Please standby. Welcome, ladies and gentlemen, to the Fourth Quarter and Fiscal Year 2024 Earnings Conference Call for Tactile Medical. At this time, all participants have been placed in a listen-only mode. At the end of the company's prepared remarks, we will conduct a question-and-answer session. Please note that this conference call is being recorded and will be available on the company's website for replay shortly. I would now like to turn the call over to Sam Bentzinger, Investor Relations at Gilmartin Group for a few introductory comments. Please go ahead.

Good afternoon, and thank you for joining the call today. With me from Tactile's management team are Sheri Dodd, Chief Executive Officer; and Elaine Birkemeyer, Chief Financial Officer. Before we begin, I'd like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties. These could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of our annual report on Form 10-K, as well as our most recent 10-Q filing as filed with the Securities and Exchange Commission. Such factors may be updated from time to time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events, or otherwise. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investor Relations portion of our website. With that, I'll now turn the call over to Sheri.

Thanks, Sam. Good afternoon, everyone, and welcome to our fourth quarter and full year 2024 earnings call. Here with me is Elaine Birkemeyer, our Chief Financial Officer. We are pleased to report strong Q4 performance today, capping off a dynamic year for Tactile where we delivered total revenue of $293 million, representing a 6.8% growth year-over-year. In Q4, total revenue grew 10.2% year-over-year to $85.6 million. With respect to our Lymphedema business line, sales grew 11% year-over-year in the quarter, and we were up 18.1% on a sequential basis. Q4 Lymphedema results reflect strong commercial execution encompassing technology and workflow-related investments including growing adoption of our e-prescribing offering, the accelerated implementation of select tools from our new CRM, and reallocation of select back-office resources to support the increased field burden of non-selling administrative activities. We also continue to see the benefits of our 2024 Channel Diversification strategy, with double-digit growth in the VA, Commercial, and Medicare. Further, we launched Nimbl, our next-generation basic Lymphedema PCD offering in early October, and we are pleased with how both clinicians and patients embrace the new platform for upper extremity symptoms. Our confidence continues to grow with the recent expansion of Nimbl for lower extremity symptoms as well. In Airway Clearance, sales of AffloVest were up 3.8% year-over-year and 8.8% sequentially. We continue to see value in our AffloVest product as a proven patient-friendly and differentiated therapy offering that is clinically advantageous in the growing bronchiectasis market. Coupled with an Airway Clearance sales organization that is highly tenured with deep product and disease knowledge, we believe we are well positioned to compete in this space as the number two market share leader. We are focused on fortifying relationships with each of our top DME partners and penetrating further within these accounts to bring AffloVest to the five million diagnosed and undiagnosed bronchiectasis patients in the US. Beyond double-digit topline growth, our Q4 gross margins increased 310 basis points year-over-year. Adjusted EBITDA grew 5.5% year-over-year reflecting another consecutive quarter of year-over-year improvement. Cash and cash equivalents increased sequentially by $12.2 million, increasing our cash balance by $94.4 million to close out the year. Notably, we achieved these results while also navigating, responding, and adapting quickly to an evolving Medicare policy environment. The changes in the payer landscape that began in Q1 of 2024 proved to be a year-long headwind, but we remain focused throughout the year on what we could control, including execution of our Nimbl launch, completing our head and neck study enrollment and follow-up, publishing positive evidence, differentiating Flexitouch clinical quality-of-life and compliance outcomes versus standard-of-care, and delivering on our tech modernization agenda. At the end of the year, we're proud to have served over 79,000 patients. Taken wholly, our financial and commercial execution in 2024 leaves us confident and well positioned to further strengthen our market leadership in 2025 and over the long-term while delivering sustainable profitable growth. As we look ahead, we anticipate full year 2025 revenue to be in the range of $316 million to $322 million, representing year-over-year revenue growth between 8% and 10% on a full-year basis. To achieve this, we have further benefited from the investments we made in 2024 focused on fortifying our business operations for scale and simplifying the patient, provider, clinician, and employee experience. We have also finalized our Lymphedema strategy for growth and have organized our work and teams around three strategic initiatives aimed at improving market access, driving further product innovation, and supporting patients during their entire care pathway. Let's discuss these priorities in more detail. At a high level, my experience as CEO over the past seven months has reinforced my conviction in our business fundamentals, compelling market opportunity, and ability to further transform the care journey for the millions of patients suffering from a chronic progressive disease like Lymphedema. I've learned a lot during this time about the patient profile including how patients initially come into the care pathway, how they are identified for our therapy, and what their experiences are after they receive one of our Lymphedema solutions. I have also learned more about the business, how we compete, why we win, and where additional growth opportunities exist for us to drive sustainable and profitable growth. Taking all these learnings into view, I believe there are three clear priorities for us to focus on in 2025 that will further transform Tactile's ability to enhance the overall patient experience and support our growth moving forward. These priorities include: Number one, improving access to care for diagnosed and undiagnosed patients; Number two, expanding the options available for diagnosed patients when they are determining the best way to proceed with treatment; and Number three, supporting patients more efficiently over a longer duration as they manage their Lymphedema, including both prior to and during the order process as well as after they initiate therapy. Remember, there is no cure for Lymphedema. Once these patients develop the disease, they have it for life. Taking these one at a time, our foundational priority is improving access to care. Our patients experience an unnecessarily protracted and complicated care journey often beginning with time to initial diagnosis. For the roughly 2 million Americans with a known diagnosis of Lymphedema, we estimate there are roughly 20 million additional patients below the waterline who remain undiagnosed, suffering from chronic swelling, but likely unaware they have Lymphedema, let alone know how to treat it. In fact, the average patient in the US with lymphedema is symptomatic for years even before they get to a definitive Lymphedema diagnosis. Once a diagnosis is made, that patient often has a fragmented care journey that delays access to appropriate therapies. Over time, we have seen an increase in the number of diagnosed patients in the US, which we attribute to expanded market awareness as opposed to growth in the actual number of patients with the disease. With increased educational awareness, more clinicians are