The stock of Tactile Systems Technology, the northeast Minneapolis medical-device manufacturer that is the state’s best-performing stock since it went public last year, hit new highs this week amid strong first-half earnings and an upbeat management report.
Tactile on Tuesday led all Minnesota public companies, as it rose 12 percent to a $33.33 per share close in heavy trading, following the earnings release late Monday. Tactile on Wednesday closed down 1.1 percent to $32.97.
“The growth in sales of our Flexitouch Systems during the first six months of the year was driven by a continuation of the longer-term growth tailwinds in our business,” Tactile CEO Gerald Mattys told investors in a conference call Tuesday. “These tailwinds... represent the primary drivers of our growth in 2017.
“We've made considerable investments to expand our sales and reimbursement teams by bringing on a number of new resources. Specifically, over the last two years, our selling organizations expanded to more than 145 representatives as of June 30 from 66 representatives at the beginning of 2015.Second, we've been focused on maximizing the productivity of our selling representatives by providing them with the resources that they need to be successful.”
Twelve-year-old Tactile Medical went public at $10 per share in August to raise capital and visibility. The stock, which topped $34 per share for awhile on Tuesday, is valued at about $560 million.
Last September, the Food and Drug Administration cleared Tactile to use the at-home treatment for lymphedema swelling in the head and neck, as well as for swollen limbs, from the excess fluid buildup that often results from cancer treatment. Flexitouch has been recognized by independent analysts as well as Medicare and private insurers as an economical way to treat lymphedema with a system that costs about $5,000 instead of repeated clinic visits and open-ended hospital stays.
Mattys said sales rose to Veterans Administration hospitals as well as through commercial insurers thanks to long-term investments Tactile hass made in the product and with public-and-private insurers.
“Within the portion of the market covered by commercial insurers, our success in creating a skilled and tenured reimbursement team, and establishing productive relationships with private payers, has been evidenced in a steady, multiyear improvement in our commercial payer accrual rate,” Mattys said of his 335-employee company. “At the end of 2016, our long-run commercial approval rate was in excess of 85 percent. In the second quarter, we [achieved] a commercial-payer approval rate that exceeded our historical leverage, increasing the efficiency of our sales and reimbursement teams during the quarter.”