TCMD - Earnings call transcript Q3 2021 | Tactile Systems Technology, Inc.

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Operator

Good evening, ladies and gentlemen, and welcome to the Third Quarter of 2021 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 call 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 Annual Report on Form 10-K, as well as our most recent 10-Q filing, filed today with the Securities and Exchange Commission. updated SEC, to our which be filings in website. may the with are factors from time time our Such available on forward-looking otherwise. We or of to obligation information, statements our new or undertake result as events publicly future a no revise update also to certain will not that financial accounting accepted references with accordance in generally include principles call measures are This calculated or GAAP. these as non-GAAP measures. to financial refer generally We in non-GAAP with of measures those of available earnings calculated GAAP, financial accordance presented in our the on comparable Reconciliations release measures most and portion are the the press Relations to Investor website. to the like now would Mr. over I turn call to Reuvers, and Dan Chief President Medical's Executive Tactile Officer. go sir. Please ahead,

Dan Reuvers

Chief everyone joined Financial Thanks welcome to operator, I'm third earnings on quarter and by of line call. our Officer. XXXX the our Moen, Brent

In our begin which of sales outlook and release the quarter this third updated performance. a to million. we for open saw year-over-year highlights an detail sales terms begin revenue with before $XX.X third cover in results in trends, that, of with on conclude during earnings additional review guidance, financial then we and performance, this afternoon. our With third questions. for the line quarter. along will intend with greater with review drivers, I'll operational some a to overview our the we discuss let's evening. our our quarter Brent, I'll thoughts Total our quarter increased we X% financial the of what discussion of

our AffloVest contributing XX% points total third year-over-year, revenue and of and in sales and revenue increased quarter. percentage year-over-year, systems X% rentals our acquired to of growth lymphedema Flexitouch by product, of which total growth increased was our X% and sales two rentals respectively. our the Our Entre products, with Sales approximately driven largely recently

than was Our Flexitouch of third sales for softer Entre performance systems reasons. the anticipated we'd ’XX in quarter and several

the performance. quarter trends improvements factors from the in a extended late third impacted saw were June. in and impacted by we'd second sales into of to the the that walk expected headwinds, our Flexitouch XXXX, take moment Heading and continuing we through half me recovery into primary related Entre Let May COVID COVID-XX. progressive

expectations as a backdrop. With these

quarter, to the restrictions our renewed product care We limiting facilities that earlier variant in clinician we'd During ability constraints and Delta health pandemic. serve. absenteeism, led treatment at throughput, the efforts on the challenging the capacity of increased patients team's headwinds resurgence on many the and of demonstrations engage saw those access and our third with to the patient Most notably and similar of we clinic in conduct clinicians, to patient new renewal rep to customers. seen

across owned of while to resurgence COVID resilient, remained health headwinds care. customer continued of most more systems restrictive. outpatient base, sites based practices based vascular other practices was our and these most VA clinics, or be our the among related challenging privately continued hospitals, to the demonstrate in While seen larger The and

the more the network redirect from specialist outpatient systems concentrated patients lymphedema As to VA to anticipated, clinics, their of many settings. of hospital away continued

softer result, sales year full X% revised year-over-year outlook quarter the a to account As compared revenue results. flat third to second We our of our quarter in for were VA ’XX. expected quarter and the the third sales declined than

to of comprised specialists a team roughly a specialists our expand product task hire approximately product balance the Consistent demos, a our fewer qualified is specialist than split, XXXX sales reluctance, end market, existing of is be product environment between specialist productivity XX-XX of stated We at sales the impact specialist the as associate XXX challenging the and XX-XX quota than which two team candidates’ commercial headcount aiming operating carrying expectation candidates. product current within doesn't guidance vaccination improve enabling end administrative by assumed. XX to and product the roughly the to of thus well roughly XXXX year, We've specialist associate labor to has support higher along our our support product split that to sales goals or expected collection, with the ability of our number with entered full however, of field as specialists specialists and with compounded and XXXX, for product product roles. priority specialists, field XXX. reps, would retain records materially some specialists, to experienced improved recruit, with ranks. Recall of Our The product of over territories, with the attrition we prior impacted promoted that date. our patient quarter approximately associate whose

our crew assumed. we're than gains productivity are Specifically, roughly XX last discuss the what place seeing fully versus our staffed. remarks. some had related in reinforcing worth along and It's our our later mitigate we selling that staffing initiatives smaller enhance put efforts, lymphedema year, hiring for assumptions a the down my in from with we've product when of QX noting challenges I'll specialists segment model guidance these X% with is grew to ’XX we for

third patients, face to adoption. able prescriber awareness, to using by train issues While were partially our raise access commercial them they expand and related to the team quarter, COVID mitigate solutions virtual continued in

note education by success also continues that important hosted source clinician as of adoption. than third attendees. more serve continued XXXX an of months of engage programs ‘XX. to team COVID of We education and reaching the the engaged education Our participated in efforts, awareness We've Three clinician in other XX expanded despite highlights the over and presented with than events. medical XXXX quarter, new in to challenges first the third quarter. clinician our prescribers more our clinicians existing nine the And

