Tactile Systems Technology, Inc. (NASDAQ:TCMD) Q3 2018 Earnings Conference Call Transcript

Nov 05, 2018 • 05:00 pm ET

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Tactile Systems Technology, Inc. (NASDAQ:TCMD) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good afternoon, ladies and gentlemen, and welcome to the Third Quarter 2018 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 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.

(Forward-Looking Cautionary Statements)

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

I would now like to turn the call over to Mr. Jerry Mattys, Tactile Medical's CFO (ph). Please go ahead, sir.

Executive
Jerry Mattys

Thanks, operator. Good afternoon, and welcome to our third quarter 2018 earnings call. I'm joined on the call today by our CFO, Brent Moen.

Let's begin with a quick overview of the topics we intend to discuss on today's call. First, I'll start by reviewing some of the key highlights of our financial performance during the first nine months and third quarter of 2018 with a brief discussion of the primary drivers of our revenue performance in each period. I'll also update you on a few operating highlights from the quarter, including the commercialization of our new products, Flexitouch Plus and Flexitouch Head and Neck, a new contract with the VA and the license agreement with Sun Scientific that we announced in October. Following that discussion, Brent will walk through our financial results in greater detail and review our financial guidance for 2018, which we updated in our earnings press release this afternoon. I'll conclude today's prepared remarks by providing a few thoughts on our outlook for the balance of 2018 before we open the call for questions.

We achieved an impressive sales performance over the first nine months of 2018, generating revenue of $97.3 million, representing 31% growth year-over-year. Sales of our Flexitouch Systems continue to be the primary driver of our growth, increasing 31% year-over-year to $89.2 million. We also saw positive contributions from sales of our Entre and Actitouch Systems, which increased 25% year-over-year to $8.1 million.

Our growth over the first nine months of 2018 continued to benefit from the impact of three primary drivers of growth that we have outlined in previous earnings calls this year. These growth drivers include the significant expansion of our field sales team, which now includes over 185 sales representatives, more than double the size since the end of 2015. Second, our strategy to maximize the productivity of our sales organization by focusing our reps on the most productive accounts.

Third, the increased in-network coverage with commercial insurers that we have achieved in recent years, which further enhances the productivity of our sales team by lowering out-of-pocket