understanding how to both identify Lymphedema in their patients and determine the appropriate care pathway. But this is not yet happening at a fast enough rate. We know there's work to be done. More patients need an appropriate diagnosis, and once diagnosed, more patients need access to the right treatment options that best fit their condition. At Tactile, revealing and treating patients with underserved chronic conditions is our passion, and as the market leader, we recognize the responsibility to champion these efforts. To do so, part of our strategy for 2025 includes key investments under the umbrella of improving access to care that will seek to further increase the percentage of diagnosed patients receiving PCD treatment. The first way we're focused on improving access to care is through market development, which includes removing existing barriers through patient and clinician training and education. To date, our efforts in this area have been focused on generating increased awareness at the clinician level primarily through educational programming. Our medical affairs team has consistently made strong progress on this front, and 2024 was no exception. Last year, we hosted over 210 educational events focused on Lymphedema diagnosis, its comorbidities, and its available treatments. Through this programming, we were able to reach and train over 10,000 clinicians. In 2025, we plan to exceed that number with a goal to reach over 12,000 clinicians. We believe our consistent investment in training and education has contributed to the growth in the overall diagnosed patient population that I mentioned earlier. In tandem with clinical education, this year we will also increase focus on patient awareness specifically through promoting the use of our Kylee patient engagement tool. Kylee is a free tool available to anyone suffering from chronic swelling including Lymphedema and provides patients a way to track symptoms and home-based therapy and share results with their care team regardless of which type of therapy they're using: conservative therapy, compression therapy like Tactile PCD, or even another type of compression therapy. Kylee is also a powerful educational tool for patients who may be on the front end of their care journey, either undiagnosed or recently diagnosed, which includes information on Lymphedema and its available treatments so that patients can be informed when speaking with their clinician regarding their symptoms and self-management. We believe increased utilization of Kylee will enable a more effective and connected care pathway for patients and their clinicians and provide our organization more insights into opportunities to help support patients with product and service innovation. A second element of improving access to care is clinical evidence generation and dissemination. At Tactile, we are committed to driving evidence that supports the right product for the right patients. In 2024, there were two published studies that supported the value of Flexitouch. One large study in the VA that we previously discussed and a study published in November for Mayo Clinic which showed statistical clinical benefit of Flexitouch after just one therapy session in patients with head and neck cancer-related Lymphedema. Further, our own RCT assessing Flexitouch for head and neck Lymphedema is progressing well, and we will be starting the six-month data analysis this month. This is a significant trial, and its potential implications are meaningful both for patients and for our business. Of the over 400,000 oral cavity and pharynx cancer patients in the US, 90% of them will have Lymphedema. This is a large population of currently underserved patients who do not have access to adequate therapy. We believe the results from this trial will help influence payer policies, clinical guidelines, and overall provider and patient awareness, as well as improve access to care more tangibly beginning in the second half of this year. We look forward to sharing the results of the study and expect commercial benefit once those results are peer-reviewed. And as we move into the commercialization phase of head and neck, we are fortunate to benefit from a strong intellectual property moat, not only in PCDs but also in this particular therapeutic area, which should help ensure our positioning in the head and neck space will be well protected from a competitive perspective. A third element of improved access to care is payer advocacy. This includes influencing policy changes where appropriate to further break down the barriers preventing access to care. Tactile has always taken a leadership role in this area, and we had a particularly busy year in 2024. One of the biggest administrative hurdles we faced last year was the increased documentation required by the MACs through their interpretation of the LCD policy for PCDs, specifically around the completion of conservative therapy by patients before being eligible to move on to a lymphatic pump. As a reminder, conservative therapy is the most appropriate first treatment step to see if patients can be managed through exercise, manual lymphatic drainage, or compression garments before moving on to more advanced compression therapies. The MAC requirement under the LCD mandated all patients, regardless of disease severity, have four weeks of this conservative therapy, then four weeks of a basic pump trial like Entre Plus before being eligible for an advanced pump like Flexitouch. While the completion of conservative therapy has always been a longstanding requirement of the LCD, the MACs took a more stringent approach to interpreting the policy last year, requiring more specific documentation around the start and end dates that required our team to spend a greater time reviewing patient medical records to find this information or working with the patient's physicians to gather if those details weren't originally included in the medical records. The requirement of a basic pump trial even when the patient's etiology required lymphatic drainage support that was not remediated by a basic pump was an administrative driven access to care for certain patients that could have otherwise benefited more quickly from an advanced compression device like Flexitouch. In November, the LCD was officially retired, and we are now back under one policy, the National Coverage Determination, which is a win for patients and a more positive policy environment for Tactile. We believe our active approach to payer advocacy influences change, and I'm proud of the collective efforts from our team. Since the LCD's retirement, we have been in discussions with the MACs on their interpretation and intended approach to the NCD. The NCD represents a less restrictive, more patient-friendly coverage policy with fewer administrative burdens that has the potential to improve access to the right therapy options that are appropriate for each patient based on their individual symptoms and needs. For example, the NCD removes the requirement for all patients to try basic pump therapy first, even if it wouldn't have been helpful for their symptoms, especially since basic pumps don't treat certain parts of the body. What this means is patients with unique characteristics such as chest and trunk swelling can progress from conservative therapy immediately to an advanced pump if their clinician believes this is an appropriate therapy for them. While the increased documentation around start and end dates of conservative therapy will remain under the NCD, we are confident we now have a much better understanding of how to navigate these requirements based on our 2024 experience. We had a steep learning curve in the middle of the year, but I was pleased that our Medicare sales grew 16% year-over-year in the fourth quarter and