TACTILE SYSTEMS TECHNOLOGY INC

Previous wording

Our current lymphedema products are the Flexitouch Plus, Entre Plus and Nimbl pneumatic compression pump systems and our airway clearance product is a High-Frequency Chest Wall Oscillation (“HFCWO”) device called AffloVest. The Flexitouch system product line is considered an advanced pneumatic compression device. The first generation Flexitouch system received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) in July 2002, introducing a medical device technology to address the many limitations of self-administered home-based manual lymphatic drainage therapy. A second generation Flexitouch system received 510(k) clearance from the FDA in October 2006. In September 2016, we received 510(k) clearance from the FDA for the Flexitouch system in treating lymphedema of the head and neck. A third generation, Flexitouch Plus, received 510(k) clearance from the FDA in June 2017. In December 2020, we received 510(k) clearance from the FDA for two new indications for our Flexitouch Plus system: phlebolymphedema and lipedema. The Entre system product line and Nimbl product line are considered basic, or simple, pneumatic compression devices. These systems are sold or rented to patients who need a simple pump or who do not yet qualify for insurance reimbursement for an advanced compression device e.g., a Flexitouch Plus system. We introduced the Entre system in the United States in February 2013, this device was manufactured by Thermotek, Inc. and received FDA clearance in 2010. In 2015, we received FDA clearance for our own first generation Entre system and the second generation, Entre Plus, was released in March 2023. Nimbl, our next-generation pneumatic compression platform, received 510(k) clearance in June 2024 and was commercially launched for upper extremity lymphedema in October 2024 and was commercially launched for lower extremity lymphedema in February 2025. Nimbl has replaced most orders for our Entre system and we expect will continue to do so. Sales and rentals of our lymphedema products represented 83% of our revenue in each of the three months ended March 31, 2026 and 2025.

Current wording

Our current lymphedema products are the Flexitouch Plus, Entre Plus and Nimbl pneumatic compression pump systems and our airway clearance product is a High-Frequency Chest Wall Oscillation (“HFCWO”) device called AffloVest. The Flexitouch system product line is considered an advanced pneumatic compression device. The first generation Flexitouch system received 510(k) clearance from the U.S. Food and Drug Administration (the “FDA”) in July 2002, introducing a medical device technology to address the many limitations of self-administered home-based manual lymphatic drainage therapy. A second generation Flexitouch system received 510(k) clearance from the FDA in October 2006. In September 2016, we received 510(k) clearance from the FDA for the Flexitouch system in treating lymphedema of the head and neck. A third generation, Flexitouch Plus, received 510(k) clearance from the FDA in June 2017. In December 2020, we received 510(k) clearance from the FDA for two new indications for our Flexitouch Plus system: phlebolymphedema and lipedema. The Entre system product line and Nimbl product line are considered basic, or simple, pneumatic compression devices. These systems are sold or rented to patients who need a simple pump or who do not yet qualify for insurance reimbursement for an advanced compression device e.g., a Flexitouch Plus system. We introduced the Entre system in the United States in February 2013, this device was manufactured by Thermotek, Inc. and received FDA clearance in 2010. In 2015, we received FDA clearance for our own first generation Entre system and the second generation, Entre Plus, was released in March 2023. Nimbl, our next-generation pneumatic compression platform, received 510(k) clearance in June 2024 and was commercially launched for upper extremity lymphedema in October 2024 and was commercially launched for lower extremity lymphedema in February 2025. Nimbl has replaced most orders for our Entre system and we expect will continue to do so. Sales and rentals of our lymphedema products represented 84% and 83% of our revenue in the six months ended June 30, 2026 and 2025, respectively.

Previous wording

On September 8, 2021, we acquired the assets of the AffloVest airway clearance product line. AffloVest is a portable, wearable vest that provides airway clearance to treat patients with chronic respiratory conditions such as bronchiectasis or conditions resulting from neuromuscular disorders. For each of the three months ended March 31, 2026 and 2025, sales of AffloVest represented 17% of our revenue.

