All right. So I think we'll hit it off here. Good morning, everyone. Thanks for joining us here at the William Blair Growth Stock Conference. My name is Margaret Kaczor Andrew, and I am the research analyst here at William Blair & Company that covers Tactile Medical. Before we begin, I am required to inform you that you can obtain a complete list of research disclosures or potential conflicts of interest at williamblair.com. With that, I'm pleased to introduce Dan Ruevers, who is the CEO and President of Tactile Medical. Also his last hurrah, really, for an investor conference, so hopefully we can give him a really nice send-off. And Elaine Birkemeyer, CFO of Tactile. So team, thanks for joining us, and I'll shoot it over to you.
Thanks, Margaret. Am I on? That's perfect. Now that Margaret did her disclosures, we'll present ours. Let me just start with a quick profile for those that might be not as familiar with Tactile Medical. We're based in Minneapolis, been around for almost 30 years and have about 1,000 employees. You can see here that last year our revenue was almost $275 million, solid gross margins over 70%, and healthy Adjusted EBITDA last year, almost $30 million. I think the important one to start with, perhaps, though, is our mission statement, and that is, "We reveal and treat patients with underserved chronic conditions in the home." That speaks as much to what we won't do as what we will. Underserved is an operative word.
There are other chronic conditions like diabetes, obstructive sleep apnea, but they're not underserved. There are some really good companies with some great solutions available. We're focused on disease states that have largely been neglected, but have reasonable girth and an opportunity for us to make a difference in a lot of patients' lives. So this is the mission that inspires the company on a daily basis, and it's also what steers our business overall. Just a couple of things as it relates to investment highlights. I think that, you can see here that, we talk about market leadership and delivering profitable growth. So we're a small cap company in that rare universe that's actually growing top line, is profitable, and has healthy free cash flow.
As far as end markets, as I alluded to, these two segments that we've selected, specifically lymphedema and bronchiectasis. And I'll share a little bit more about why we believe those are two segments that are worth the energy and investment that we've continued to apply. It's because we really believe that there's significant runway ahead, and we're already in the pole position. So strong payer adoption, and market share leaders as far as attractive market segments. I think when you look at strong assets, we've built a lot of the infrastructure necessary to develop these markets. We've got a large direct sales force. Our lymphedema group is roughly almost 270 salespeople. We also have a small, what I'd call SWAT team in the bronchiectasis side of our business that supports a huge universe of respiratory DME salespeople.
So we've got a very comprehensive distribution reach in place. We're also very unique in that we are vertically integrated, so we serve as our own DME. We have a back office that supports all of the billing for patients, interfacing with both Medicare and commercial plans, and all of that along with what we believe is the best solutions to treat these segments that we have developed, designed, and manufactured in-house. And then, as you think about value creation, not only, as I said, we have strong growth margins, but we really believe that the selection of the segments that we've picked have the capacity for continued growth. And particularly in the last what I'd call 12 months or so, we've demonstrated a significant increase in improvements in free cash flow as well.
So this is a slide that's intended to explain a little bit more specifically why we've selected lymphedema and bronchiectasis as the markets that we want to continue to develop. On the left-hand side, you can see the lymphedema iceberg, and there's 1.4 million patients today that have been diagnosed with lymphedema in the United States. Among them, less than 10% still have received a device like ours. And then furthermore, there's almost 20 million more patients with lymphedema that continue to go undiagnosed. So there's a huge opportunity to continue to develop this market. We had acquired data several years ago that revealed that the average lymphedema patient suffering from swelling symptoms had recognized them more than three years before they got their definitive diagnosis. So, and they've also gone through 3.7 HCPs before they got their diagnosis.
These patients are struggling for a solution and for someone to help identify what they have and how to treat it. That's why we're so energized at this specific segment. Similarly, on the right side, bronchiectasis is a complex respiratory condition that afflicts about 500,000 diagnosed patients in the United States today, but also similarly, it's a very underdiagnosed disease state. The belief is that the evidence points to over almost 4.5 million patients that have it, but still haven't gotten that definitive diagnosis. These are the pieces that continue to drive the focus in our investment. If you're like most primary care physicians, and frankly, even many specialists, you may not be familiar with lymphedema.
So if you're new to the story, Lymphedema is a diagnosis that, as I just described, goes unrecognized by many or misdiagnosed. But at its core, the lymphatic system is the second biggest circulatory system in the body, second only to the venous system. There's three different ways, typically, that most patients will develop Lymphedema. Most is secondary. There is primary Lymphedema, which means you may have been born with it, but it's a very small space. Secondary Lymphedemas, the largest one would be, related to chronic venous insufficiency. So as patient gets venous disease, a lot of times it will lead to, Lymphedema, typically in the lower extremities.
