Tactile Systems Technology Inc Q1 FY2026 Earnings Call

Please stand by. Welcome, ladies and gentlemen, to the First Quarter 2026 Earnings Call for Tactile Systems Technology, Inc. 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 Systems Technology, Inc.’s management team are Sheri Louise Dodd, Chief Executive Officer, and Elaine M. Birkemeyer, Chief Financial Officer. Before we begin, I would 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-Ks as well as our most recent 10-Q filing to be 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 will now turn the call over to Sheri.

Thanks, Sam. Good afternoon, everyone, and welcome to our first quarter 2026 earnings call. Here with me is Elaine M. Birkemeyer, our Chief Financial Officer. We are pleased to report a strong start to 2026, with first quarter results reflecting focused execution of our three strategic priorities, continued strength and durability of our commercial action plan, and operational excellence including preparing for recent changes regarding the introduction of prior authorization for fee-for-service patients. Specifically, in Q1, we delivered total revenue of $75.3 million, representing growth of 23% year over year. By business line, lymphedema revenue grew 23% year over year to $62.2 million, and airway clearance revenue increased 22% year over year to $13.0 million. Q1 results include a minimal contribution from our recent acquisition, Lymphotech. Our revenue performance reflects continued strategy and execution against key revenue drivers: our phased technology and people go-to-market investments, which drive referrals and market share; NCD-related tailwinds, which drive favorable advanced pump product mix; depth and breadth of our DME relationships, which drive market expansion and share; and disciplined operational execution across the enterprise. Further, top-line strength drove meaningful margin expansion. Gross margins increased 250 basis points to 76.5%, and adjusted EBITDA increased $4 million year over year to $3.7 million. We ended the first quarter with approximately $75 million in cash, maintaining substantial financial flexibility as we continue to invest for long-term growth. For 2026, we are updating our full-year revenue guidance to a range of $360 million to $368 million. This update reflects the inclusion of Lymphotech and our increased confidence in commercial execution while maintaining a disciplined approach as prior authorization outcomes under new Medicare requirements for our category continue to mature. For the remainder of the call, I will review our Q1 performance by business line and then provide updates on our ongoing strategic priorities. Elaine will follow with a review of our first quarter financial results and an update on our outlook for 2026. Turning first to lymphedema: revenue grew 23% year over year in Q1. We are pleased to see the significant growth compared to last year, which was expected given the momentum of our field and back-office strategy execution. Our go-to-market investments are delivering. Our sales organization is fully resourced with broad geographic coverage and a well-balanced staffing model of one account manager for every product specialist. With those resources in place, we are shifting our focus from capacity investment and onboarding to productivity and operating leverage. Territory productivity increased meaningfully in Q1 year over year. Robust CRM utilization, combined with continued enhancements including workflow tools, is increasingly supporting referral management, prioritization, and account development, and we expect continued territory optimization and sustained productivity gains over time. From a products perspective, overall lymphedema growth in the quarter was supported by both Nimble and Flexitouch, with Flexitouch growth outpacing Nimble. As expected, this dynamic was largely tied to our decision in October 2025 to align our advanced pump documentation criteria with the Medicare NCD. While this alignment had always been planned, the timing reflected our increasing confidence that the MAC administration of the NCD had stabilized. Importantly, the NCD has created a more direct and clinically aligned pathway for patients who require advanced pump therapy compared to the prior LCD policy. This will continue to be a tailwind for Flexitouch as we continue to educate providers on the policy change and drive the right patient, right pump messaging. Notably, the NCD policy language also allows for advanced pump coverage for patients with head and neck lymphedema, and we are pleased to see increasing clinical adoption for these underserved patients who have no other pneumatic or nonpneumatic compression device options. This NCD-driven Flexitouch strength was also evident in our Q1 payer mix with sales in our Medicare channel growing 40% year over year. To a smaller extent, Medicare strength also reflects some order acceleration ahead of the April 13 effective date for the new prior authorization requirements for PCDs billed under traditional Medicare fee-for-service. Importantly, underlying demand remains healthy, and as the new prior authorization process settles, we expect quarterly ordering patterns to normalize. As a reminder, the inclusion of the prior authorization process for basic and advanced PCDs for Medicare patients was announced in January 2026 and aligns with prior authorization decisions in other growing DME categories. During our Q4 call, we discussed our expectation that this new requirement will add additional steps to the order process, such as assembling and submitting a prior authorization documentation packet and checking the status of each submission in order to process the claim. Additionally, these new requirements require patients to have a