Shares of Tactile Systems Technology (NASDAQ: TCMD) fell as much as 18.5% early Tuesday, then settled to close down 3.2% after the medical technology company announced mixed quarterly results and light forward guidance.
Tactile Medical's record profits just weren't enough
Tactile Medical's fourth-quarter 2023 revenue grew 5% year over year to $77.7 million, translating to adjusted (non-GAAP) net income of $8.9 million, or $0.37 per share. Analysts, on average, were expecting lower earnings of $0.22 per share, but on lightly higher revenue of $78.4 million.
Within Tactile Medical's top line, growth was led by a 5.6% increase in sales and rentals of the company's lymphedema therapies, as well as a slight increase in sales of its airway clearance products.
Tactile Medical CEO Dan Reuvers noted the company delivered record profitability in 2023 while improving its balance sheet. The company retired $16.8 million from its revolving line of credit and completed a final $5.6 million earnout payment in the fourth quarter related to its previous acquisition of respiratory therapy company AffloVest.
What's next for Tactile Systems Technology shareholders?
For the full year 2024, Tactile Medical provided guidance for revenue to be in the range of $300 million to $305 million, up around 10% from 2023 at the midpoint. By comparison, most Wall Street analysts were modeling higher 2024 revenue of $309 million.
In the end, Tactile has done well to manage the aspects of its business within its control, particularly as it pertains to delivering operating leverage as it scales within its niche for treating patients with underserved chronic conditions. While it was no surprise to see shares pulling back hard this morning on its light revenue outlook, the market seems to be willing to accept that top-line shortfall given the company's relative earnings outperformance.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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