That's the largest segment that we treat today, and we find those patients typically at a vascular practice, where the patient has been referred to try and help understand what is it that's leading to their condition, and that's where we get our referrals. The second would be oncology. So these are patients that have either had lymph nodes removed or damaged with post-operative radiation. The good news is they may survive their cancer bout. The bad news is many of them will ultimately develop lymphedema because those lymphatics have been disrupted or potentially removed, and the ability for that system to flow and continue to rid the body of the toxins it's designed to take care of has been disrupted. It leads to swelling in the extremities, and potentially even in the trunk. And the third one is lymphatic therapists.
So manual lymphatic drainage is a way to treat lymphedema. It's simply not very available. There's not enough of these therapists out there, and most payers will only pay for half a dozen visits, which means for the next 11 months of the year, they're on their own, and that's where we come in and our device. So you can see also in the light blue box, these are significant consequences. I think sometimes people believe lymphedema is simply a function of a cosmetic or a self-conscious swelling. But if you have lymphedema, it can lead to cellulitis, it can lead to chronic wounds, it can if it's head and neck cancer survivors, can lead to inability to eat swallow solid food to speak, range of motion, pain. So there's a lot of very significant consequences of lymphedema that goes untreated.
Our device attempts to restimulate the lymphatics where that disruption has occurred. So if it's a lower extremity patient, they may be wearing a garment like you see on the far left, that would provide lymphatic drainage therapy, in their affected limb. It typically will start for us with a basic pump, and that's our Entre Plus. That's the entry-level pump. Most payers today require that the patients start with a basic pump. They wanna make sure that the most conservative therapy is applied first. If the patient doesn't respond, they would become ultimately eligible for an advanced pump, which would be our Flexitouch, which has been our hallmark brand for years. And then Kylee is an introduction of a third product. It's a free application that's available for download by patients, so they can start to educate themselves.
As I've explained, so many of these patients, their primary care physician will misdiagnose what they've got. They'll either suggest that maybe they should lose some weight, or maybe they should go on a diuretic, neither of which is going to resolve lymphedema. So helping to have an outreach where we can connect directly with the consumer, the patient, so they can be more informed, help educate their own primary care physician, and understand how to pursue the kind of therapy they should be entitled to. So just to summarize on lymphedema, number one player in the space, we're the only truly vertically integrated pneumatic compression device company. We compete with a couple of others that would typically be private, and their market has been an attempt to stitch together regional DMEs.
The ability to deliver one consistent face to the patient, to the prescriber, and ensure a consistent experience with the patient; it's much more difficult when you're stitching together regional DMEs. So we've got a large direct sales force, scalable back office, and a very good, well-matured, reimbursement climate as well. Now, the second diagnosis that we treat is bronchiectasis. Bronchiectasis is another one, as I alluded to on the slide with the iceberg, that it's another highly underserved and underdiagnosed condition. Bronchiectasis is effectively, it's the scarring of lungs as they continue to get recurring pulmonary infections. Most people have heard of COPD or chronic obstructive pulmonary disease, if they're not familiar with bronchiectasis. Bronchiectasis would be a subsegment of the COPD community.
You know, if you've got a smoker community, typically one in four of those patients have or will develop bronchiectasis. And the consequence is this recurring infection leads to pneumonias, it can lead to the requirement for inhaled antibiotics, hospitalizations. These patients will often become what's referred to as a frequent flyer. So, this is a part that the consequence as the lung continues to have deterioration from the disease, they'll develop more and more mucus. It's very difficult for the patient to expectorate that, and our device helps them to do that. And as a result, it leads to fewer infections, fewer hospitalizations, and fewer exacerbations. So the sequence here is typically, it's left untreated, just like we showed in that iceberg slide.
Many of these patients will not get the diagnosis or the therapy that they're gonna ultimately need to maintain their health. The basic approach, and most often, patients have the exacerbation treated only. So they have a pulmonary infection, they're hospitalized, they'll be treated with, with antibiotics, and they'll be sent home, and they will eventually find themselves in this vicious circle, coming back and going through the same sequence over again. Historically, the standard of care has been chest physical therapy, and this is a physical therapist that would clap on the patient's lungs. If you've ever known, folks, who've had children with cystic fibrosis, they're a pretty typical example of patients that require chest physical therapy every single day.
A therapist or a parent in that instance would typically have to clap on the patient's lungs, put them in Trendelenburg, head down, using gravity as well, and are able to cough up that mucus so it avoids the ongoing infections that it would lead to. That's where high-frequency chest wall oscillation, which is the generic term for Vest therapy, which replaces the need for a professional therapist or a family member and allows patients to self-administer care. So you've moved from number 3, which is CPT by a professional or family member, to independent ability to self-manage your care with a garment. And this is what you can see in the top right sequence of the slide. So from an airway clearance standpoint, we feel like we're very well positioned as well.