face-to-face clinical visit with a treating physician, not just a therapist, to establish and document medical necessity. To be ready for the go-live date, we accelerated the prior authorization module in our AI portfolio, which had originally been planned for launch in 2027. In the weeks leading up to April 13, we demonstrated operational agility in validating the technology and systems, training and staffing our team, and successfully deploying a new process on schedule. The Medicare PCD prior authorization requirement has been in place for just three weeks. We are actively managing early transition dynamics as both we and the MACs adjust our respective processes. As the industry leader and a DME provider with extensive experience operating in other prior authorization environments across Medicare Advantage and commercial plans, we believe we are well positioned to support patients through this transition. Turning to our other payer channels, our commercial business remains healthy and is demonstrating quarter-over-quarter consistency. In the VA channel, performance reflects a different operating and growth profile than Medicare and commercial. Unlike those channels where reimbursement policies are more dynamic and have driven more pronounced year-over-year comparisons, the VA reimbursement environment is notably more stable, which naturally results in less quarter-to-quarter volatility. From a commercial execution standpoint, the VA call points span a diverse set of specialties, including vascular, oncology, and therapy practices, with success driven by sustained relationship-based engagement and navigation of local VA systems. As our recently expanded field organization continues to deepen engagement, establish workflows, and build trusted relationships within these accounts, we expect the VA to become a more meaningful contributor over time. We view the VA as a strategic long-term opportunity that is well aligned with our evolving portfolio and an incremental growth contributor alongside our Medicare and commercial channels, with growth unfolding in a deliberate and durable manner. Turning now to airway clearance: sales of AffloVest increased 22% year over year in the first quarter. The key drivers of our robust performance remain consistent with what I have shared previously. Our relationships with the top respiratory DMEs remain strong, including at the C-suite, and AffloVest continues to be well placed across these accounts. There are additional opportunities to deepen engagement within our top 10 DME partners, given the breadth and scale of their national footprints and alignment of individual branch performance goals. We are committed to delivering high-quality medical education and training for providers and DME staff, supporting sales skills of AffloVest and airway clearance therapies at the DME national and area sales meetings, manufacturing a superior airway clearance product, and providing AffloVest account manager continuity to our DME partners, all of which we believe are critical inputs to driving consistent growth and valued partner status. As the market leader in airway clearance therapy, we remain focused on serving the millions of diagnosed and undiagnosed bronchiectasis patients in the U.S. We expect our commercial strategy, clinical education efforts, and strong DME partnerships to continue driving growth throughout the year, in addition to the launch of our next-generation AffloVest product, which I will touch on shortly. We are committed to evolving our lymphedema strategy for growth from that of a product company to an integrated solutions leader for lymphatic dysfunction, and the acquisition of Lymphotech is an important milestone in this exciting evolution. Lymphotech sits squarely within our strategy to support patients across the full continuum of care, which begins with getting an accurate, timely, and objective lymphedema diagnosis. Lymphotech’s 3D measurement and monitoring addresses this need directly, replacing traditional manual measurement methods that are time consuming, highly variable, and dependent on clinician technique. Currently, the Lymphotech platform is FDA cleared and commercially available as a SaaS-based solution. As we shared last quarter, a key element of this acquisition is broadening our R&D capabilities to support next-generation approaches to disease assessment and treatment, and we look forward to sharing updates on our progress in the quarters ahead. The integration is progressing as planned since closing in February. The Lymphotech cofounders and team are actively contributing to both the go-to-market commercialization strategy as well as helping to identify the capabilities and integration points across the diagnostic and therapy product development road maps. We are being deliberate and strategic in our approach to maximizing the provider, clinician, and patient experience. Beyond the team and the technology, Lymphotech also earned selection as a funding recipient under a new federal research program focused on lymphatic disease. Specifically, the Advanced Research Projects Agency for Health recently announced two landmark programs, LIGHT and GUIDE, committing a combined more than $290 million across all awardees over five years to advance lymphatic diagnosis and therapeutics. Lymphotech was selected as one of seven GUIDE funding recipients and is focusing its research on the development of a new responsive garment using bioimpedance feedback to deliver adaptive compression with Bluetooth-enabled remote monitoring. We believe this program has the potential to extend personalized treatment to millions of diagnosed patients. Along with the first U.S. clinical practice guidelines for lower extremity lymphedema presented in March, which validated PCD therapy, we