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Lymphedema revenue grew 12% year-over-year, driven by strong referral trends, improved territory productivity, and continued adoption of Flexitouch following Medicare NCD alignment.

Airway clearance revenue declined 7% due to temporary inventory management dynamics as large DME partners transitioned to the next-generation AffloVest system.

Management noted that several large DME partners were carrying elevated inventory levels, necessitating a pause in ordering to burn through existing stock before normalizing.

Profitability expansion was significant, with gross margin improving 180 basis points to 76.3% due to lower manufacturing costs and favorable product mix.

The company is leveraging its established VA infrastructure to launch MyoSleeve, a non-pneumatic compression device, targeting patients in earlier stages of chronic swelling.

Strategic focus remains on reducing administrative friction through AI and tech-driven order management to improve patient access and operational leverage.

Full-year 2026 revenue guidance was updated to $360 million to $366 million, reflecting lymphedema strength offset by conservative airway clearance ordering patterns.

Airway clearance ordering is expected to remain impacted through Q3, with a return to normalized purchasing activity projected for Q4 as DME inventory rebalances.

Management expects a larger-than-typical sequential revenue step-up in Q3 as Medicare prior authorization timelines and adjudication processes begin to stabilize.

FDA submission for LymphaTech as a diagnostic aid is underway, with expected approval in 2027 to address the estimated 20 million undiagnosed lymphedema patients.

The company is pursuing a Category III CPT code for LymphaTech to establish a formal reimbursement pathway and support broader clinical adoption.

Medicare prior authorization requirements implemented in April introduced administrative steps that caused a near-term moderation in order volumes during Q2.

The 6-month manuscript for the head and neck clinical evidence program was published, providing a foundation for challenging restrictive commercial payor policies.

Cash position decreased to $69.9 million primarily due to upfront payments for exclusive MyoSleeve distribution rights and share repurchases.

Management flagged that while the next-gen AffloVest offers superior features like connectivity, it does not command incremental reimbursement, serving instead as a competitive differentiator.

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Management confirmed that while prior authorization created an upfront administrative burden, the process is normalizing as MACs align their adjudication policies.

The timing impact resulted in some Q2 orders shifting into Q3, contributing to the expectation of strong sequential growth in the coming quarter.

The device is viewed as an incremental growth contributor for the VA channel that does not require additional OpEx, as it leverages existing sales infrastructure.

Current 2026 guidance does not assume material revenue contribution from MyoSleeve, as adoption is expected to build gradually over time.

Management stated they now have high visibility into partner inventory levels, which was previously limited in their indirect sales model.

The inventory issue is contained to a small number of the company's largest DME partners rather than being a widespread market trend.

Tactile is actively seeking immediate reconsideration of 'experimental' designations from commercial payors based on the newly published 6-month randomized controlled trial data.

While management is confident the evidence will drive policy changes, they cautioned that payor decision timelines are outside of the company's control.