We acquired the AffloVest about 2.5 years ago, and we have moved from number 4 to number 2 in market share. There's a difference in the distribution model that's opposite what we did in lymphedema. We believe that a direct sales force in lymphedema is critically important because the education sequence continues to be very critical. The reimbursement criteria is important for the representative to be able to convey clearly, and all of those things we control on our lymphedema side. As far as airway clearance is concerned, there's a pretty straightforward criteria for eligibility for vest therapy, and there are three other companies that compete in this space. They all have devices that plug into the wall, and they sell them through their own direct sales forces, Baxter, Philips, and a company called Electromed in the space.
If you aggregate all of their salespeople, there's about 200. Conversely, in the respiratory DME, and that's the operative word, respiratory, the universe is about 4,000 reps in the United States. They've never had a vest option because the three people that we compete with at the three companies have all been direct. We chose to put this one into the hands of the respiratory DME. One, because the universe of salespeople is so much larger. Two, because a lot of these patients can be referred from a primary care office, and trying to reach the primary care office with a handful of salespeople is an awfully big challenge. So reaching out to the coverage area of respiratory DMEs, and perhaps most importantly, the respiratory DME is the one that has already had a relationship with the complex respiratory patient.
The target patient for this is typically on a nebulizer. They probably have oxygen in their home. They may be on nighttime ventilation. They've got complex respiratory needs. There's a variety of DME components that you'll find in their home, all of which came from their respiratory DME. So the fact that we can embed ourselves in the middle of that, portfolio of solutions, which they never had that one puzzle piece, we believe is really important. And I think we've demonstrated over the last couple of years in doubling the business since we acquired it, that, this is indeed a, a well-constructed marriage. So a few things that we've, checked off the box in the last few years.
We've got a lot of things we're proud of, but I think if you just kinda isolate on 2023, we have refreshed in the last two years, virtually our entire portfolio on the Lymphedema side. So we've got new garments that we've introduced. We introduced a new Entre Plus for the entry-level segment, and we're in the midst of developing an even refreshed or brand-new platform for therapy that we'll look forward to introducing to the market later on this year. From a profitability and growth standpoint, we've continued to demonstrate consistent double-digit growth in top line, as well as significant expansions in both profitability and free cash flow.
I think that the fact that we've assembled a really stellar leadership team and board over the last few years convinces me that we are well positioned to continue to scale. This business should not outgrow this leadership team. This is just a quick glimpse to give you a feel for what our last handful of years have looked like. I think clearly, when you look at 2020, we all know there were some things going on that year, so growth took a year off at Tactile, as we navigated our way through the pandemic. But with the exception of 2020, we've demonstrated double-digit growth all the way back to the beginning of this slide and well before.
You can see that our guidance this year is between $300 million and $305 million, and our Adjusted EBITDA targets compared to, call it four years ago, would effectively be a double. The fact that we're still in the early stages of these underserved segments and there's still so many patients that are either undiagnosed or untreated is what gives us the confidence that this is a sustainable growth pattern. From a near-term strategic priorities, I think there's three things that we're very focused on. One, obviously, is growth, and we've continued to invest both in expanding our sales force to further educate even more physicians, engage more with practices, and make sure that we can continue to help them identify the right patients to be treated. We're also looking at ways that we can expand productivity for our sales force.
I think the third one is at the bottom here. We talked a bit about a randomized clinical trial that we've just completed for head and neck cancer survivors. There are over 400,000 patients in the United States that are head and neck cancer survivors. 90% of them have or will develop lymphedema. There are very, very few options for them. We talk about conservative therapy, compression garments around your head and neck on a sustained basis like you would wear all day in your legs, not very practical. So this is a subset of the market that desperately needs help, and we've sponsored an RCT that took us almost 3 years. We enrolled 235 patients. It's the largest randomized controlled trial in this segment ever done.
The last patient in was in April, and there's a six-month follow-on, so we're looking forward to sharing the results by the first of next year. From a tech standpoint, as we've continued to grow, when you're a $50 million company, infrastructure needs are different than when you're a $300 million-$500 million company. So we've clearly recognized that. We've been investing this year specifically in some tech tools that we think will continue to enable us to scale and be more efficient in our operations over the next few years. E-prescribing is one that we're in the midst of a pilot on right now. We've got 4 of our 26 regions that we've deployed a new e-prescribing tool.
One of the things that can siphon the productivity of a sales rep is the back and forth with the prescribing office to make sure that we've got what we need to submit for insurance. We need medical records. We may need evidence of when they tried conservative therapy, and more often than not, when we get an order, it's rarely complete. Usually, the office forgets something.