Current wording

On September 8, 2021, we acquired the assets of the AffloVest airway clearance product line. AffloVest is a portable, wearable vest that provides airway clearance to treat patients with chronic respiratory conditions such as bronchiectasis or conditions resulting from neuromuscular disorders. In April 2026, we received FDA 510(k) clearance for our AffloVest Gen 6 and it was commercially launched in June 2026. For the six months ended June 30, 2026 and 2025, sales of AffloVest represented 16% and 17% of our revenue, respectively.

Previous wording

a direct-to-patient and -clinician model. The AffloVest device is sold through respiratory durable medical equipment providers throughout the United States that service patients and bill third-party payers for the product. We employ a small group of respiratory specialists, who educate DME representatives, provide product demonstrations for targeted clinicians and support technical questions related to the AffloVest. As of March 31, 2026, we employed 172 account managers and 163 specialists for our lymphedema products and a team of 18 specialists supporting our airway clearance products. This compares to 161 account managers and 103 specialists for our lymphedema products and a team of 19 specialists supporting our airway clearance products as of March 31, 2025.

Current wording

To support the growth of our business, we continue to invest in our commercial infrastructure, consisting of a lymphedema and respiratory sales force, marketing team including clinical education programs, patient education team, reimbursement capabilities and clinical expertise. We market our lymphedema products using a direct-to-patient and -clinician model. The AffloVest device is sold through respiratory durable medical equipment providers throughout the United States that service patients and bill third-party payers for the product. We employ a small group of respiratory specialists, who educate DME representatives, provide product demonstrations for targeted clinicians and support technical questions related to the AffloVest. As of June 30, 2026, we employed 169 account managers and 163 specialists for our lymphedema products and a team of 19 specialists supporting our airway clearance products. This compares to 161 account managers and 132 specialists for our lymphedema products and a team of 19 specialists supporting our airway clearance products as of June 30, 2025.

Previous wording

For the three months ended March 31, 2026, we generated revenue of $75.3 million and had a net loss of $1.8 million, compared to revenue of $61.3 million and net loss of $3.0 million for the three months ended March 31, 2025. Our primary sources of capital since our initial public offering in 2016 have been from operating income, bank financing and our public offering in February 2023.

Current wording

For the three months ended June 30, 2026, we generated revenue of $85.7 million and had net income of $7.8 million, compared to revenue of $78.9 million and net income of $3.2 million for the three months ended June 30, 2025. For the six months ended June 30, 2026, we generated revenue of $161.0 million and had net income of $6.0 million, compared to revenue of $140.2 million and net income of $0.2 million for the six months ended June 30, 2025. Our primary sources of capital since our initial public offering in 2016 have been from operating income, bank financing and our public offering in February 2023.

Previous wording

Comparison of the Three Months Ended March 31, 2026 and 2025

Current wording

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

Previous wording

Revenue increased $14.0 million, or 23%, to $75.3 million in the three months ended March 31, 2026, compared to $61.3 million in the three months ended March 31, 2025. The increase in total revenue was attributable to an increase of $11.7 million, or 23%, in sales and rentals of the lymphedema product line and an increase of $2.3 million, or 22%, in sales of the airway clearance product line in the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

Current wording

Revenue increased $20.8 million, or 15%, to $161.0 million in the six months ended June 30, 2026, compared to $140.2 million in the six months ended June 30, 2025. The increase in total revenue was attributable to an increase of $19.3 million, or 17%, in sales and rentals of the lymphedema product line and an increase of $1.5 million, or 6%, in sales of the airway clearance product line in the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

Previous wording

The increase in the lymphedema product line revenue in the three months ended March 31, 2026, was driven by accelerating commercial momentum from our strong partnerships, execution of our go-to-market commercial strategy and disciplined focus on sales force productivity. The increase in the airway clearance product line revenue was primarily driven by strong partnerships and prioritized placement agreements with our top 10 respiratory DME providers.