we are up 83% sequentially over Q3, reflecting a return to a more normalized quarterly channel mix. As we enter 2025, we have a firm grasp in understanding what the MACs are looking for in terms of documentation. The final element to our access to care initiative is further streamlining the entire order process for an improved patient care experience. There are multiple phases involved in generating the patient referral, qualifying the referral based on payer requirements, completing all aspects of the order, and submitting the claim, and each phase has its own set of activities and interdependencies with the patient and clinicians. It's critical that we continue to simplify this process in order to convert all clinically appropriate referrals into orders and to minimize patient leakage from the funnel. Our second strategic priority for 2025 focuses on ensuring diagnosed patients have appropriate treatment options available to them based on their individual condition, symptoms, and needs after they come into the treatment funnel. Thanks to a strong history of continued product innovation, Tactile is well equipped to treat Lymphedema across the whole body with our historical portfolio of patient-centric solutions including our current Flexitouch and Entre Plus systems. However, we constantly seek to identify ways to improve the patient experience through our technology, and the recent introduction of our Lymphedema platform is a testament to delivering products designed specifically to meet the patient where they are in their care journey. As discussed last quarter, the first product launched on our new platform is Nimbl, the next generation of our basic PCD. The first phase of Nimbl's launch announced last year was targeted specifically for upper extremity Lymphedema treatment. Since launch, Nimbl continues to generate enthusiasm among clinicians and patients. Both groups have shared that the connectivity to Kylee has been an effective way to increase patient therapy engagement and disease and treatment education. Two weeks ago, we expanded Nimbl's applicability to include patients with lower extremity Lymphedema. As the largest segment, 16 million Americans suffer from chronic swelling in this region, and with Nimbl, these patients now have an effective and convenient at-home option that is easy to use. The features of Nimbl for lower extremity are similar to the upper extremity garment, using 94% less hosing than Entre Plus. This significant reduction makes the device easy to transport and store in the home so that patients can manage their condition on their own terms. We believe the full launch of Nimbl will be a growth driver for us in 2025, and we look forward to sharing additional updates on uptake and patient and provider feedback over the coming months. Development of our next-generation advanced pump remains in progress, and we'll be sharing updates with respect to commercialization timing as we are able to. In the meantime, we remain committed to serving patients with our leading clinically proven Flexitouch advanced pump. Finally, our third strategic priority for 2025, we believe there's an opportunity for us to support patients more efficiently over a longer duration as they manage their Lymphedema, both prior to and during the order process as well as after they progress with their therapy. Several of the workflow related investments we made in 2024 are specifically focused on this. In 2025, we will again be intentional in identifying new ways our team can best support the end-to-end patient journey and not just at the point of sale. As both a medical device company and a DME, we are involved at every step of the order process. To that end, we will focus more on how we serve patients across the whole care journey, and this starts with the initial point where we meet the patient, introducing them to our therapy, and then helping them navigate the reimbursement qualification process so they can obtain the therapy affordably. We have already identified a few ways to best accomplish this, namely we're focusing first on optimizing our commercial organization and ensuring we have the right leadership, appropriately defined roles across our organization, and the balance of resources and tools to best enable success across the entire sales process. As announced today, we are making a change in our sales leadership with the promotion of Aaron Snodgrass to Senior Vice President of Sales, succeeding Sherri Ferstler, effective today. Aaron is a 10-year Tactile veteran, having served in various sales and sales leadership roles, most recently as one of our area Vice Presidents. He has a proven track record of sales performance and brings well-developed skills in creating, implementing, and executing sales and channel strategies as well as building high-performance sales teams. He possesses a thorough understanding of our business and opportunities, and he's already earned an incredible sense of followership within the field sales team as well as internal teams. I'm pleased to have him join our senior leadership team. I'll be working closely with Aaron over the next several months reviewing our entire sales organization in greater detail and identifying areas of opportunity that could benefit from additional investment in people and technology. Part of that focus has and will continue to be on also ensuring we have appropriately defined roles and responsibilities across our field and back-office teams so that we are resourcing each step of the clinician, patient, and order management workflow with the right resources deployed at the right time. To that end, beginning in Q4 and now moving forward, we are refining the task of our Lymphedema field sales team into two even more specific roles along with new nomenclature, account managers and specialists, which we believe will help ensure internal alignment on selling versus support roles and the responsibilities for each. Account managers will focus their efforts on educating clinicians on the disease condition, referral network development, patient identification, clinical guidelines, and product features and benefits, while specialists will support account managers with clinician office support for documentation, e-prescribing onboarding, and in-clinic patient demo assistance. In Q4, we ended with 280 total field sales reps within our target range for the year and split between 169 account managers and 111 specialists. In 2025, we expect to invest further in specialist headcount to support the volume growth of our business. We fortunately continue to see strong referral generation through our account managers, and additional specialist staff will help ensure pull-through and conversion of more of these leads into sales to drive growth. To be clear, we view the specialist role as an integral part of the revenue-generating sales order process, and an investment here is key to our growth. Supporting both our account managers and specialist staff are our patient education consultants, also known as PECs, who are separate from our field sales team and not included in our reported headcount. Our PECs focused on in-home patient demos and patient training continued to be a vital resource for our field sales team. In Q4, 52% of in-home demos were performed by our PECs, exceeding our goal for the full year. This compares to 48% in Q3 and up from 30% at the beginning of 2024. Increasing PEC utilization will continue to be a focus for us in 2025. These three strategic priorities are well underway, and we will continue to build out tactics to support execution resulting in increased referrals, yield, and ultimately revenue growth. With that, I will now have Elaine review our Q4 financial results in more detail and provide an overview of our guidance for 2025.

