Tactile Systems Stock Tumbles As Q1 Earnings Fall Short Of Expectations

Tactile Systems Technology, Inc. TCMD traded lower on Tuesday after the company’s Q1 earnings missed Wall Street expectations on Monday.

The medical technology company reported adjusted loss per share of 13 cents, down from a loss of 9 cents a year ago, missing the consensus of 7 cents.

Total revenue in the first quarter of 2025 increased 0.3% to $61.27 million, missing the consensus of $63.28 million.

The increase was attributable to a 22% increase in sales of the airway clearance product line, offset by a decrease of $1.8 million, or 3%, in sales and rentals of the lymphedema product line.

Gross profit increased 4% to $45.3 million. Gross margin was 74% of revenue, compared to 71% in the first quarter of 2024. The increase in gross profit was primarily attributable to lower manufacturing and warranty costs.

Adjusted EBITDA loss was $0.3 million in the first quarter of 2025, compared to positive Adjusted EBITDA of $1.0 million in the first quarter of 2024.

“Through the first quarter our team executed on several highly strategic, growth-oriented priorities. We launched Nimbl for lower extremity lymphedema, completed efforts to optimize our sales organization for scale and efficiency, and implemented a new CRM tool,” said Sheri Dodd, CEO of Tactile Medical.

“While these efforts have had a temporary impact on sales force productivity, we are thrilled with the progress made and firmly believe these transformational actions are essential to positioning Tactile for consistent, long-term growth. Our underlying business fundamentals remain firmly in place, and we are meaningfully advancing each of our three 2025 strategic priorities to remain the competitive market share leader in medical device lymphatic therapy,” Dodd added.

Guidance: Tactile Systems lowered its fiscal 2025 sales guidance from $316 million-$322 million to $309 million-$315 million versus consensus of $317.91 million.

The company now also expects a full-year 2025 adjusted EBITDA of $32 million to $34 million, compared to an adjusted EBITDA of $37.1 million in 2024. The company’s prior 2025 guidance expectation was adjusted EBITDA in the range of $35 million to $37 million.

William Blair analyst Margaret Kaczor Andrew writes, “Despite the larger headwind seen in the quarter, management is already starting to see the metrics turn more positive, having nearly recovered to end-of-year headcount levels, recording positive April metrics, and seeing growth in referrals despite a decrease in feet on the street…Though the company has had a series of headwinds that offset its tailwinds over the last year, and as such it may take some time for investors to regain confidence in the outlook, we see a number of catalysts that should turn positive in the coming quarters and drive traction in shares.”

“Despite the weakness this quarter, we continue to believe that the investments made throughout the year should position Tactile favorably over the medium to long-term,” Kaczor Andrew adds.

William Blair maintains the Outperform rating.

Piper Sandler downgraded Tactile Systems from Overweight to Neutral, lowering the price target from $25 to $14.

Price Action: TCMD stock was down 28.9% to $9.90 on Tuesday.

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