Tactile Systems Technology, Inc. (NASDAQ:TCMD) Q3 2023 Earnings Call Transcript

Operator: And the next question comes from the line of Margaret Kaczor with William Blair. Please proceed with your question.

Margaret Kaczor: Hey, good afternoon. Thanks for taking the question. I wanted to start on the increased sales rep productivity which obviously was quite impressive. You had referenced that there’s still going to be some improvement from here, I don’t know, I watch baseball. So is this like the third inning of that process? Is it the eighth inning, close to the end of the game or not? And then as we think about that and other efforts, not only over the next six months or 12 months, but as we look out towards that 2025 EBITDA margin target, what other efforts can you guys put in to kind of drive that margin expansion?

Daniel Reuvers: Yeah, I think we could probably use a good middle reliever if you know one. That might be a reasonable interval probably for us. As we said that, there’s lots, I mean, tens of thousands of in-home patient demos we hosted in the last 12 months. So being able to start liberating more of those from the reps so they can optimize their time in clinic, I think it’s clearly having an impact. We are not doing the majority of them with our trainers yet, but clearly they’re making a big impact. I think the opportunity for us to continue with that progression will take us through 2024. We’re trying to be careful about it, but I think it’ll continue to play itself out over 2024. And then I think by the time we get to 2025, we should certainly be in a position where we’ve kind of shifted some of those tasks to the extent that they still have to exist.

That all depends on payer policy, of course. And I think that the other piece, Margaret, that we still think there’s opportunities for us, certainly as we get to 2025, is the impact of some ongoing investment in tech. We have a handful of things that we’re working on to examine how we can deploy technology to make the processing of orders more efficient. And that includes trying to introduce and find ways to bring easier ways for us to work with our prescribers, as well as an easier process for our internal team, and maybe just as importantly, those folks caught in the middle, which is the sales team. So if we can make some of those advances in 2024, I think they should be able to demonstrate some contribution. And I think those are the kinds of things that give us good enthusiasm, I think, for the next couple of years.

Margaret Kaczor: Okay. That’s helpful. And then, I’ve got to hit on AffloVest a little bit. And I think part of the question is, what’s your comfort level at this point? Because we’ve maybe been surprised a couple of quarters in a row now to the downside. Are you trying to take another even more conservative stab at Q4 or should we just kind of continue to assume some sequential weakness I guess until we get into May and then hopefully things start to pick up on a sequential or year-over-year basis, however you want to look at it. Thanks.

Margaret Kaczor: Yes, now, Margaret, we did reduce the guidance for AffloVest, and it really was taking into consideration what we saw in Q3 and what we’re anticipating for Q4. Q3 was our first full quarter really being able to fully see the impact with the large EME partner. We’ve got more line of sight to what we think for the remainder of the year. And really our expectation is that Q4 is going to look quite similar to Q3, maybe a little bit better, but in that same range. And that’s what we reflected in the latest guidance.

Margaret Kaczor: Okay, thank you.

Operator: [Operator Instructions] And the next question comes from the line of Suraj Kalia with Oppenheimer & Company. Please proceed with your question.

Suraj Kalia: Good afternoon, Dan, Elaine. Can you hear me all right?

Elaine Birkemeyer: We can. Perfect.

Suraj Kalia: So Dan, I want to ask a very high-level question. Since the time you have come on board, Dan, how would you characterize the time to patient acquisition within these three buckets? And as we stand today, what are the main structural factors you think are changing somewhat positively or somewhat negatively?

Daniel Reuvers: I’m not sure I understand the question, Siraj. When you say time to acquisition, can you be more specific?