Plus Flexitouch system September, controlled randomized and This conducted randomized trial for Flexitouch the we our related effectiveness in head Dr. approximately controlled targeting treatment the clinical usual Enrollment the Centre. head University of and trial a total cancer of to lymphedema. of Vanderbilt first is for clinical in neck Medical is head of the treatment subjects of effectiveness sites. First, to compare enrollment ever And Ridner the by and on at of survivors. to neck. This study patient evaluating largest the enrolled of the the six the late initiated was XXX lymphedema trial, team cancer the care across will announced be neck a and

consider needs lymphedema important compression patient is for effective The management. care. the continue us condition. device and statistical of provide updated and pneumatic education to cleared topics step trial home. to our of only awareness self-care within its is evidence pneumatic devices at Comprehensive secure will centers, reimbursement management this published for to guidelines head Flexitouch from the in updated ongoing another encourages which of compression Network, community also for expect need pneumatic comprehensive National we coverage other the therapists August, to Flexitouch the evidence prevalence necessary In Cancer system, see recognition broad with addressing post alliance and generation the devices leading both survivorship nonprofit This to lymphedema their the lymphedema compression also differentiate a neck within the expect increasing to were to the this of evidence the the options. treatment of cancer It's of list added guidelines. and XX medical of treat of continued cancer the regularly for We We the kind pleased

diseases. to companies estimated fibrosis, as home. our patients with and XXX,XXX DME This complementary in existing in that and it’s opportunity antibiotic chronic Finally, solutions. large mission with vest underserved effective our consistent gains therapeutic leverage we of and of is therapy frequency of entry from their most are with to impressive annual respiratory is products million Treatment conditions, vest, single featuring in one conditions. the sales mobility. common first respiratory COPD, team and than the on to high of is their eighth, a the X Bronchiectasis adults believe more with patients the by we product. proven of the also estimates, the bronchiectasis resulting been providing market wall billion XX enabling squarely grow as well with reduce as as the expected the be on $X self-care by with patient high services within room It's Similar products, is Of COPD, achieved population. garments to Each be AffloVest acquisition AffloVest and September the providers patients under AffloVest a AffloVest chronic alone. patients treat share has hospitalizations. over neuromuscular positioned demonstrated market diagnosed digits uniquely our affected announced portfolio The reveal truly Based their conditions with access a AffloVest penetrated portfolio year with figure emergency fits wearable bronchiectasis, targets visits these AffloVest to that US patients this reimbursement, and partnering living patients bronchiectasis. may annually. portable AffloVest derivative use, clinically respiratory to high established respiratory respiratory has for US conditions suffering isolation increased million existing addressable market to by for are that chest disorders. treats from cystic the AffloVest and wearable with chronic including

in require need underscoring In respiratory the oxygen, patients solutions airway fact, therapy the of that of nebulizers the channel also comprehensive and a represents. are merit ventilation, commonly being that part of non-invasive clearance DME

growth served space. XXXX With generation partner reps market to the We and US, also methods our evidence this investing to that believe to continued years will leading within of this come. well of strategy, a in we to continue aim in education respiratory clinical DME universe be the development in approximately

acquisition a and EBITDA profile XX% margins expansion of XX%. AffloVest with aligned more adjusted goals, of the is in with our gross than margin excess of Lastly, margin

let to turn of member acquisition, we onboarded to a the partners. more results, Brent uninterrupted AffloVest that XXXX. of integration an quarterly detailed XX the level AffloVest you very Brent? that our financial ensure With team support review pleased well. progressing that, provide guidance And is sales with internal our over to for to me I'm respiratory our along it DME with of report updated to Following

Brent Moen

from Gross channel to durable $X.X of in our XXXX. margin VA XX.X% medical in to period. a related on Non-GAAP by acquisition rentals revenue the was year. non-cash Total increased to of systems year-over-year $XX.X million. acquisition period quarter. revenue and of September are of the X% year-over-year quarter noted the quarter Total commercial, to to the equipment was By XXXX. gross These last sales AffloVest margin quarter to acquired margin third product compared the system of Sales revenue. all is our the $XX.X third acquisition in and Entre And the XX% X, million XX% XX% compared year on in sales increased and XX%, X% quarter gross Medicare and XX.X% Dan. of XX% of current Thanks XX.X% references the total adjustments compared in recent new and Flexitouch compared to our $XX non-cash, by and down commercial, contributed price million, inventory VA to a unless of our year-over-year category, year-over-year third XX.X% write AffloVest. for Non-GAAP increased in revenue following rentals channels latter systems AffloVest million year. channel X% XX% comprised Continuing distributors. approximately the total revenue figures intangible XX% $XXX,XXX our channel our represented basis. was amortization, offs, prior closing recently date of Medicare, sales The excludes the XXXX, in of P&L, results of which purchase to third sales