believe awareness of lymphatic disease and evidence-supported therapies is reaching a historic inflection point for the category. As the industry leader, Tactile Systems Technology, Inc. is well positioned at the center of this momentum, further bolstered by our three ongoing strategic priorities focused on improving access to care, expanding treatment options, and enhancing lifetime patient value. Let me now provide a few updates on each of these. Beginning with improving access to care, where we are focused on several internal- and external-facing initiatives. Internally, we continue to transform each step of the order process with new technology infrastructure and more efficient workflows. AI-enabled technology is playing an increasingly meaningful role in our back-office transformation. Over the past several months, we have been leveraging AI capabilities in our order intake processes and parts of our medical record review and have been pleased with both the technology performance and the enhanced workflow efficiencies it is enabling. As I shared earlier, this quarter we successfully accelerated and launched the prior authorization component of our AI platform for Medicare fee-for-service orders ahead of the April 13 deadline. Looking ahead, we remain on track to further expand the use of AI capabilities across the entire order process, including patient eligibility and benefits verification, and full medical record review. With the rollout of these expanded features, we believe we will accelerate speed of therapy, reduce revenue-impacting human errors, and improve operational efficiency, each of which should support margin expansion over time. Externally, improving market access conditions is supported by clinical evidence generation, guideline dissemination, and engagement with government and commercial payers. For commercial payers, we continue to make steady progress on head and neck coverage and are working to align certain commercial policies to the NCD rather than their current alignment to the retired LCD. As part of that work, our head and neck clinical evidence program continues to advance with data progressing through the peer-reviewed and publication process. Payer engagement is a continued patient advocacy commitment we make for all patients, operationalized through payer education, appealing denials, and activating clinical support with medical directors as needed. Next, on expanding treatment options. We are excited to share we recently received FDA 510(k) clearance for our next-generation AffloVest product. Key enhancements with this next-generation device are focused on improving the patient experience and include further weight reduction, new digital connectivity, and improved size adjustability to allow for a more customized fit. Additionally, the clearance maintains our indication for use across the full patient age spectrum, from pediatrics through geriatric populations, reinforcing AffloVest’s position as a solution for bronchiectasis patients at every stage of life. We remain on track for commercial launch this year to ensure the product is available for the 2026 to 2027 winter respiratory season, and we look forward to sharing more updates with respect to timing as we get closer. Our second innovation area is focused on the advanced pump category. As we shared last quarter, our product roadmap includes the introduction of incremental features and product enhancements for Flexitouch focused on the patient experience. These include a new controller, reduced external hosing, and remote control functionality through our Kylie patient engagement application. We anticipate go-to-market readiness in 2027 for these features. Beyond these innovation updates, we are also focused on identifying integration points across the combined Lymphotech and Tactile product development portfolios. While it is too early to share specific details of a Lymphotech-integrated product portfolio, we are excited by the expansion of diagnostic and therapy delivery opportunities. Finally, our third strategic priority of enhancing the lifetime patient value encompasses more efficient and personalized engagement before, during, and after the order and delivery process. As we shared last quarter, we are continuing to focus on targeted care navigation pilots designed to provide clearer guidance to patients earlier in the process and reduce administrative friction. Results to date continue to support our thesis that patients value clear communication and guidance earlier in the process. We are refining these pilots to optimize touchpoints, and we are evaluating how to expand their impact in a measured and scalable way. We believe this work will reduce patient leakage, enhance the patient experience, and over time decrease the need for sales representative involvement in the order process, supporting both growth and operating leverage. Taken together, our progress across these strategic priorities reinforces our confidence in the durability of our commercial momentum. Our Q1 results reflect strong execution across both business lines, meaningful progress and agility in our operation transformation initiatives, and the expected return on our go-to-market people and technology investments. Intentionality and discipline are key constructs in the way we are operationalizing our strategy; as a result, the business performance is there. This approach is supported by a strong balance sheet and a thoughtful capital allocation strategy that balances growth investments with shareholder returns. We are confident in the trajectory of our business and the multiple catalysts ahead as we move through 2026 and beyond. With that, I will now have Elaine review our Q1 financial results in more detail and provide an update on our outlook for 2026.