Current wording

The increase in the lymphedema product line revenue in the three and six months ended June 30, 2026, was driven by accelerating commercial momentum from our strong partnerships, execution of our go-to-market commercial strategy and disciplined focus on sales force productivity. The decrease in the airway clearance product line revenue for the three months ended June 30, 2026 was primarily driven by inventory timing dynamics among a few large DME providers. The increase in the airway clearance product line revenue for the six months ended June 30, 2026 was primarily driven by strong partnerships and prioritized placement agreements with our top 10 respiratory DME providers.

Previous wording

The following table summarizes our revenue by product line for the three months ended March 31, 2026 and 2025, both in dollars and percentage of total revenue:

Current wording

The following tables summarize our revenue by product line for the three and six months ended June 30, 2026 and 2025, both in dollars and percentage of total revenue:

Previous wording

Cost of revenue increased $1.7 million, or 11%, to $17.7 million in the three months ended March 31, 2026, compared to $15.9 million in the three months ended March 31, 2025. The increase in cost of revenue was primarily attributable to the increase in revenue.

Current wording

Cost of revenue increased $0.2 million, or 1%, to $20.3 million in the three months ended June 30, 2026, compared to $20.1 million in the three months ended June 30, 2025. Cost of revenue increased $2.0 million, or 5%, to $38.0 million in the six months ended June 30, 2026, compared to $36.0 million in the six months ended June 30, 2025. The increase in cost of revenue in both periods was primarily attributable to the increase in revenue.

Previous wording

Sales and marketing expenses increased $5.2 million, or 19%, to $32.7 million in the three months ended March 31, 2026, compared to $27.5 million in the three months ended March 31, 2025. The increase was primarily attributable to a $4.1 million increase in personnel-related compensation expenses, a $1.3 million increase in expenses related to meetings and seminars and a $0.1 million increase in expenses for demo units, partially offset by a $0.3 million decrease in travel and entertainment expenses.

Current wording

Sales and marketing expenses increased $7.2 million, or 12%, to $64.7 million in the six months ended June 30, 2026, compared to $57.6 million in the six months ended June 30, 2025. The increase was primarily attributable to a $6.8 million increase in personnel-related compensation expenses, a $0.2 million increase in expenses for demo units and a $0.1 million increase in educational grants.

Previous wording

Research and development (“R&D”) expenses increased $1.0 million, or 59%, to $2.8 million in the three months ended March 31, 2026, compared to $1.7 million in the three months ended March 31, 2025. The increase was primarily attributable to a $0.6 million increase in IT and other professional fees related expenses and a $0.5 million increase in personnel-related compensation expenses.** **IT-related expenses reflected in both R&D expenses and Reimbursement, general and administrative expenses primarily relate to the ongoing implementation of new technology across the entire order process, replacing legacy systems, which we expect to continue through the remainder of 2026.

Current wording

Research and development (“R&D”) expenses increased $0.5 million, or 24%, to $2.5 million in the three months ended June 30, 2026, compared to $2.0 million in the three months ended June 30, 2025. The increase was primarily attributable to a $0.2 million increase in IT-related expenses and a $0.2 million increase in personnel-related compensation expenses.** **

Previous wording

Reimbursement, general and administrative expenses increased $3.0 million, or 15%, to $23.0 million in the three months ended March 31, 2026, compared to $20.0 million in the three months ended March 31, 2025. This increase was primarily attributable to a $1.2 million increase in personnel-related compensation expenses, a $0.8 million increase in acquisition and integration costs related to the LymphaTech acquisition, a $0.6 million increase in occupancy costs, depreciation expense and professional fees and a $0.4 million increase in IT-related expenses.

Current wording

Reimbursement, general and administrative expenses increased $4.4 million, or 10%, to $46.4 million in the six months ended June 30, 2026, compared to $42.0 million in the six months ended June 30, 2025. This increase was primarily attributable to a $3.3 million increase in personnel-related compensation expenses, a $1.0 million increase in acquisition and integration costs related to the LymphaTech acquisition and a $0.7 million increase in IT-related expenses, partially offset by a $0.7 million decrease in occupancy costs, depreciation expense and professional fees.

