Tactile Systems Pre-Releases 1Q; Pulls FY20 Guidance on Covid-19

Specifically, TCMD pre-released first quarter revenue of $43–44 million, up 14–17% year-over-year, vs the consensus $44 million estimate. This includes Flexitouch system revenue in the range of $38 million to $39 million, representing growth of approximately 11% to 14% year-over-year.

“Beginning in March, our revenue growth was impacted by the COVID-19 pandemic, which disrupted our ability to access our clinician customers and their patients. Specifically, we saw healthcare facilities and clinics restricting access to their clinicians, reducing patient consultations and treatments, or closing temporarily due to COVID-19” commented CEO Gerald Mattys.

He continued: “As a direct result, we have changed many of our processes and practices… [so that we can] safely make our at-home therapies available for patients.”

Mattys expects COVID-19 will continue to impact near-term financial but concludes “we remain confident in our long-term opportunity related to the $5+ billion U.S. lymphedema market and plan to continue expanding our commercial organization this year to further enhance our growth profile.”

Overall, analysts are retaining a bullish position on the stock, with a Strong Buy consensus. In the last three months TCMD has received three buy ratings vs 1 hold rating, while the average analyst price target works out at $73 (88% upside potential). (See Tactile System’s stock analysis on TipRanks)

However lone bear Suraj Kalia of Oppenheimer is highly critical of the stock, telling investors on April 6: “Ultimately, our view on Tactile remains, 1) Poor science: 2) No rigorous trials done; 3) Aggressive marketing driving the message; 4) Growth expectations unrealistic.”

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