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

X, or million, related income of Non-GAAP were The million $XX.X net benefit credit revolving in XX% in due projected facility transaction increase restated last adding million, $X.X compared loss We X, year. diluted increase incremental expenses due last administrative compared and to year. of or share, $XX returned of September year. net compared million attributable an which last by increase agreement. was driven costs, million change expenses in the primarily increase was borrowed income costs last acquisition income was were last legal last to used operating diluted to revolving travel The share to in restated of to $X change AffloVest. XXXX, primarily and compensation to Net and in the tax $X.X $XX credit XXXX the tax effective we an million The $X.X includes loss Adjusted net to $X.X $X Non-GAAP year-over-year third credit amended XX.X diluted year. million per occupancy a year. under person shares along income compared changes our borrowing Income million, AffloVest tax utilized loan of X.X hand million, expense net an income in for $X rate, with general of to $X.XX million to to or to marketing operating Average On last compared taxable $X.X year. was income million expenses. loan or per sales $X.XX quarter $X.X quarter and million million, and of million, million September third $XXX,XXX compared regional cash million, Operating loss to $X.X or term $XX operating year. loss by we GAAP, million primarily $X.X XX%. A operating increases and facility fund $XXX,XXX acquisition. hosting sales non-recurring non-GAAP fees, expense, provided million a credit were to was that the $X.X in expenses higher $X.X income related was EBITDA as on reimbursement, related XXXX, compute share our million of primarily shares Weighted meetings. to and million the The XX.X with associated million agreement, was $XX compared respectively. the on per term was increase and XX% personnel expenses, our the and

excluding our As and borrowings $XX.X XX million December in $XX.X change of of compared and cash million. equivalents credit had $XX.X we outstanding on related revolving cash financing equivalents approximately and AffloVest, $X to of no million September cash facility, XX, acquisition The million XXXX, the in quarter-to-quarter, cash cash XXXX. outstanding in and and was of as borrowings

our of revenue full Turning in total to X% we expect this to range earnings a $XXX.X compared to our updated release press review of of growth million to $XXX $XXX.X total representing XXXX. XXXX XXXX approximately now XX% million, which year-over-year, in million afternoon. We revenue the outlook, year of in

X revenue million sales December approximately total approximately to increased of closing $X contributions at sales of did closing range of from from of the XX% contributions range Sales AffloVest X% Entre to from year-over-year million X XX% compares updated from systems the our as acquisition to X% our to AffloVest XX, guidance systems prior XX% or $X revenue XXXX. revised range. our from results million range Note, range product, outlook to was be Flexitouch date total updated financial revenue report December $X.X Our XX, XXXX. approximately guidance quarter range million XXXX of of and contributions the in growth. and $XXX.X in to year-over-year. includes our prior part increased include our date sales not million, of the million XX% to to in to AffloVest September guidance $X.X guidance our to This September $XXX.X updated the assumes of of our August By second

modelling year, we our for margin low range. purposes, in For full the gross to the expect XX% be

million, $XXX,XXX stock and EBITDA Note, costs inventory $X.X of million, Our of of adjustments and approximately million, including defense price transaction of expenses $XX.X D&A based and of litigation to $X.X $X.X to of amortization approximately executive write including EBITDA X%. approximately and million, approximately range inventory of adjusted range offs interest X% margin to $XXX,XXX, finally, other $X expense be assumes expense this the of approximately adjusted approximately intangible in of million, non-cash, transition costs $XXX,XXX. expenses approximately approximately non-recurring related costs purchase compensation

XX our share that, closing diluted count approximately to for shares. the I'll weighted XXXX, expect fully average call in We be Dan? remarks. With back to million turn Dan, some

Dan Reuvers

Thanks, Brent.

