Tactile Medical’s Spending Outpaces Sales: Rapid Earnings Reaction

Tactile Systems Technology (TCMD -0.74%) grew third-quarter revenue 7% to $91.9 million, but net income fell to $7.2 million from $8.2 million. Shares dropped about 8% in after-hours trading. Its core lymphedema business is still growing at a double-digit pace. The problem is that spending is growing just as fast, so those sales gains aren’t reaching profit.

Key Numbers

• Lymphedema revenue: $81.8 million, up 13% year over year.
• Airway clearance revenue: $10.0 million, down 25%.
• Gross margin: 77%, up from 76%.
• Operating expenses: $60.9 million, up 13%.

What It Means

The airway clearance slump looks like a timing issue. Tactile launched a new version of its AffloVest vest in the second quarter, and the release blames the drop on medical equipment suppliers working through inventory during the switch. When dealers run down old stock before ordering a new model, sales dip even if patient demand holds. The release doesn’t say when orders will normalize.

TCMD – Tactile Systems Technology

$22.87-$0.17 (-0.74%)

NASDAQ · As of 4:00 PM ET 11/02/26

Spending is the bigger issue. Gross margin improved on lower manufacturing costs and better product mix, yet operating income fell to $9.6 million from $11.0 million. Sales and marketing, plus the reimbursement and administrative line, both grew faster than revenue. Tactile is hiring and spending ahead of growth, which only pays off if sales speed up.

Management held its 2026 revenue outlook and nudged up its adjusted EBITDA forecast. But the new range, after nine months of results, implies fourth-quarter adjusted EBITDA about 2% to 10% below last year’s. The raise reflects a strong first half, not a better finish.

What to Watch Next

Watch whether airway clearance revenue rebounds in the fourth quarter as suppliers stock the new AffloVest. Then check whether expense growth slows to match sales.

David Kretzmann has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tactile Systems Technology. The Motley Fool has a disclosure policy.

Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.