Thanks, Sheri. Unless noted otherwise, all references to fourth quarter financial results are on a GAAP and year-over-year basis. Total revenue in the fourth quarter increased $7.9 million, or 10.2%, to $85.6 million. By product line, sales and rentals of Lymphedema products, which includes our Flexitouch and Entre systems, increased $7.6 million, or 11%, to $77.1 million, and sales of our Airway Clearance products, which includes our AffloVest system, increased $0.3 million, or 3.8%, to $8.5 million. Continuing down the P&L, gross margin was 75.2% of revenue compared to 72.1% of revenue in the fourth quarter of 2023. The increase in gross margin was attributable primarily to lower manufacturing and warranty costs, a testament to improvements in product design and improving collections reflected in our revenue. Fourth quarter operating expenses increased $7.6 million, or 17.3%, to $51.9 million. The change in GAAP operating expenses reflected a $2.6 million increase in sales and marketing expenses, a $0.2 million increase in research and development expenses, and a $4.8 million increase in reimbursement, general and administrative expenses, including and primarily driven by strategic technology investments. Operating income increased $0.7 million, or 6.1%, to $12.5 million. Interest income increased $0.1 million, or 10%, to $0.9 million due to an increased cash position. Interest expense decreased $0.4 million, or 47.4%, to $0.5 million primarily driven by the retirement of a revolving line of credit at the end of 2023. Income tax expense decreased $0.3 million, or 8.1%, year-over-year to $3.3 million. Net income increased $1.5 million, or 18.3%, to $9.7 million, or $0.40 per diluted share compared to $8.2 million, or $0.35 per diluted share. Adjusted EBITDA increased $16.2 million, or 18.9% of sales compared to $15.4 million, or 19.8% of sales. With respect to our balance sheet, we had another solid year of cash generation, adding over $33 million of cash even after sponsoring $3.5 million of stock buyback. We had $94.4 million in cash and $26.3 million of outstanding borrowings at quarter-end. This compares to $61 million in cash and $29.3 million of outstanding borrowings as of December 31, 2023. Our cash growth was driven by a combination of operating income and an increase in net working capital. Turning to a review of our 2025 outlook. For the full year 2025, we now expect total revenue in the range of $316 million to $322 million representing growth of approximately 8% to 10% year-over-year. We expect to see benefits from the strategic initiatives that Sheri outlined earlier to begin contributing to growth more meaningfully in the second half of the year. Our 2025 total revenue guidance range assumes that growth for our Lymphedema product line will be 8% to 10% and growth for our Airway Clearance product will be 6% to 9%. For modeling purposes for the full year 2025, we now expect our GAAP gross margins to be approximately 74%. Our GAAP operating expenses to increase mid-double-digits as we invest in our sales organization and advance our tech-related investments throughout the year, net interest income of approximately $2.5 million, a tax rate of 28%, and a fully diluted weighted average share count of approximately 24 million shares. As a result of our continued investment in the business, we expect to generate adjusted EBITDA of approximately $35 million to $37 million in 2025. Our adjusted EBITDA expectation assumes certain non-cash items, including stock compensation expense of approximately $8.8 million, intangible amortization approximately $2.4 million, and depreciation expense of approximately $4.3 million. With that, I'll turn the call back to Sheri for some closing remarks.