Thanks, Sheri. Unless noted otherwise, all references to first quarter financial results are on a GAAP and year-over-year basis. Total revenue in the first quarter increased by $14 million, or 23%, to $75.3 million. By product line, sales and rentals of lymphedema products, which includes our Flexitouch, Entre, Nimble, and Lymphatex systems, increased $11.7 million, or 23%, to $62.2 million, and sales of our airway clearance products, which includes our AffloVest system, increased $2.3 million, or 22%, to $13.0 million. Growth was broad based and reflected strength across both volume and revenue per unit, including higher shipments, strong collections, and a favorable mix across payer and product category. Continuing down the P&L, gross margin was 76.5% of revenue, compared to 74% in 2025. The increase in gross margin was attributable primarily to lower manufacturing costs, stronger collections, and favorable product and payer mix reflected in our revenue. Importantly, these improvements reflect structural enhancements in the business rather than temporary cost actions. First quarter operating expenses increased $9.3 million, or 19%, to $59.1 million. The change in GAAP operating expenses reflected a $5.2 million increase in sales and marketing expenses, a $1.0 million increase in research and development expenses, and a $3.0 million increase in reimbursement, general, and administrative expenses. As we discussed previously, we are annualizing investments made in 2025 while continuing to invest in IT infrastructure and automation to support long-term growth. Despite these ongoing investments, operating loss decreased $3.0 million, or 66%, to $1.5 million. Interest income decreased $200,000, or 26%, to $700,000 due to our decreased cash position. Interest expense decreased $400,000, or 93%, to $28,000. Income tax expense was $900,000 compared to an income tax benefit of $1.1 million. Net loss decreased $1.2 million, or 41%, to $1.8 million, or $0.08 per diluted share, compared to $3.0 million, or $0.13 per diluted share. Adjusted EBITDA increased to $3.7 million compared to an adjusted EBITDA loss of $300,000 in the prior year, with margin expanding to 4.9% from negative 0.4%, reflecting a meaningful improvement in operating leverage. With respect to our balance sheet, we had $75 million in cash and cash equivalents and no outstanding borrowings at quarter end. This compares to $83.4 million in cash and no outstanding borrowings as of 12/31/2025. The change in cash during the quarter primarily reflects the Lymphotech acquisition, share repurchases, and normal seasonal items such as bonus payments. We continue to see improvement in working capital, including a meaningful reduction in days sales outstanding. Turning to a review of our 2026 outlook: for the full year 2026, we are raising our guidance and now expect total revenue in the range of $360 million to $368 million, representing growth of approximately 9% to 12% year over year. This guidance assumes both our lymphedema and airway clearance businesses will grow in a similar overall range, with airway clearance growing modestly faster. The increase in guidance is driven by three primary factors. First, we continue to expect strength in the commercial execution across the business. Second, we have included the contribution from Lymphotech. Third, we have incremental early confidence in how the MACs are navigating the new prior authorization requirements we discussed on our last call. More broadly, we believe underlying demand remains durable, and our tools and processes designed to support prior authorizations are tracking well against plans. While prior authorization approval data is still early and continuing to take shape, our outlook appropriately reflects discipline until we have a longer track record of consistent outcomes. For modeling purposes, for the full year 2026, we expect our GAAP gross margins to be 76% to 77%, our GAAP operating expenses to increase 10% to 12% year over year; the increase relative to our prior outlook reflects one-time acquisition and legal related costs, net interest income of approximately $3 million, a tax rate of 28%, and a fully diluted weighted average share count of approximately 22 to 23 million shares. We continue to expect to generate adjusted EBITDA of $49 million to $51 million in 2026. This outlook reflects the annualization of 2025 investments and continued strategic investments in 2026, which we believe are important to support long-term growth and operating leverage. Our adjusted EBITDA expectation assumes certain noncash items, including a stock compensation expense of approximately $9 million, intangible amortization of approximately $3.6 million, depreciation expense of approximately $3.2 million, litigation-related expenses of approximately $1 million, and one-time acquisition-related and integration costs of $1.3 million. With that, I will turn the call back to Sheri for some closing remarks.