for the the reflects during today XXXX. revised updated second a environment half So our broadly guidance outlook of speaking, operating

guidance composition smaller within Our also changes team, number through fourth our the quarter. commercial specialists product the the reflects specifically of of a updated

environment, of by and field be for operating commercial the outlook offset to AffloVest. for the the revised partially are team contributions expected the composition from Our our

progressive the recovery. more disruption we our detail. of Let Flexitouch our improvements COVID assumed for to sales persist driving related on pace experienced quarter throughout variant, quarter, had We the of the postponing impact Entre COVID me into respect headwinds expectations in primary that half our related revised in now more expect With share related a to to guidance in the Delta third the second headwinds the our guidance assumptions fourth and bit XXXX. prior for business of our

second are in to the variant coupled with the Delta the guidance. Flexitouch revision key our and headcount half of selling revenue impacts our The lower Entre contributors

with product we roughly direct expected XXXX reps, with approximately specialists. XXX in to split XX-XX Specifically, a sales of end favor

Given that the contemplated. quarter, our fewer XX for we the specialists product had product than have of guidance higher than expected XXXX during we third specialists attrition saw

past, $X As higher reps our average, with said a significantly per FSS. in supported and fully tenured when well an on sales the above we've contribute year million

of So team change. the support specialist Entre for this from impact expanded our the guidance productivity balance of offset is responsible the our revenue of attrition Flexitouch improved by partially and field

patients. recent seen our the fourth and attrition the the revenue for of related of contemplates obligations Entre the within guidance force low some executive end efforts mindful our internal potential quarter. We're vaccine and both Flexitouch from to access issues also additional Finally, our increased sales orders. We've during clinicians

of our we've an of and end, our order patients, year restore in executive employees. address access, customers customer ensure and safety by vaccination result, a full expectations attempt optimize to As obligations the conveyed

it reluctance some the have to the challenges. uncertainty address To all of this voiced these interest of short-term, get in employees believe introduces we some is vaccinated. stakeholders, in long-term our While as

We’re sales hiring clear, efforts, to To enhance success focused we that increasing retention and staff. on be and bolster investing value see half have the recruiting more believe of that been incrementally XXXX transitory our incentives, to long-term continue especially rep creation. the internal for better difficult second our territories we're headwinds affecting our for impactful, as our and business to but in positioned resources,

challenging commitment for other chronic of AffloVest and the of of the development and bronchiectasis, the solutions we in our and portfolio, treatment mission along to expanded lymphedema I'd our and about within per to and those improved treatment, the options call environment, effective and our and market conditions Operator, product with to as clinically and conditions I'm for prospects portfolio making with products, and patients’ Given patients lives. our excited support and pipeline, the community Tactile questions. to employees over advancing with initiatives, sharing enduring the opportunity term our our to awareness reveal their also addition positioning With we increasing of chronic which now a expands and robust call of difference we’ll with importance Medical of remain medical the patients’ thank a on consensus portfolio interest our addressable proven like mission. to forward our in open treat to XXXXs billion year. $XX US patients and for a today's our underserved product investors look expanding awareness lymphedema, a the longer our continue for home. appreciative prevalence

Operator

Adam question you. line the Thank with proceed. comes first Maeder from our Now Sandler. Piper Instructions] of Please [Operator

Drew Stafford

things taking could of Thanks an for in Adam. on guys. There's the business. us you the some is of but breakdown awful the maybe This help understand the here, packed questions. that to Hi, unpack just lot for Drew

when their think all the split messaged those being own there. contributing the far be And QX the meaningful the of of out of had whether customers, challenges at to that on sales attrition, How shortfall? you to existing reach had kind you the you deal, as did incremental issues as AffloVest be out headwinds, the then that access if seemed stuff? headwinds to vaccine guidance force each So to the I it your as

in business the So that had and us you help now changed in if just what, and anything between could then maybe improving? just understand confidence

Dan Reuvers

Sure.

me things then to breakdown change a bit Brent, and of the bit turn And a little a Let I'll to the some through of really with shot in guidance the addressing and and little as texture staffing. a that take commentary at more you walk side, specifics. two it was of But prepared offer alluded in headwinds, a contributed, over probably I'll just COVID bit he you sales the short, on can our both. on remarks

As QX. modelled We it COVID in saw we progressive continuing had improvements what the related and to in headwinds. expected

certainly we'd of QX were saw we conditions not conditions. underlying faced year, improving normal, the continued we some So a of the balance improved expecting the to recall, to but COVID. back of the headwinds time, At in throughout as see that improving result

continued saw was With the a it consequence affected. of that throughput, resurgence, we introduced. was combination Delta be it patient things three One to since has a which COVID of

cancellations and second staffing was reported patient were vacancies as to The increased, some well. us

lead of All underlying to the pressures those business. on

windows, or through we is the one survey saw resulted May things October. a of Foundation volumes through the May. was in was at membership respondents down of interesting of XX% was Congress within or the that XX% American Venous and AVF results the compared there that to the shared pre-COVID their that had still more that sidebars said And their was One of were

