Tactile Systems Technology (NASDAQ:TCMD) reported first-quarter 2026 revenue of $75.3 million, up 23% year-over-year, as management pointed to “focused execution” on strategic priorities, continued commercial momentum, and operational changes made ahead of Medicare’s new prior authorization requirement for pneumatic compression devices (PCDs).
First-quarter results and updated revenue outlook
Chief Executive Officer Sheri Dodd said the company’s first-quarter performance reflected strength across both business lines and “meaningful margin expansion.” Lymphedema revenue rose 23% to $62.2 million, while airway clearance revenue increased 22% to $13.0 million. Dodd noted the quarter included a “minimal contribution” from the company’s recent acquisition of LymphaTech.
Lymphedema: NCD tailwinds and Medicare prior authorization transition
Dodd said lymphedema growth was supported by both Nimbl and Flexitouch, with Flexitouch growing faster. She attributed that mix shift largely to the company’s October 2025 decision to align advanced pump documentation criteria with the Medicare National Coverage Determination (NCD), after gaining confidence that Medicare Administrative Contractor (MAC) administration of the NCD had stabilized.
Dodd called the NCD a more “direct and clinically aligned pathway” for patients who require advanced pump therapy compared with the prior Local Coverage Determination policy, and she said the NCD also allows advanced pump coverage for head and neck lymphedema. She added the company is seeing “increasing clinical adoption” of Flexitouch for head and neck patients who have limited device options.
The company highlighted strength in Medicare, with Dodd stating sales in the Medicare channel grew 40% year-over-year. She said Medicare performance also reflected “some order acceleration” ahead of the April 13 effective date for Medicare fee-for-service prior authorization requirements for PCDs. However, she emphasized underlying demand remains healthy and expects ordering patterns to normalize as the new process settles.
In the Q&A, Dodd pushed back on framing the dynamic as a pull-forward of revenue into the first quarter. She said the company added resources to help ensure some in-process orders cleared before the April 13 change “for the patient benefit,” describing it as an acceleration rather than “stealing orders” from the second quarter.
Dodd said the company accelerated the launch of a prior authorization module in its AI portfolio—originally planned for 2027—so it would be ready by the April 13 go-live date. She said the company validated technology, trained and staffed teams, and deployed the process on schedule. Three weeks into the requirement, Dodd said the company is seeing some variability across MACs in approval and denial behavior, which she described as administrative rather than structural.
CFO Elaine Birkemeyer added that while the company still expects second-quarter revenue to increase sequentially as it historically has, the cadence may differ this year because of the new prior authorization process. She said the company expects “a little bit of a lighter step up in Q2” and “probably a bigger step up in Q3 as it starts to normalize,” while expecting the two quarters together to be similar to prior patterns.
Airway clearance: AfloVest growth and next-generation product clearance
Airway clearance sales grew 22% in the quarter, driven by AfloVest. Dodd said the company’s relationships with top respiratory durable medical equipment (DME) partners remain strong, and she sees opportunities to deepen engagement within the top 10 DME partners given their scale and national footprints. She also highlighted the company’s focus on provider and DME staff education, product quality, and account manager continuity.
Dodd also announced the company received FDA 510(k) clearance for its next-generation AffloVest product. She said improvements include further weight reduction, new digital connectivity, and improved size adjustability for a more customized fit, while maintaining the indication for use “across the full patient age spectrum.” The company expects to launch the product this year to support the 2026–2027 winter respiratory season.
Asked whether the new product is expected to lift guidance, Dodd said reimbursement is “exactly the same” for the current generation and next-generation product, and the company’s guidance already assumes airway clearance will grow slightly faster than lymphedema.
Dodd also addressed a question about pharmaceuticals for bronchiectasis, saying their introduction is helping awareness for the category. She described bronchiectasis as involving inflammation, mucus, and infection, and said pharmaceuticals address inflammation but do not replace the need to clear airways. She said clinicians view drug therapy as potentially “alongside” airway clearance, rather than “one versus the other.”
LymphaTech acquisition: integration progress and grant-related revenue
Dodd described the acquisition of LymphaTech as a milestone in the company’s effort to evolve from a product company into “an integrated solutions leader for lymphatic dysfunction,” emphasizing the need for accurate, timely, and objective diagnosis. She said LymphaTech’s FDA-cleared 3D measurement and monitoring platform addresses limitations of traditional manual measurement methods.
Dodd said integration is progressing as planned since the February close, with the co-founders and team contributing to commercialization strategy and identifying integration points across diagnostic and therapy roadmaps.
She also highlighted LymphaTech’s selection as a funding recipient under the Advanced Research Projects Agency for Health (ARPA-H) GUIDE program, part of ARPA-H’s LIGHT and GUIDE initiatives. Dodd said the programs commit “more than $290 million across all awardees over 5 years,” with LymphaTech among seven GUIDE recipients. She said LymphaTech’s research focus includes a responsive garment using bioimpedance feedback to deliver adaptive compression with Bluetooth-enabled remote monitoring.
In response to an analyst question about near-term contribution, Dodd said the ARPA-H grants “come through as revenue,” and that is why LymphaTech is now included in guidance. She said the company’s larger strategic excitement about LymphaTech is longer-term, including expanded R&D capabilities, while timelines for future R&D portfolio outcomes were not provided. She added that diagnostic expansion will require additional FDA approvals and work toward CPT codes for payment, which “is going to take a little bit of time.”
Margins, expenses, and 2026 profitability expectations
Birkemeyer said gross margin increased to 76.5% from 74.0% a year earlier, driven by lower manufacturing costs, stronger collections, and favorable product and payer mix. She characterized the improvements as “structural enhancements in the business rather than temporary cost actions.”
Operating expenses rose 19% to $59.1 million, reflecting increases across sales and marketing, research and development, and reimbursement, general and administrative costs. Birkemeyer said the company is annualizing 2025 investments while continuing to invest in IT infrastructure and automation, and she noted the operating loss narrowed to $1.5 million.
Adjusted EBITDA was $3.7 million, compared with an adjusted EBITDA loss of $0.3 million in the prior-year quarter, with adjusted EBITDA margin expanding to 4.9% from -0.4%. The company ended the quarter with $75 million in cash and cash equivalents and no outstanding borrowings, down from $83.4 million at year-end 2025, which Birkemeyer attributed primarily to the LymphaTech acquisition, share repurchases, and seasonal items such as bonus payments.
For 2026, Birkemeyer reiterated the company expects adjusted EBITDA of approximately $49 million to $51 million. She said the company expects GAAP gross margin of 76% to 77% and GAAP operating expense growth of 10% to 12%, with the increase versus prior outlook reflecting one-time acquisition and legal-related costs. She also noted that the revenue lift from LymphaTech includes grant-related work that is “service-based” and on the “lower margin side,” which helped explain why adjusted EBITDA guidance was not raised along with revenue guidance.
About Tactile Systems Technology (NASDAQ:TCMD)
Tactile Systems Technology, Inc, headquartered in Plymouth, Minnesota, is a medical device company specializing in the design, manufacture and marketing of home-use pneumatic compression therapy systems for the treatment of lymphedema and other chronic edema-related conditions. Using proprietary software and patented pump technologies, the company’s platforms are designed to improve patient outcomes through sequential pressure treatment that promotes fluid mobilization and enhanced lymphatic function.
At the core of Tactile Systems’ product portfolio is the Flexitouch® system, a programmable pneumatic pump and garment system approved for home use, and the Aria® device, which features an intuitive touchscreen interface and advanced garment design.