Thank you, Elaine. We are encouraged by a strong, balanced start to the year and the trajectory of our business. Our Q1 results demonstrated broad-based performance and reflect disciplined execution, improving productivity from a fully built commercial organization, and the increasing benefits from investments we have made in technology and infrastructure. As we look ahead, our focus remains on the fundamentals that matter most: expanding access to care, innovating across our product portfolio, and enhancing lifetime patient value. While we remain mindful of near-term adjustments related to Medicare prior authorization, ultimately, we believe this change reinforces our emphasis on clinical rigor, access durability, and long-term reimbursement stability, and we are well positioned to navigate it. We are operating from a position of strength supported by a resilient balance sheet, multiple growth levers in motion, and a clear strategy to translate consistent execution into sustained growth over time. With that, operator, we will now open the call for questions.

Thank you. We will now be conducting a question and answer session.

You may press 2 if you would like to remove your question from the queue. Again, that is 1 to ask a question.

And our first question will come from Ryan Zimmerman with BTIG.

Good afternoon, and congrats on a nice start to the year here. I want to ask about some of the dynamics that are starting to occur in the second quarter. Sheri, I think you called out some order acceleration with lymphedema sales ahead of February. I want to understand if that was an acceleration effect, and then what you are seeing with the MACs in February, how they are responding to this, how physicians are responding to this, and the cadence of sales we should think about over the balance of the year because you have historically seen the second quarter step up from the first quarter. So, is there a bit of a pause or dynamic in the market we need to think about for Q2? Apologies for the multipart question.

Let's take this layer by layer. First, I want to reorient the concept of a pull-forward because it was not really a pull-forward. What we did is we had patients whose orders were in process, and if they were not all the way completed by that date, they would have been exposed to an overall denial. So we performed an acceleration for those patients, but I would not characterize it as pulling orders from Q2 into Q1. What you are seeing in terms of our positioning on prior authorization does not reflect readiness issues on our side. We accelerated what we had planned and got it in place by the go-live date, and we are pleased with that. The variability we are seeing is early variability across the MACs, and we are only three weeks into this process. Orders are flowing through; we are observing denial and approval rates, and we are seeing some differences between the MACs. There should not be variability between the MACs; similar patients with the same criteria should not be denied based on geography. This variability is not uncommon as MACs align their interpretation of the policy, check how data is flowing through, and conduct training. Everything we are seeing appears administrative, and we expect to discuss and align with MACs on these items. We do not see this as a long-standing issue. As we gain more experience with prior authorization, our confidence in process time and approval rates will increase. From a guidance standpoint, we have included Lymphotech revenue and our overall business delivery confidence, and we are holding a bit until we have a few more weeks of prior authorization data. That does not mean this will impact the full year; we just want more visibility into MAC outcomes.