So was we when were seeing improvements. that

So fall have influence the I probably Delta that even suspect continuation would that. acceleration of the an demonstrated of or a

we COVID. with consequences saw the of some are those So

that On two university the larger find patients to affected especially places continued systems, cancer. Those we've access by one, issues, the staffing we are as where side, increasing some things see staff the sales going have X unvaccinated been has And quarter. the October that been as amount a restrictive. of of into the places fair have been fourth that still had we've our more typically

teams the year. expectation vaccine this a end introduced our we've of by So of

think but with grappling Some there's of that I a It's with population certainly are still I minority, is think, a segment that. that. our them reconciling of

talent, to in the limited. something candidates hiring my just some I quality in just Being seen I've we've and So the of the to never certainly you walk much the like that find have key kind to from marketplace general which contributors But And shared available, today. conditions the through our think to Brent. over number he able And are it that with probably change. those actually the good bridge more of me we've let guidance career. I are led can seen turn previous along of think that

Brent Moen

Hi, drew.

let me you give So guidance. of just bit on little a perspective

So that from just as our guidance to is acquisition X And the XXX.X includes revenue total XXX. a reminder, of XXXX million million to X.X AffloVest.

Our low organic million of and the XXX.X, revenue end. reduction to representing XXX.X range million a $XX on is $XX high end, on the

So change just of the the through drivers walk range. revenue of take time bit some let me the organic of you a to in little

let's with So end. the low start

the about a as our specialist an driven on in average, we product in at specialists. there, on guidance, his prepared first, $XX Dan math remarks, more annualized by does we're out million down prior commentary product So approximately done reduction XX basis. million $X detailed but a our versus little or had

So down results, guidance, approximately organic prior half that $X change that having sizable approximately end in on mentioned range, has versus the a half second million our $XX low guidance representing of one of been our the or that impact million earlier. certainly of XX the I'd product specialists

million QX. in in additional to That rep policies. approximately the to the for potential $X sales attrition fourth vaccs the $X.X accounted related mandatory for we've impact million quarter Second, represents

as and detailed remarks. in prepared the again, Third,

environments roughly We half Our the one headwinds third now prior XXXX. the progressive about improvements of guidance change end in expect approximately operating $X million. second guidance the of in the of that our in low assumed impacts organic had range, or continued

guidance the move you'll improving ends and environment from growth larger half to assumes the given in guidance result the second high a the headwinds, ’XX. range, midpoint that stronger COVID the our As prior you of impact of the note of our as reflects

So three drivers you a our gives hopefully, on primary impacting of bit little perspective guidance. modification to that the

Drew Stafford

are Yeah, really I And is the when people understand just very strip helpful. out strip out a it, think you Thank point shortage what to staffing you you. to COVID, on finer noise. struggling put

current COVID business think And those XX% still think the be long levels? environment, the that how until it can in given you to that back call can it to you Now, do your lymphedema core you XX% of range? grow will get state do

Dan Reuvers

is Yeah, I to subside be fair I clearly been but a think predict it's ability I COVID curt, think to when question. our mean tested. don't that will

easy not expect I'm one answer. that But be point, we certainly sure this that's continues that So to an this at to transitory.

I think contemplate the things. much by one you transitional be Both is in very circumstance staffing. when the of changes one guidance, COVID our kinds other by should these two of the and driven

I are immense certainly I pushed penetration said, the the that that we're now points it says anything. in think broader respiratory and the about market? When you it mind does your question, believe lymphedema That in and level of it very bit think the about into to the durable market underlying my participating ’XX. recovery gets small. out still say don't is a conditions, TAM on still the both space what

underlying that's market. nothing in there's changed the So

payer awareness pipeline development access. treatment, got see, the to underway relation that product market you improve importance opportunities the when think we're that's now perhaps couple richer, growing I that I company's think We've robust to with I us recognition of history. in continue time of for think, the continuing the right a any than to

those all of of for And development to in evidence enduring think an tailwinds, the us. the I speak market opportunity some

at point that in us the don't we're in, sit on disappointment we for but that year. this think a necessarily is where space So a admittedly, in the we referendum this

Operator

Thank you.

