Tactile Medical starts trading

Tactile Medical on Thursday became the first Minnesota company in 18 months to go public.

After lowering the price of its 4 million shares to $10 on Wednesday, the company started trading Thursday morning under the symbol "TCMD." In doing so, it also was the first U.S. medical device company this year to complete an initial public offering.

"Employees are not only excited about this juncture taking us to the next level and giving us the ability to invest in and further grow the business," said Tactile Chief Financial Officer Lynn Blake, "it also gives us a greater sense of stability."

The shares ended the day at $11.08, up 10.8 percent.

Tactile Medical had planned to pull the trigger on its IPO shortly after the company and underwriters Piper Jaffray, William Blair and Canaccord Genuity went on a two-week roadshow in mid-June to meet with and solicit investors.

At the time, the company had said in a filing with the Securities and Exchange Commission that it wanted to raise as much as $73.6 million by offering its shares in the $14 to $16 range. At $10, the company has the potential to raise $46 million, including the underwriters' overallotment.

"Brexit" got in the way of the initial plan. The United Kingdom's vote to pull out of the European Union created some market volatility and the company temporarily halted the offering.

The company then decided to wait a couple more weeks in July so it could present preliminary second quarter results to investors before pricing. Officials also were able to share new insurance reimbursement contracts resulting in up to 30 million more individuals eligible for coverage of care using Tactile Medical products.

"Having those messages about continued positive momentum in the business definitely helped us fill the order book and get the deal done," Blake said.

The company had 2015 profits of $1.3 million on revenue of $21.2 million. Revenue for the first half of this year is expected to be $33.1 million to $33.5 million.

"We've had a 30 percent compound annual growth rate in revenue over the past two years and in the first quarters of 2016 we've grown even faster than that," Blake said. "The company has also operated on a profitable basis the past several years, … which made us pretty unique as we talked with potential investors."

Tactile Medical develops home therapy devices to treat lymphedema and venous ulcers. Lymphedema causes swollen limbs and dangerous infections. If often affects breast cancer and other cancer survivors whose lymph nodes and system may have been damaged or removed during treatment. Tactile Medical's compression bandages and devices help control the swelling.

Tactile Medical intends to use proceeds of the offering to expand its sales, marketing, reimbursement, clinical, regulatory and product development activities.

According to the company's filing on Wednesday, insiders of the company, including two large venture capital partners Galen Partners and Radius Ventures, will hold 49.9 percent of the company's shares.

The company was able to complete its offering despite a soft market for IPOs in the first half of 2016. Total IPO offerings in the U.S. are well behind the pace set in 2015: 51 companies have completed IPOs this year compared with 116 through the same period last year. Most of the 2016 offerings have been by health care, information technology and financial companies, according to data from Renaissance Capital.

This is the first major IPO of a Minnesota company since Entellus Medical completed its IPO on Jan. 29, 2015.