Ryan, on sequencing for Q2 and Q3: we continue to expect growth in Q2 over Q1 like we always have. I will say Q2 and Q3 this year will look a little different. Together, those two quarters should be the same in aggregate, but we expect a lighter step up in Q2 than in some prior years and probably a bigger step up in Q3 as the prior authorization process starts to normalize. As that went into effect, it created a little delay as the new process began to flow, so collectively the two quarters remain consistent, but the pattern between Q2 and Q3 will shift.

Okay. Very helpful. I will sneak one more and then get back in queue. On the Lymphotech contribution: when do you expect that to be meaningful in the year, and how should we think about what Lymphotech can offer to the business further into 2027 and beyond?

On Lymphotech, the grants we discussed—LIGHT and GUIDE—come through as revenue, which is why they are in the guidance. When we provided our original guidance, we did not expect meaningful contribution from Lymphotech this year, so the update reflects the grant revenue. Lymphotech's longer-term value is less about near-term revenue and more about R&D capabilities that expand our approach to disease assessment and therapy. The GUIDE program work on garments using bioimpedance to deliver adaptive compression with remote monitoring is compelling and could extend personalized treatment to many diagnosed patients. I cannot share timelines for R&D and integrated product portfolios yet, but we will provide updates as plans advance. On the diagnostic side, key milestones include broader FDA indications and CPT codes that enable payment for diagnostics, which will take time. For now, we are excited the government grants are supporting development that aligns with our future portfolio. To bookend your question on guidance and flow through: we are only three weeks in on prior authorization. We previously waited on the NCD conversion because we expected changes in interpretation and needed time for processes to progress before feeling confident. Everything we are doing now is based on precedent and previous experience, and that has worked well. We are confident these early administrative issues will be resolved and that we are well positioned to handle the transition. We want more time to fully articulate the benefit, but we do not have major concerns.

Thank you.

And our next question comes from Brandon Vazquez with William Blair.

Congrats on a nice quarter. I want to revisit the pull-forward versus accelerated concept to ensure clarity on the strength in the quarter and the sequential changes from here. Can you explain the nuance between why accelerated orders are not necessarily a pull-forward of sales from Q2?

We performed order acceleration for patient benefit, not to cover revenue. A pull-forward typically refers to accelerating revenue from a future quarter into the current quarter to boost results. Our acceleration was focused on patients with orders in process who risked denial if orders were not completed by April 13. We put extra resources to ensure those orders completed, but we were not taking orders planned for Q2 and booking revenue into Q1.

Got it. Thank you. A follow-up: many commercial investments were made in 2025 and are ramping into this year. Can you characterize where some of these investments are in terms of maturing? Should the benefits still be growing, or are some reaching maturity, such as the commercial team?

We are pleased with our current headcount and are moving from capacity building and onboarding to true productivity. We have a fully resourced sales organization with the one-to-one ratio of territory managers to product specialists, and reps are using our CRM and workflow tools effectively. We expect revenue per rep year-on-year growth to turn positive as the year progresses. Net-net, we are transitioning from building the organization and tools to having a field organization that is stepping up and driving increased referrals per rep.

And as a reminder, that is star one if you would like to ask a question. We will go next to Adam Nader with Piper Sandler.