Previous wording

Interest income decreased $0.2 million, or 26%, to $0.7 million in the three months ended March 31, 2026, compared to $0.9 million in the three months ended March 31, 2025, primarily due to a lower cash balance in an Institutional Insured Liquid Deposit demand account due to funds being utilized for the LymphaTech acquisition. Interest expense decreased $0.4 million, or 93%, to $28,000 in the three months ended March 31, 2026, compared to $0.4 million in the three months ended March 31, 2025, primarily due to the repayment of debt.

Current wording

Interest income decreased $0.3 million, or 34%, to $0.6 million in the three months ended June 30, 2026, compared to $0.9 million in the three months ended June 30, 2025, primarily due to a lower cash balance in an Institutional Insured Liquid Deposit demand account due to funds being utilized for the LymphaTech acquisition. Interest expense decreased $0.4 million, or 95%, to $19,000 in the three months ended June 30, 2026, compared to $0.4 million in the three months ended June 30, 2025, primarily due to the repayment of debt.

Previous wording

We recorded an income tax expense of $0.9 million compared to an income tax benefit of $1.1 million for the three months ended March 31, 2026 and 2025, respectively. The primary driver of the change in our effective tax rate was attributable to the Company recording stock-based compensation discrete items when compared to the prior year period.

Current wording

We recorded an income tax benefit of $0.4 million and an income tax expense of $1.3 million for the three months ended June 30, 2026 and 2025, respectively. The primary driver of the change in our effective tax rate was attributable to the Company recording stock-based compensation discrete items when compared to the prior year period.

Previous wording

On March 31, 2026, we had cash of $75.0 million and net accounts receivable of $38.2 million. This compares to cash of $83.6 million and net accounts receivable of $35.7 million at March 31, 2025.

Current wording

On June 30, 2026, we had cash of $69.9 million and net accounts receivable of $43.1 million. This compares to cash of $81.5 million and net accounts receivable of $33.1 million at June 30, 2025.

Previous wording

Net cash used in operating activities during the three months ended March 31, 2026 was $0.3 million, resulting from non-cash net income adjustments of $3.5 million, a net loss of $1.8 million and a net decrease in operating assets and liabilities of $1.8 million. The positive non-cash net income adjustments consisted primarily of $1.8 million of stock-based compensation expense, $1.6 million of depreciation, and a loss on disposal of property and equipment and intangibles of $0.1 million. Cash used relating to the change in operating assets and liabilities primarily consisted of a decrease in net accounts receivable of $5.7 million, a $2.2 million increase in accounts payable, a $0.8 million decrease in income taxes payable and a $0.6 million decrease in net investment in leases, partially offset by a decrease in accrued payroll and related taxes of $8.3 million, an increase in inventories of $2.6 million, an increase in right of use operating lease assets of $0.3 million and an increase in prepaid expenses and other assets of $0.1 million.

Current wording

Net cash provided in operating activities during the six months ended June 30, 2026 was $2.9 million, resulting from non-cash net income adjustments of $7.6 million, net income of $6.0 million and a net decrease in operating assets and liabilities of $10.7 million. The positive non-cash net income adjustments consisted primarily of $4.0 million of stock-based compensation expense, $3.5 million of depreciation and amortization, and a loss on disposal of property and equipment and intangibles of $0.1 million. Cash provided relating to the change in operating assets and liabilities primarily consisted of an increase in prepaid expenses and other assets of $5.2 million, a decrease in accrued payroll and related taxes of $3.8 million, an increase in inventories of $2.8 million, a $2.2 million decrease in income taxes payable, a $0.8 million decrease in accrued expenses and other liabilities and an increase in right of use operating lease assets of $0.4 million, partially offset bya $2.9 million increase in accounts payable, a decrease of $0.8 million in net investment in leases and a decrease in net accounts receivable of $0.8 million.

