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| Statement |
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| While sales to this one large DME will likely remain paced by the impact of the PHE waiver expiration until its anniversary in May of 2024, we continue to expect strong, sustained growth longer term as we expand penetration of the large underserved bronchiectasis patient population |
| The improvement in operating income was driven by a $3.9 million or 7.5% increase in our gross profit, as well as the aforementioned $40,000 decrease in our operating expenses |
| We were pleased to demonstrate revenue growth in both lymphedema and airway clearance products, post record quarterly profit, and further strengthen our balance sheet by continuing to generate solid cash flow from operations and retiring our line of credit entirely |
| With increasing sales productivity, an enhanced portfolio of products and solutions, and strong customer relationships, we look forward to building on our success from 2023 |
| We were also pleased to see better than expected sales of our airway clearance products, which totaled $8.2 million in the fourth quarter, representing 16% on a quarter-over-quarter basis and 1% growth compared to prior year period, despite transient headwinds |
| We complemented our revenue performance with notable improvements in profitability, which exceeded our expectations for the fourth quarter |
| GAAP net income increased 77% year-over-year and adjusted EBITDA grew 27% year-over-year |
| Our performance in the fourth quarter reflects our enduring commitment to enhancing our profitability profile |
| We also generated $18.4 million of cash flow from operations driven by our strong net income results and continued improvements in working capital |
| All in all, we were pleased to close out 2023 with solid financial performance in the fourth quarter while further strengthening our balance sheet |
| Turning to a more detailed discussion of the drivers of our fourth quarter sales performance, the growth in our lymphedema product line was driven by the enhanced productivity of our field sales team, which continued to benefit from our initiatives to improve their operational efficiency and enhance our product offering |
| Together, these improvements enabled us to generate growth of 16% on a sequential quarterly basis and return to growth on a year-over-year basis as well |
| We’re excited by the success of this initiative and we believe there’s an opportunity to make further progress on this front in 2024 as well |
| During the fourth quarter, we continued to see a favorable response to our new products |
| We were also pleased to see continued growth in sales to our other DME customers |
| The increase in non-GAAP gross margin was attributable to lower freight and manufacturing costs as well as improved product pricing |
| We made great strides last year - you know, close to $33 million of free cash flow improvement |
| Having been able to deliver double-digit growth on a relatively flat headcount last year, I think demonstrated the productivity gains were real, but knowing that still only roughly a third of those in-home demos have been taken off the plate of the sales force, that means that there’s more opportunity |
| I’m proud of our accomplishments across each of these areas, made possible by the efforts of our entire team at Tactile Medical which will leave us incrementally better positioned to drive profitable growth and strong cash generation going forward |
| From a cash flow perspective, our strong net income results combined with material improvements in our working capital performance enabled us to generate nearly $36 million of cash flow from operations |
| In the months following our launch, we’re seeing strong sales to patients with breast cancer-related lymphedema and we look forward to continuing to enhance our focus on this portion of our addressable patient population as well |
| We generated record profitability for the year with $28.5 million of GAAP net income while improving our adjusted EBITDA margins by 340 basis points to 10.8% |
| In particular, Entre Plus, our next-generation entre system has had a stronger than expected showing since its launch in March, and we continued to see impressive adoption of the system during the fourth quarter |
| This enabled us to deliver significant sales and marketing leverage with just 1% growth in this expense line versus 2022 |
| Through our efforts to driver operational efficiency by improving the productivity of our sales force, we delivered revenue growth of 14% in our lymphedema product line for the full fiscal year, our first year of double-digit growth in this product line since 2019 |
| I think that while we expect this might be a little bit less than that in 2024, there are some things that we think are going to be really well positioned as we enter 2025 |
| As we look forward, we still have more debt that we have to continue to service, and we are making investments in technology and headcount that Dan alluded to, but clearly the stronger balance sheet position that we are proud to now have does offer us some good optionality as we think about continuing to grow the business in the future |
| Our medical affairs team made strong progress throughout 2023 |
| We also plan to contribute to ongoing gains in sales rep productivity by expanding in-home demo support among our patient trainers |
| Simply stated, our team achieved considerable progress this past year across multiple areas, strengthening our market leadership position, executing on our commercial strategy, and delivering strong financial performance including double-digit revenue growth and 62% growth in adjusted EBITDA this year |
| Statement |
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| As we’ve commented previously, the large affected DME customer experienced slower placements following the expiration of COVID-19 public health emergency, or PHE waiver in May of 2023 |
| It’s a little bit of an inverted scenario from last year, where we had the easiest comps at the beginning of the year and they progressively got more difficult |
| I think the last one is it is the quarter where we’re going to have the toughest comp |
| I think as we thought about, Izzy, in the first quarter, we know Afflo is going to be a bit of a headwind, as we’d called out earlier, so that’s one we have to offset for |
| They’d taken advantage of the relaxed eligibility requirements under the PHE waiver, and the return to traditional pre-COVID eligibility requirements has continued to slow their volumes |
| Head and neck, as you alluded to, that one’s certainly going to be a more contributor once the results are complete this year, into next year; and I think the other one is we’ve clearly stated that AffloVest is going to have a headwind in the first half of this year, and we’ll have a more normalized expectation for next year |
| This seems like it’s maybe a little bit worse, and I guess I’m asking because Q4 obviously was also a little bit lighter relative to typical seasonal patterns for Q4 |
| Then I think if you look at it from a historical standpoint, it’s a step down sequentially of somewhere in the mid-20% from Q4, which is pretty typical if you looked over the last three or four years |
| Yes, I think our current guidance suggests a decline in Q1 of about 25% to 27%, so if you take a look back, it’s fairly similar - I went back to 2020 and it’s in line with what we’ve seen over the past several years |
| This year, we still have opportunity to do so, but it will be muted by continued investment |
| We had somewhat modest lymphedema guidance in the first quarter, in part because we probably don’t benefit quite as much from the demo assignments in the first quarter |
| I think as we think about Q1 and what Dan mentioned, again it will be our hardest comp |
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