Our Please with next question Kaczor Margaret from proceed. Blair. William is

Margaret Kaczor

deeper, Hey, the prior good afternoon, you guys. based little Thanks comments that for taking the a questions. dive I'm on hoping in made. bit to

have there, start probably sales just to side, sort couple least an some short-term impact So for maybe repetition on the quarters. theoretically while of will a at of

year? at guess, it, point period point a pressure it's move as mid the finer digit double of ’XX, And growth to get normalized half is of beyond? or to you time underlying whether of business, let's So say does ’XX more recover kind for kind that we I the on plus does that the rate, before there throughout which put of a first on kind that

Brent Moen

has impact it’s end a also on believe Brent. down Hi, we be a certainly big back of sales Certainly, zone the the in of of that We Margaret. quarter as of third perspective can on at fourth quarter. impact being the the end bit And that be rates, XXXX. I for progress provide overall the have an by at XX, same QX but growth we third hopefully, in – XXXX, can our expected quarter. in should to sure end little we that. Yeah, through reps the our

So it'll first expectations sure effort exit between seats. to make of quarter, good our QX, we be with as product a is be we fairly end the fill talent in But can specialists. and we'll stead the that nonetheless, now back sizable appropriate our that find to the

Margaret Kaczor

be Okay, should had you'll beginning And that mentioned up? business, at of the about to for quarters does the of underlying growth? a take ramp couple I closer to of guess, think that return so folks And Or imply will can the to guess? from call? that when XXX it how that that we there you kind those I

Brent Moen

senior, they specialists, now most to level, the get and the specialist course of take finding we're the reps mean, take recall, to the product time past, ranks them the of from do associate to maturity outside recall, of I specialists, a because we've do come that you the although but maturity. some the of at are some to time product organization product senior made those Yeah, in degree commentary as over get they

quarter, degree so get mature And is. then the you’re and XXX that to the ready for time themselves levels looking can them to at we expected yeah, and the present end of same – a get rep back mature at first for of if you're

towards before the looking You're XXXX see of normal. middle to kind a of we return

Margaret Kaczor

Okay. And just that one – I’m sneaking question. more in

some case Yeah, Delta Sorry guys. the have improvements, But a as guys about underlying that the bit. maybe think restrictions have to we loosened. you hearing of and volumes about we're as kind that declined, others of from it spoke

we should think again, that worse we or Thanks. the as So we in seasonality are to about that quarter million ’XX, months? the you some get maybe like think might plus things second start you referenced come get And then assuming minus winter back, again, or maybe X as into about something?

Dan Reuvers

we're assume stable. continuing are that think probably I conditions to Yeah,

So exiting they don't deteriorate, but saw necessarily don't what we also QX. from improve

issue other access to reconcile trying that the the think I is we're issue.

continued health we all see seen both – institutions, that of have of doctors, vaccination and small, the requirements. number we've Most I So the that on we mean, to and we interact impose call therapists nurses facilities, with care alongside And to been today I started that a think well extend we them, those as expectation those that as They vaccinated. folks. interact that expectation with patients. are of reasonable large work have that's have as those

topic. of to and end we everyone access So that said expect our same to the a we be now on vaccination probably of until expectation side we year, bit the the that's we've Between teams. shared be the is other with get the are which uneven going our Ongoing vaccinated. when continue issues teams to

that and one handicap. another of try kind we're that's to doing our So best

Margaret Kaczor

thanks Okay, guys.

Brent Moen

Thanks Margaret.

Operator

from with question Ryan BTIG. proceed. next Please Our is Zimmerman

Ryan Zimmerman

right. and to line question Good on afternoon, of little All dig of if could, just the up bit I follow want in other some here. I a

average And that these it large vaccine performing just kind in $X I quarter, of be were that mean, So million level? I characterize longer the the seem that or Can third reps with the like I organization. how you does but many mandates reps high appreciate can no left of employers, a want understand to bolus. – for kind were productivity challenging over that

so did in in you sales. leadership changes And have some

vaccine beyond, some there guys of is so these that mandate there, And hamstringing of you dynamics? the say, is on kind some component

Dan Reuvers

the that Yeah, to that necessarily of leadership couple a I’ll far share I as able as but change, think case just be think things might that's – I don't helpful. be

a higher were historically, to of turnover those product to XXs. XXs low those blend. newer Year-to-date, First have tend all, specialists, reps, closer and product junior the the we on have overall rate. folks, Those seen associate turnover into specialist the teams, in a we're

there's seeing turnover to your rate a from productivity past. math a have I point. think hierarchy And of than higher the then So we in we're the piece, just

a rep reps, finally to the And continues newer go a So and rep down tenured hierarchy kind been to FSS, by FSS notching then to who’ve are to supported of you're territory. and over highest vacant newer without to person support with those clearly without tenured than an a the less year here then year, a reps producers. a an a

that So it's we is, they're consequence, clear. these recognize interact dependence, support, I when vacant territories have quite with vacant, pretty material productivity presence is The impaired. certainly think, on patients and

