Tactile Systems Technology, Inc. (NASDAQ:TCMD) Q4 2019 Earnings Conference Call - Final Transcript
Feb 26, 2020 • 05:00 pm ET
Thank you. [Operator Instructions] And our first question comes from Margaret Kaczor with William Blair. Please state your question.
Hey, good afternoon guys. Thanks for taking the question. So maybe the first one from me is on guidance. So if we exclude some of the ASC 842 impacts, it looks like that's coming in the mid 20% range, which frankly is stronger than you guys have typically guided to at this point in the year. So I understand the sales or productivity improvements and so on that could drive that growth. But is that the main delta or is there something else you're seeing in the field that gives you greater confidence?
Gerald R. Mattys
Hey, Margaret. Thanks for the question. We certainly like and believe that increasing the headcount in the field is a key driver of growth in 2020. I would say the productivity that we're seeing by both leveraging the in-house team to process those Entre and Medicare orders to free up product specialists' time is working very, very well and this targeting strategy, which we've been talking about now for a couple of years is really starting to pay off and you can see that in the data that I shared a little earlier. So I think our success in penetrating these important accounts where we've gone from nearly half penetrated at the beginning of 2019 to now more than 60% penetrated at the end of the year speaks well to why we are bullish about 2020 guidance.
Okay. So that's helpful and then that brings me kind of to the follow-up question, which has to do with kind of the high-diagnosing clinicians as well as the updates on tam, both of which were very good. So first part of the question is on the high-diagnosing accounts. The market growth is already high teens. FIES accounts are growing faster than that, which means that you guys get to benefit from that dynamic. But in terms of the growth drivers, how do we think about that -- helping that rep productivity and profitability for you guys and then kind of the side question on tam. Is that CVI-related lymphedema trial at 16 million patients is quite large. So what are the next moves that you guys need to make strategically to see a more material impact in numbers from that. Thanks.
Gerald R. Mattys
Great. Thanks. Good couple of questions. On the first one, the new data. When we are able to convert one of these high-diagnosing clinicians to begin prescribing our Flexitouch system, they tend to order twice the amount of product as our average account. So this has been a very fruitful way to focus the sales team and get them to utilize -- better utilize the time that they have. So the new data suggest growth in the number of patients diagnosed, the number of high-diagnosing clinicians, the number of clinics and most importantly, the number that we've penetrated. So I think those are all very positive elements going into 2020.