopher Pasquale

it commercial to the channels, strong that like for a thoughts know just attention. driving get you segment on quarter little this there anything but rate? moderation your growth the and growth Can in business? looks Jerry, lower going give in if us was the I you of your VA you're Medicare And a is guys latest that's seeing notable that

Jerry Mattys

Chris. call. Absolutely, Thanks it was the quarter, for Year-to-date, third VA XX%. the is question, and the up the welcome to XX%. In up

as So, quarter than that rest of full items definitely see a growth of point. the on the in third still softer growing still - the of but in is a trend of a getting growth year. couple Schedule Supply the We are see We the quarter. Federal impact year. the We us had impacting is it's September last

whereas lesser last So, a full quarter, price the - was up quarter, it lower year, in the for impact. showed this

softer outpacing Texas. quarter. digits, something channel seen And growth with, allowed clinics again and two is referrals. overall how commercial the have site company appears that our of with delighted double on more are had particularly some growing, even growth watching of kind prescribe, VA impact this we the what in saw expected. We're to business with say of the in the prescribers happy VA for an based We It were we're it's in I'd we're also the but in this the fast those wound particular or in quarter. our VA demand VA business familiar

Christopher Pasquale

dealing question anniversary the you're formal you I helpful. But I there Brent, That's change. about accounting you then, wanted be And to unique guidance going today. follow-up is XXXX. aren't one on appreciate just as giving dynamic the to with guys

So page have just XXXX, the you just to sure is that on to expect that that there? everyone to review the same make impact year-over-year in

Brent Moen

we'll Chris. question. that, I the appreciate certainly, No, Yes. do

the that in rental set, XXX in will the But agreements call. comprised repeat has to not my XXXX. of that XXXX. into revenue that's actually up is place that, a brought referenced So piece I will is rental There component just yes, revenue in continue of question to that Chris, level XX, components. itself XXXX relates were December That X our and that trickles as

So, it, of you $X million. will XXXX amount revenue in about if think that expire is that

impact to our XXXX illustrate The guidance that talking that revenue of what rental revenue might won't Chris, full just for So of for is about, was the in year the million. repeat what million $X mean, you're itself is $XX XXXX.

So, million how you it. think adding you for growth of XX%-plus baseline, to little framework a can $XX think That in on XXXX. a rate million. And you $XX our gives that just bit about about might

Operator

And our next Canaccord from Genuity. Jason question is the of line Mills from

Jason Mills

Jerry, continue to XXXX. wanted push Great. I on to

be perhaps the talk I little could understand we So, about quantitative, to you're just takes puts not going and a but bit more.

bit fourth range in is we're year-to-date, mid-XX% and So the quarter a the guidance mid-XX different. - in quite rate run the

done the not over that yourself? the the But you've as think in that challenge in, XXXX, that, You is position while reflect things about drive - how do position, you the you the to Do view last in momentum growth or larger the the like more view the would of a in feel company couple it, may years? X went be Jerry. and Or you guidance do about XXXX? or business something the - business like extent, the a you numbers to some frankly, how lot of fourth think you thereabout in you feel you quarter X guidance to

Jerry Mattys

question. the for Thanks

First quarterly. off, don't we guide

XX-plus top line And what as for historically to us give today. So, think we're willing that's to grower. guidance a XXXX of employed have folks we percent

X,XXX by growth strong As the quarter good any I quarter, metrics. to think we of run to leverage. takes we - guidance and or lymphedema third our would that into what uptick folks, puts a strong really evidence. got reason the see that don't in overachieved obstacles awareness deliver the of of those increased We've quarter. our to making that's We wanted in about the XX%. seeing year. closed full have field, very continue We're we're progress the amount Impressive operating growth. on expanding on XXX expanding Normalized percent revenue and we though, clinical we've of any XX-plus just in We've operating this and the base

QX. changed third our backing Our in for gave annual in QX guidance all. since not We're expectations quarter We're happened on we have not simply what's to guidance. down passing at the

Jason Mills

someone perfect tend like anticipate to makes that that's from agree with you - tends with I And questions sense. agree that that. to that, those That not

So, color. thank for additional you

talk went run of million, over bigger that under still franchise in the sort as of feet. XX% for quite it they're on more second with therapy, drive step the spending you're savings insurers, getting radar getting still market now comment this the of not bit. only of it is XX,XXX a about much cost the constituency that but developing when lymphedema, you and but is, perhaps cost which market? rating you're think these penetrating, I think about are evidence, your to developing When could been to seeing talking building, and a I your a effectiveness of but now little clinical becoming what and taking more market, to is on could helps you're how relates in et penetrated, the you respect the guess, question franchise I - are run guess, on how success you the to the therefore network, to therapy treatment you've much back a penetration the rating and you on under rating I respect in force screens cetera. that you where of perhaps testament public, hearing with successful the continue run public, associated you you're as were you're - they're a market you the of you're $XXX to million, you clearly sales question think penetration $XXX to you're went with

Jerry Mattys

in most about diagnosed the I'd us by XX a were No, the year look we the patients forward, questions, Jason. last there is I X that's excites as systems them lymphedema, Yes. set that with good about we thing million that fact XX,XXX months. last saying, the and know of put guess start we on opportunity

So, opportunity. very to single-digit large point, your market of penetration a

I'm not necessarily the behind certainly that dealing us a a science, to with have directly on In of conversations based body go these we have in allows the evidence terms way clinical that strong hyperbole. that's glad audience, payer of us

a stand screen we that's they at these paid on patient payers. product, the able population that in front that evidence population, save uses getting medical around percentage payers And continue a radar we the that are one are regular and base of One, so developed that cited. show data; in the two, economic patient basis - I evidence coming product of the if the able we of a patient to we efficacy product strong payer. to for we think have the on even very our their them shows payers from for works of directors from payer rate Flexitouch very and money get to this high up reasons the though So, are you have high that these that approval

Operator

Instructions]. [Operator

of Our next question Suraj from the Oppenheimer. Kalia from is line

Suraj Kalia

basis, numerator to modelled would get look on year-over-year accounted gets remove X It is myself. if a most of I the XXX. certain I'll on segments, The net and because my rate stick up been ASC little asked, year-over-year? these to the questions just ask us confess into is, excluding I growth XXX, basis? can impact with the apples-to-apples X% contribution I ASC the growth If I'd so a buckets, about from Jerry, a the So, extent, Medicare, what's is. isn't have for, three but denominator VA the you within love give split how would one. of I been have an reason commercial, X%., it And the

Brent Moen

ASC happy it's you to Brent. context XXX. I'll a little on give Suraj, be

ASC XXX the VA. So, only of It commercial impacts has channel business. the Medicare or no in impact our

that you number. what growth ASC for at looking right XX%. quarter the A is commercial on of would growth XXXX be XXX So, at portion third XX% rate be impact would of driver that there

Operator

does your our conference gentlemen, and Thank for that conclude today. you participation. for Ladies

Jerry Mattys

Thank you.

Tactile Systems Technology (TCMD) 4 Nov 192019 Q3 Earnings call transcript