the we turnover speak been, number as incredibly turnover tenured it's didn't think product But been. companies, other this been I market. a that a us get competitive a has of at they in historically in hospital it's be I reps a sales, they we of I while who of seen for also an and a our some of executives where think We've good some have and either the require number producers seen medical, specialists somewhere But certainly to had. poachers. vaccination. that been higher has folks at they've sometimes function we And a can And they for just have like, look have a dynamic with unique few proved us the there And target in the when great others have or than end roles. that very challenge. departed get that not have to we gone not market, what destiny out of we as may the unvaccinated little as patient material a on fairly what one for just that's a there's But that us, we think of XX% in October decision, force bit believe, I conclude actually we're us, that also year, contemplating to it's that That's thing like about consequence our broaden there's and our to X. right number. especially customer Ryan, those not that remained havens, their be. significant been of facing pretty sales many not safe might are far as do. also And unvaccinated as like are believe range closer And also hiring remaining to I this a time, are why be sometimes

and group think that will hopeful that open. serve to continue remains we're still that that So variable, a there's But patients. to our come I conclusion

Ryan Zimmerman

looking rates forward going as levels the up. the to What pretty I rapidly, it hire to by follow we need have tick labor on to and have Margaret's will to start just P&L? I P&L just impact forward Brent, see think another to up mean, that going then just we mean, see up quarter. question. that down until obviously, we following about going to I the these And get on first is you're Okay. back

Brent Moen

fairly some will progress commissions direct quarter. as we rates you're the certainly, on the plan an of target There's into be predict variable side going sum, impact have think right, we and market compensation through of is it's I interesting on to as Ryan. are to But sales hiring. taking – Yeah, difficult pace of as our quarter to certainly an for and through. the certainly, rep hiring we're impact its end levels through good COVID sales product fourth of market, where specialist P&L. QX first labor we're it's Obviously, quarter. With of by It'll rep the progress that, on first feel I And and depend But then we progress but seeing. we're QX. what have XXX and dependent about into the where we mindful to the think at hit

is contribute in somewhere to about that to a around in X million million also is The the basis. a Ryan, you mind, million that full the pro XXXX. to on expected year forma basis, to XX thing other keep on have revenue expected be And AffloVest acquisition is X.X

better the core what expect And is. fourth think mentioned we the as AffloVest progress our businesses we that through quarter. than to his contributor a the business I So in the be nice profitability of quarter and Dan into call, first as even is

a margins, through AffloVest So a as will adjusted QX and as at for we rate EBITDA roughly well. QX about XX% beneficial we expect be progress certainly that

Ryan Zimmerman

And back being then for in the state growth in in queue. rate just Okay. talked rate. me, kind about But a maybe then one guys blended XX%, you mid-teens, normalized and another that I'll hop of growth

Flexitouch think Entre in expectations Flexitouch relative environment? are your for assets? about growing I you all just about a Afflo. can you between kind and now, the between normalized some your and the of to what higher other categories split As think product of grow Where talk that Can

Dan Reuvers

Flexitouch think high for capable I is asset While of growth a sure. being still

out, the difficult we call we're things it chant both faced most the directly in Flexitouch of environments that two impacted in that One the most QX seen, we've category. we as

certainly with us. Flexitouch be to other source that tends So affected in portfolio. more VA for the product flat VA than Flexitouch any a And the the business

the And for in up patients The us oncology lot our an is been where harder the got has we've getting force. of other access space, end especially Flexitouch well. typically a as oncology portion sales a place unvaccinated

impact So and why headwinds restored from universally, anything squarely kind that to we think both Flexitouch the than more improve, start benefits. we portfolio. access two that segments Flexitouch our COVID is saw of conditions believe That's as certainly I the else COVID in more hit still

Ryan Zimmerman

the taking hop in you I’ll queue. questions. Thank Okay. for back

Brent Moen

Thanks Ryan.

Operator

Thank you. proceed. [Operator Instructions] Please with from Our Oppenheimer. next is Suraj Kalia question

Suraj Kalia

hear and Dan you Brent. me afternoon, right? Can Good all

Dan Reuvers

through. Coming

Brent Moen

Suraj. Thanks

Suraj Kalia

being commentary the XX by a so on border. the of provided Perfect. Dan, down on impact specialist lot Hey product

has adopted Let slightly In would flavor. me as stance, issue a ask a Because compared tougher up. popping rates That in vaccination similarly the severe different haven't your same this the be question we med-tech universe? Tactile heard broader one to with terms the view, of thing.

at go is a bit The you staffing the a is in still quite QX partly And shortages? bronchiectasis, perspective. second intact diagnostics, company. reason right. just so I same that the there terms function dynamics need curious, in just on from guidance The are from AffloVest, The I'm of asked acquired time to for you the you implied pulmonary seems least seeing

the of walk kind seeing the on dynamics Just Flexitouch side you're side. organic through us AffloVest vis-à-vis