Thanks, Elaine. In closing, we're pleased with our financial results and the progress made in 2024 against our operational and commercial priorities. This performance enabled us to serve almost 80,000 patients last year, and we look forward to serving even more in 2025 through our new growth strategies. Finally, before concluding my remarks, I'd also like to thank our employees for their collective efforts this past year. None of what we achieved would have been possible without them. Thanks as well to our customers and investors for their continued support. With that, operator, we'll now open the call for questions.

Thank you. We will now be conducting a question-and-answer session. Our first question comes from Margaret Kaczor with William Blair. Please proceed with your question.

Hi, everybody. It's Max on for Margaret. Thanks for taking the question. I just wanted to start on the '25 sales guide. There's a lot of moving parts with Nimbl, e-prescribing tools, the NCD, maybe a next-gen AffloVest. So I just wanted to understand how you guys came up with the 8% to 10% for the guide and what makes you confident you can see growth accelerate to 8% to 10% versus the 7% this year? Thanks.

Sure. Hi, Max. Thank you. When we put together the guidance for 2025, we definitely did take into account the continued modernization that we started in 2024. So we're starting already this year, having launched the CRM actually just about two weeks ago, 1.5 weeks ago. So having that new CRM tool is going to be very beneficial for our sales force overall efficiency, effectiveness, etc. We are excited about the launch of Nimbl. We just released the lower leg extremity launch here also in the beginning of February. So we'll have a full system that we're launching into 2025. And we know already that, that system has been highly appreciated by both patients and physicians in that area. And we also are just continuing to see our ability to generate the back-office support. So whether that's the right resources in the right place, as well as the e-prescribing tool, just reduce the friction that's currently out there in the collection of documentation. And then two other points I'll say. One is then on the policy landscape. So as we shared in the script, there's been a lot of changes that have happened between the LCD and the NCD. And when we announced this in this change at our last earnings calls, we still didn't have a good understanding about how the MACs would be adjudicating the NCD. We have a lot better understanding now. We've had both training, as well as engagement with the MACs. And as I shared on the script, we're feeling that there's going to be opportunity for patients who could benefit from an advanced pump. We'll have a more streamlined way to get there. We're still being conservative in our guidance here because we'll need to see what's written on paper versus how the MACs actually adjudicate. But we're feeling very positive it was the right decision for patients and for our business. And then you mentioned on AffloVest, we do not have a product launch in 2025. But what we do have now is we'll have a full year of being under contract with the top 10 DMEs, where that was not the case last year. So I'm looking forward to seeing the growth both in Lymphedema as well as in the AffloVest pick up for 2025 until we have the right strategies behind that.