Yes, hi, this is Kyle on for Adam. Thanks for taking the questions, and congrats on a good start to the year. Maybe I will ask on the EBITDA guidance. The Q1 result beat expectations and then you raised revenue guidance. So can you help unpack keeping the EBITDA guidance where it is? I know you mentioned acquisition costs and one-time expenses and noticed the uplift in OpEx. Is much of that due to the acquisition, or is it driven by R&D and pipeline investment?

There are two main factors. One is a portion of the increase relates to Lymphotech. Specifically, the grant work adds service-based revenue that is on the lower-margin side, and that is included in our revenue this year. This is not representative of our broader business model, but it affects margins this year. Second, we did have some in-period one-time costs in OpEx. The biggest driver, however, is the type of revenue lift coming from Lymphotech and the nature of that revenue.

Okay. Got it. That is helpful. Congrats on the clearance for the next-gen AffloVest. How should we think about growth from that product? Will it be a material contributor this year or more of an upside lever later? Is it baked into the guidance at all?

We are excited to have received FDA 510(k) clearance for this product. The next-gen AffloVest improves the patient experience with weight reduction, digital connectivity, and better adjustability. Reimbursement is the same for the current and next-generation AffloVest, so there is no incremental reimbursement. We are working with our DME partners on timing to wind down existing inventory and ensure training and education are complete for the respiratory season at the end of this year and into next year. Our guidance assumes both lymphedema and airway clearance grow in a similar range, with airway clearance growing slightly faster, and that expectation already incorporates having the next-gen product available this year. It is primarily a product experience improvement that supports penetration and adoption within DMEs rather than an immediate reimbursement-driven revenue lift.

And moving next to Ben Haynor with Lake Street Capital.

Good afternoon. Thanks for taking the questions. First, on the lower limb guidelines: any more color on initial clinician reaction? Also, can you provide commentary on the overall mix of the lymphedema market—what percentage is lower limb and how should we think about penetration?

We are pleased to have the first U.S. clinical practice guidelines for lower extremity lymphedema presented in March, and publication is anticipated this summer. The guidelines specifically called out pneumatic compression devices as part of guideline-based care, which differentiates them from non-PCD products. We will help disseminate and educate clinicians on the guidelines, and we believe they will support broader awareness and adoption of PCD therapy.

In terms of lower versus upper extremity mix, think about the underlying causes. About a third of patients develop lymphedema due to cancer, while the remainder are due to other causes, with chronic venous insufficiency (CVI) being a large driver. Cancer-related lymphedema often affects the upper body—breast cancer and head and neck cancer—whereas CVI and other drivers lead to lower extremity lymphedema. That gives a sense of where the cases fall, but it ultimately depends on the underlying cause.

Would you expect additional clinical guidelines for upper extremity or other body areas?

There are guidelines and white papers in oncology that address upper extremity lymphedema, and oncology is an area where the trigger for lymphedema is more obvious. I am not aware of a specific new guideline in the works for upper extremity at this time, but the oncology community and therapists already have strong awareness of PCDs in upper body cases. The lower extremity guidelines are especially meaningful because lower extremity lymphedema can be more of a process of elimination, and these guidelines help clinicians discover and diagnose earlier.

That makes sense. Last question: there is a new pharmaceutical for bronchiectasis—any notable impact on airway clearance adoption or the category?

The introduction of a pharmaceutical product for bronchiectasis has helped raise awareness for the category and served as a positive lift. Bronchiectasis is characterized by inflammation, mucus, and infection—the so-called vicious vortex—so pharmaceuticals that address inflammation are helpful but do not remove the need to clear mucus. Airway clearance remains relevant because patients still need mucus clearance to reduce infection risk. Clinicians position pharmaceuticals alongside airway clearance rather than as a replacement. We are seeing that it supports category awareness and education, but it has not changed the care pathway where airway clearance is indicated.

Makes sense. Thanks for taking the questions, and congrats on the quarter.

Thank you. And ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines, and have a wonderful day.