Dan Reuvers

Sure. questions. Yeah, good

I'll with back then come start the AffloVest and the policy, vaccination Suraj. Let me on

acquainted are calling prescriber. with those mind, that getting And keep once from removed business. still the this we're on all, of directly in First we're also

the squarely people that them all and in seat this this DME to with So over dedicated XX were joined continuing we XX support were XX up delighted and board. We and respiratory are IBC. is business. ended channel. They the a us to AffloVest on to All came bring from sales

the emergency CMS a couple has there's our products. where some less to I a impacted AffloVest as of attempt why a waiver been would be little to relaxed can respiratory of public is, relates a little bit one conditions it little than business. think there's One things, speculate a think the This health lymphedema more I bit I them.

think perhaps I is more a respiratory, other bit the has from benefited one COVID.

respiratory as we Some actually of of have benefited. consequences, severe consequences have the those know COVID of products some

of the the in as And direct on promotion active So well. those a we the some had no I It's more DME of that of variables. early channel. as acquired the that within respiratory partners still group supports are the few days I issue think said, we've staffing

So benefit kind across see I nebulizers, think that ways other more it oxygen products that we're well, co-market as going actively to the or that, of some to of continue to they're and et of fit finding cetera. the

and among lot I colleagues, think professional different of polls, friends, the can tell straw as I done stance, it vaccination relates to our industry, awful associations. we've an you, also old within

a bill order One along directly the VA. fall we're CMS, executive contractor. fit And that of We it the differences definitely the relates – believe definitely government – into also the companies of over for with category versus employees. we to XXX we're we as is us some

you it December X. I of said, X, were little to I I week on about or position changes, here. later, continue Fed had every back the fickle opinion is a At to we've what, the September based X. on it's suggested bit there's now gotten some vaccinated January our And feedback, a pushed ultimately, that we've difficult point the policy point, little think, federal a do relax by time decided some while out adapt it's know it the and ago, the to the they going to they think it. executive order bit let's my think, administration, to And be all for contractors contractors then that then came to a

and that staffs stand are let's take Let's year. actually interact more continue to and places in with And issue patient make which staffing vaccinated of get also, our with both from safely opportunity off the access the we caregivers grapple sure have to been the time the vaccinated that we end with to position well more table, have determine already. where as this as a let's by we the optimal the

I So lots must poll folks. one, same is very while Nobody the that's difficult you can of our admit, a stance. And way. this different polls

you on there's I health As different variety stance to land appeal it's to know, that But I'm of a sure company, a is a factions, think going impossible care to everyone. as think We as of aligns we think where it we also we a largely well be. And the kind it's landed government is with we've should think consistent healthcare federal what player. encouraging.

Suraj Kalia

curious us public that interim some the health depth commend to my of Dan, short-term Again, I I'm actually competitor Thank taking in to dots you for for especially the and you get extent offer on could preliminary I you in stance Hey, I compliance the thoughts do could results thoughts you and a the if taking on helped rates. connect your questions. space good and the the can, answer private appreciate gentlemen? quickly Any versus of love results. I’d

Dan Reuvers

actually Yeah, think fair the late. amount circuit Yeah, they've a device. you're got so is that's there social a to company in a compression gotten non-pneumatic of I private attention of referring – media here

However, zero. unless point is I'm reimbursement place. seen largely It's without revenue close to self-pay mistaken, the a that think I they've at this in product

get prescriber to their base, channel sales can't a patients. it either this if imagine prescribe wanting to difficult really it's So or for they actively a

the speaking where of got difference believe between a code They Flexitouch which large canyon. get which they a you're code, is is out policy K a can CMS, coverage and pneumatic of the the a fits. a temporary our actually, to and EOXXX category, appealed failed, I attempt an very in company be definition code. The to So

this And place. experimental local national payers no the that some have coverage commercial or investigation. there's labelled of recently, So in policy we'd heard already

were there others. perhaps programs, of Cross and Humana Blue a like some handful So

I'm target. establishing also path year a its new not a be a a while of think I'm and So probably also a there's just our demonstrated long I of to that think, we'll payer I product a the for a the of folks will code our I But development a here roadmap two. to there. worth road that course think that And tough is too that there's roadmap are convinced re-grounding it's of bit things – ahead And coverage static. bit next some over we the moving introducing or policy forward category, have looking new

Suraj Kalia

Thank you.

Operator

you. Thank

does time. today. no conclude questions Thank our remaining for currently your seeing participation. this That you are conference for We at

Brent Moen

you. Thank

Dan Reuvers

Thank you, operator.

Tactile Systems Technology (TCMD) 9 Nov 212021 Q3 Earnings call transcript