Previous wording

Net cash provided by operating activities during the three months ended March 31, 2025 was $0.4 million, resulting from non-cash net income adjustments of $4.0 million, a net loss of $3.0 million and a net decrease in operating assets and liabilities of $0.7 million. The positive non-cash net income adjustments consisted primarily of $2.1 million of stock-based compensation expense and $1.7 million of depreciation. Cash used relating to the change in operating assets and liabilities primarily consisted of a decrease in net accounts receivable of $9.2 million, a $1.4 million increase in accounts payable and a $0.3 million increase in accrued expenses and other liabilities, partially offset by a decrease in accrued payroll and related taxes of $7.0 million, an increase in prepaid expenses and other assets of $2.5 million, a decrease in income taxes payable of $1.3 million, an increase in right of use operating lease assets of $0.3 million, an increase in net investment in leases of $0.3 million and an increase in inventories of $0.2 million.

Current wording

Net cash provided by operating activities during the six months ended June 30, 2025 was $15.2 million, resulting from a net increase in operating assets and liabilities of $7.5 million, non-cash net income adjustments of $7.4 million, and net income of $0.2 million. Cash provided relating to the change in operating assets and liabilities primarily consisted of a decrease in net accounts receivable of $11.9 million, a $2.6 million increase in accrued expenses and other liabilities, a $2.3 million increase in accounts payable, a decrease in inventories of $1.5 million, and a decrease in net investment in leases of $0.1 million, partially offset by a decrease in accrued payroll and related taxes of $5.2 million, an increase in prepaid expenses and other assets of $4.7 million, a decrease in income taxes payable of $0.6 million and an increase in right of use operating lease assets of $0.3 million. The positive non-cash net income adjustments consisted primarily of $4.0 million of stock-based compensation expense, $3.4 million of depreciation and amortization, and $0.1 million of loss on disposals.

Previous wording

Net cash used in investing activities during the three months ended March 31, 2026, was $7.1 million, primarily consisting of $6.2 million of net payments related to the acquisition of LymphaTech and $0.8 million of purchases of property and equipment and patent costs.

Current wording

Net cash used in investing activities during the six months ended June 30, 2026, was $11.4 million, primarily consisting of $6.2 million of net payments related to the acquisition of LymphaTech, a $3.0 million payment for the exclusive distribution agreement for MyoSleeve, $2.1 million of purchases of property and equipment and $0.1 million of patent costs.

Previous wording

Net cash used in investing activities during the three months ended March 31, 2025, was $0.4 million, consisting of purchases of property and equipment and patent costs.

Current wording

Net cash used in investing activities during the six months ended June 30, 2025, was $0.8 million, consisting of purchases of property and equipment and patent costs.

Previous wording

Net cash used in financing activities during the three months ended March 31, 2026, was $1.1 million, primarily consisting of payments of $1.1 million for the repurchase of our common stock.

Current wording

Net cash used in financing activities during the six months ended June 30, 2026, was $5.1 million, primarily consisting of payments of $6.4 million for the repurchase of our common stock, partially offset by $1.0 million in proceeds from the issuance of common stock under the ESPP and $0.2 million in proceeds from the exercise of common stock options.

Previous wording

Net cash used in financing activities during the three months ended March 31, 2025, was $10.8 million, primarily consisting of payments of $10.0 million for the repurchase of our common stock and a payment of $0.8 million made on our term loan.

Current wording

Net cash used in financing activities during the six months ended June 30, 2025, was $27.2 million, primarily consisting of payments of $26.6 million for the repurchase of our common stock and a payment of $1.5 million made on our term loan, partially offset by $0.8 million in proceeds from the issuance of common stock under the ESPP.

Previous wording

During the three months ended March 31, 2026, we repurchased 40,250 shares for approximately $1.1 million. We used cash on hand to fund these repurchases.

Current wording

During the six months ended June 30, 2026, we repurchased 249,150 shares for approximately $6.4 million. We used cash on hand to fund these repurchases.