Great. Thanks. And just a follow-up, if I may. On the e-prescribing tool, you guys piloted that throughout 2024 and rolled it out in October. Can you just give us some color on how that progresses throughout '25, maybe a ballpark percentage of how many accounts are currently using it? Are you seeing quick adopters, or should we think of that more as like a steady uptick?

You know what, we were really pleased to have piloted with multiple generations through the majority of 2024 to fine-tune that tool. So it was easy for physicians to use and it reflected the appropriate documentation for our providers. And when we launched in October nationally, our reps were really happy to have that in their hands so that they could go and talk to prescribers. So we're going to continue to focus on that. We're not sharing a target in terms of the number. There's certainly going to be some physicians that are going to adopt it quickly, while some might not adopt it at all. And we won't be just hanging our entire efficiency on that. We'll be looking at other tools, AI tools, etc., that help with that more efficient way of collecting the appropriate documentation. So there'll be something for everyone on the physicians, even those that don't want to adopt it.

Great. Thanks for taking the question.

Yes, I appreciate it. Thanks, Max.

Thank you. Our next question comes from the line of Adam Maeder with Piper Sandler. Please proceed with your question.

Hi, Sheri, Elaine. Good afternoon and congrats on the finish of the year. Thanks for taking my questions. I wanted to start with one on guidance and specifically adjusted EBITDA guidance, which I believe is flat to down a couple million bucks. You've driven really good leverage in past years. So I guess the question is, why is 2025 different? And I heard some of the comments in the prepared remarks around investments focused on access to care, specialist headcount growth, but still trying to get, I guess, my arms around the guide a little bit more, and just wanted to flesh that out. And then, as we look to 2026, should we expect adjusted EBITDA to grow and move in the right direction again? And then I had a follow-up. Thanks.

Yes. Thanks, Adam, for the question. So I'll have Elaine weigh in on this as well. There's been a really nice history with Tactile of improving EBITDA for years, right? So the business has gone from that focus on profitability and collections and has continued to show really nice gross margins as well as everything dropping to the bottom line on EBITDA. Where we're at right now, as I shared on this growth strategy, we need to make and continue to make the right investments. That's going to be both in people and we talked about the role that our field team has, not just in selling, which is going to be that account manager tool, management people, but also the specialists, that collection, the documentation. That's more on the DME side, if you will, of our business. So we have a need to be investing in both the sales work as well as the documentation collection. Some of that can be leveraged from tools, some of it can be leveraged by back-office support, and some of it is going to be by adding the appropriate headcount in the field. So investments that we're making is both in headcount from the specialist standpoint to make sure that we can collect that documentation quickly and move the patient through that order process quickly, so we don't have leakage of patients and we have the best possible experience. And then the investments will continue to be in modernizing our technology. So the next phases of CRM, which will bring us into cloud-based services, etc., is all in our pipeline for this year. Anything else, Elaine, to add?

No, I would just say, I think the EBITDA guide was a conscious decision that this was really the right time for us to make these investments in the organization. I think, as Sheri mentioned, we spent the last couple of years really bolstering both our P&L and balance sheet. And all the investments we're making are really going to help us have sustained long-term top line growth as well as profit growth. And so everything that we're doing is kind of aimed at both, and we thought that both our cash flow and kind of where we've been in profitability affords us to be able to make those investments this year.

I got it. That's really helpful color. Thank you for all that. And for the follow-up, I guess, kind of a two-parter here. So I guess, one, just as we think about kind of quarterly cadence for 2025, we'd just love incremental color that you're willing to give there, both from a top line and adjusted EBITDA standpoint, as we think about our models? And then as it relates to the head and neck opportunity, are you contemplating anything from head and neck into the back half of 2025 in the guide, or should we really view that as a potential upside lever? Thank you.

Sure. I'll start with the head and neck piece. So as I mentioned, really pleased to have be in the position now where patients have been enrolled, all the follow-up has taken place, locked down the database. We've submitted the two-month data into conferences for presentation. But the most important data is really going to be that six-month data for us. The six-month data is what the CMS had asked for in terms of what was going to be important and basically a criteria to help support two aspects of reimbursement: one is coding, and the other is coverage. And so with that data and as soon as those six-month studies have results, they still need to get presented, both in publication and/or in conferences. So we were conservative in baking in any head and neck upside just because the timing of when that conference and acceptance could be slightly varied. But again, we're super excited about this as a benefit for us. I mentioned the IP moat we have around this. I mentioned that 90% of the 400,000 patients with head and neck cancer are going to have Lymphedema, and we have a great product for them. So we'll need to work through all that, but I would say that, that is going to be very conservative and it would be in the back half of the fiscal year. From a timing standpoint of everything else, very indicative of what's happened in the past, where not just because of the seasonality of our business in terms of Q4 being a bigger year because of the patient deductibles, but the first part of the year, Q1 tends to be slow for that very reason because patients haven't yet met their deductible. So we'll have a normal cadence that I think you've seen in previous years, where you will see the revenue be on the trajectory of slower in the first half of the year and then ramping up in the back half.

Yes. So I think while our sequential growth, I think, as Sheri mentioned, is going to look kind of within the realm of what we've seen historically. In my prepared remarks, I did share that we do expect to see greater growth in the back half versus the first half. I think just to give a little bit more color on that, we did launch our CRM tool, which we're very excited about. However, there is a learning curve there, so we do expect some short-term just growing pains as the team learns that tool with really increasing productivity as they become proficient, which we'll start to see as the year progresses.

Thanks for the color.

Thank you. Our next question comes from the line of Ryan Zimmerman with BTIG. Please proceed with your question.

Hi, Sheri and Elaine. This is Izzy on for Ryan. Thanks for taking the questions. So just to start out, I was curious about the strength of the balance sheet. It's pretty clear that you guys are going to be prioritizing investments back into the business with those priorities that you outlined in the prepared remarks. But I was curious if you could speak to your appetite around inorganic growth, if there's anything that or any opportunities that you see there?

Thanks, Izzy. We definitely are very proud of the balance sheet and where we're at. When I mentioned before, we have this underserved population, you've got an underpenetrated population, and then you have a business that is profitable, has strong gross margins, has cash to invest back in the business, as well as, as you know, we did the stock buyback, another great value back to our shareholders where we believe that the stock definitely will be able to move. And then there's still cash on the books that we can use both for investments back in the business as well as for other opportunities. My key point here is that the opportunities that we are currently thinking through would be very strategic investments based on the scope of our business. And so we are not thinking of being a holding company with multiple small companies in this space. So the strategic investments will fall very much in line with the strategies for growth that I laid out, investments that allow us to increase access to care, help support patients through their full care pathway and this lifetime value. So that's where we'll be focused on any of those external inorganic spends.

Helpful. Thank you. And then as we look bigger picture for Tactile, I was just curious if you feel that there's anything that might be underappreciated by The Street in the story right now.

I think that the story that The Street has seen, and I appreciate the questions that they've been asking about growth. And I think where we're at now in laying out the strategy that the growth and the growth in areas that could be durable and sustainable growth, at the same time, keeping profitability overall, being able to make smart investments back in the business to help serve patients. That is where we are. It's where we're planning to go. I think the health of the balance sheet and the health of the bottom line, if you will, has been kind of appreciated. But what I've heard from The Street is, show me your plans to grow. And I hope that I was able to outline that in talking about the strategic imperatives. We have to develop the market, and we have to do that through educating clinicians and educating patients, and we have to do it through having the right reimbursement landscape and we have to do it from having the right technology and innovations, and it has to be easy to work with us. We have to be able to do all this quickly. So that is all the things that we're working on, and I hope that the strategies that we've laid out will resonate with our Street and our investors and they'll see our path to growth.

Thank you. Our next question comes from the line of Kyle Bauser with B. Riley Securities. Please proceed with your question.

Great. Thanks for taking my questions. Maybe just following up on the guide for EBITDA. So obviously the top line guide of 8% to 10% for sales with 8% to 10% being the Lymphedema business and 6% to 9% for the Airway Clearance. Can you break out the kind of business outlook for profitability for each business as well like you did on the top line? So I think the guide for '25 EBITDA is about 11.2%. How does that look for AffloVest versus Lymphedema? I'll start there.

Hey, Kyle, thanks for the question. We actually don't break out profitability by our product lines. We're a single segment reported business. So the only breakout we have is at that top line.

Okay. Got it. And so the growth of 6% to 9% in the Airway Clearance business would imply share loss, a slight share loss, I think that's growing a little bit slower than the market. Are there since this is kind of a transition year from a profitability standpoint since you're investing in the business, are there ways to kind of invest in the AffloVest business and enhance margins here or have it become more of a meaningful contributor to the overall business?

I want to highlight a few points about Afflo. Afflo has been beneficial for our business. I might have misunderstood you, Kyle, regarding its profitability. It has always been a positive contributor. We hold the second position in this market, which is evolving with new technologies. We see this as a positive development since it addresses a population that has been inadequately diagnosed and supported. More patients are learning about bronchiectasis, and doctors are increasingly recognizing the condition and the potential benefits of treatments. Our therapy is perfectly suited for this need. It allows patients to be mobile without the need for a console or being tethered to equipment. It has great durability, and the feedback from our patients has been overwhelmingly positive. This year marks our first full year of contracts with the top 10 Durable Medical Equipment suppliers, and among them, we even have preferred placements. I'm optimistic about our growth prospects with AffloVest, supported by our strong product and extensive contracts with DMEs, some of which have shown a preference for our product.

Okay, yes. And I wasn't saying that business wasn't profitable. I was just saying that the top line growth rate implies that it's growing slower than the overall market. So I was just kind of curious about that. But it sounds like you've got some good contracts in place to maybe outperform that potentially. Maybe one last question. On the patient education consultants, I think you finished the year, you said that 52% of in-home demos were being done by PECs and that you hope to increase that. Is there a goal for the end of this year to go north of 52%? Thank you.

Yes, we're not going to call out a specific number there. It's very hardwired in. And as we described this role clarity that we're putting in place between the account managers as well as the specialists and the PECs, making sure that we understand, and we do understand, the work and jobs to be done and then making sure that we've got the right territory placement of all of those individuals and that they're working well as a team. So I fully expect that the PECs will be taking on more of the in-home demos. It will be a big part of the overall strategies. And it's also a great opportunity when the PEC is side-by-side with the patient to actually help the patient onboard with Kylee. And again, I've mentioned Kylee before. I don't want it to be thought of as just an app. Kylee is really a unique patient engagement tool. The patient can take photos of their limbs. They can record measurements. They can talk about symptoms. They can track their entire therapy session. So the PECs being close and proximal to those patients in the home will be a great opportunity of onboarding Kylee as part of their whole kind of care package.

Okay, got it. Thanks for taking my questions. Appreciate it.

Thanks, Kyle.

Thank you. Our next question comes from Suraj Kalia with Oppenheimer & Company. Please go ahead with your question.

Sheri, Elaine, thank you for taking my questions. So Sheri, a couple of questions from my side. The first one, throughout your commentary and even last quarter, you've mentioned and brought up many times the burden of documentation and specifically patient leakage. Sheri, can you put some guideposts around defining patient leakage a little more for us, just quantify it to the extent that you can? And also how should we think about leverageability implicit in the model because if you reduce patient leakage?

Yes. Hi, Suraj. Thank you for the question. So when I talk about patient leakage, if you think about the entire journey of a patient, and we've mentioned before, it can take years sometimes for them to get to a diagnosis. They get into kind of a rule-out condition. They finally get a diagnosis, and the physician says, I think you would benefit from a pneumatic compression pump; go. Well, the difference between a patient getting a pharmaceutical product was then the patient would go to the pharmacy and pick up a script. On our side, of course, because this is managed through DME, there is the documentation that the physician has to have that's going to meet the payer requirements. So that has to be in the record, and it isn't all the time in the record. So we mentioned before what happened with the LCD interpretation. A patient could have been on conservative therapy for months, but if it hadn't been documented the start date with measurements and then the end date at four weeks with measurement, that patient had to redo that entire episode of care, if you will. And so, patients sometimes said, I'm dropping it; like why do I have to do this all over again? I need something else. And then they may drop out. So that would be a potential leakage point. Once the patient does complete all the documentation, we have to qualify their insurance. That insurance could take a while, depending on the benefits. The patient has to be available for us to do the in-home demo. And that has to be done. So there's multiple steps that are part of the DME piece. And the longer that takes and the more protracted that is, there becomes more chance that the patient will just say, I give up, I'm done, and they drop out. That would be the leakage that I'm talking about. So it is in our interest and the patient's interest to make sure that we're collecting all the information upfront so that patient gets qualified and that we can move through all those processes quickly and with the right information for the patient so that they understand what's happening next, there's great communication all the way through, and then they can get onboarded with their product. I hope that's helpful.

Got it. Sheri, one other thing, and I don't believe in your prepared remarks you made any reference to the qui tam. Do we know the latest and greatest on whether the government is going to take it up? I think that there was a date coming for a decision and maybe my memory is failing me. Any update there would be great. Thank you.

Yes. So as you know, this remains an ongoing legal matter, so I can't comment any further than what's in our public filing. And in that filing, we share that we've been served by both relators' counsel, and we're working with our counsel on a response. And at this time, the government has not chosen to intervene, which would mean that at the moment, they haven't. They can intervene at any time, which means that they would take over the litigation. But right now, they have not chosen to intervene. Regardless of whether they intervene or they don't intervene, we'll defend the matters as they proceed, and we're still very early in the process. Thanks, Suraj.

Thank you. We have reached the end of the question-and-answer session, and this also concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.