Hey, we need to get measurements for when the patient started their conservative therapy," or, "We need to know the dates that they started," or, "We need to have some record that there's been sustained swelling for a period of time." Basics, but there's a lot of products that get prescribed from a medical office, so expecting the office to always regularly be familiar with the criteria for every device is difficult. That means our sales rep oftentimes will have to go back to the office and say, "Can you pull up the medical record? I need you to print that piece out." The E-prescribing attempt is a tool that we've identified that looks a lot more like an Amazon order.
We know that when we if you place an order for a pair of shoes, you got to put in the size, you got to put in the color, you got to put in your credit card number, and then you try and hit order, and it says, "Nope, that button's not hot." Has to take you back to, "You didn't fill out this field. You need to complete the field of your expiration date of your credit card." And it's very instructive. That's the E-prescribing application that we're piloting right now.
And the goal here is to make it more straightforward for the prescriber, but also to reduce the back and forth by making sure that they understand exactly what criteria they need to complete, and get the sales force liberated from some of that back and forth, allowing them to have more market development and selling time. We just signed a contract with Salesforce, and we'll be deploying CRM over the balance of this year, introducing it as our order management tool next year as well. So a number of benefits that we expect to yield from that. And then when we talk about people, we're investing in a better optimized experience for a variety of constituents. One is for the prescriber.
This e-prescribing tool that I just described is an important one because it can be onerous for the practice, and that leads to them overlooking patients, making it easier to do the right thing and process an order for the patient that needs it. We think that that could be a differentiator for us. I think the second one is for our sales force. That along with CRM and liberating them from some of the in-home demos that they've been doing with some of our trainers, we think will also be good for the sales force and enable them to have more selling time. And then for the patient, specifically, we continue to invest in improved solutions, and we're looking forward to introducing the next platform, as I mentioned, later on this year.
So I think just in conclusion, we think we're a bit of a, a unique story. We're a small cap company that's not only growing, but as I said, is profitable, generating solid cash flow, really strong balance sheet, and all of those things allow us to continue to make wise investments and lean in to the development of the markets that we've identified. We think that both of these spaces, as I said, have a lot of opportunity for us to continue to help even more patients, and I think that, from a financial standpoint, we are optimally positioned to continue to invest in the places we need to continue to develop these spaces, help more patients, and, certainly continue to grow shareholder value.
Perfect. Well, Dan, thank you for the presentation. We do have some time for a few questions, so obviously, if folks in the audience have questions, feel free to chime in. But maybe I'll start with head and neck a bit. And this is something... I was trying to think back, the number of years, I would say at least 2018, since we've been excited about the product. So maybe walk us through what the next steps are for that product. We're getting some clinical data as well, you know, hopefully towards the back end of this year. But what do you need to do to launch it? And then, you know, I think from an investor perspective, they wanna know, you know, when is this gonna start to be material to revenues, and is it a revenue inflector?
Yeah. So I'll start, and maybe Lynn can fill in a bit. So back in 2018, there was certainly discussion about the promise of treating head and neck or head and neck lymphedema for cancer survivors with our Flexitouch. The challenge was the reimbursement climate was not very well developed. So I think that we've certainly kind of softened our position on the expectations for head and neck until more recently. We did a pilot study. It was 25 patients compared to standard of care. We were able to demonstrate that by using our device, our Flexitouch, we could improve the ability of the patient to swallow and eat solid food, to reduce the amount of pain, improve their ability to speak and affect their dysphagia, range of motion improved. So these are really life-changing kinds of consequences.
But there were only 25 patients. High statistical significance, but Medicare said, "Hmm, looks good. We want to see a bigger N." So that's really what prompted us back in late 2020 to initiate this randomized controlled trial. Vanderbilt University is the anchor tenant on this one, and we had 10 contributing sites, some really well-recognized cancer facilities. And we've just completed, as I said, the 235 patient enrollment. Similar outcomes that we're tracking, but we have to follow the last patient in for 6 months. So I think to the question about when do we see an impact, we expect that, you know, a manuscript and a podium presentation probably available by the first quarter of next year.
In the meantime, I think there's opportunities for us to start now in continuing to try and improve the payer climate. But when you think about almost 450,000 patients in this universe alone, we think that this certainly by the back half of 2025 can be a notable contributor to growth. And I think the other one I would just add is we applied for some patent protection on this particular segment, and we were issued several patents back about 2 years ago. So a lot of runway left on them. We believe we've really ring-fenced this area of the body to treat with compression therapy, regardless of whether it's pneumatic or otherwise, for the treatment of lymphedema. So it's one that we've certainly continued to invest in. We believe it's gonna be really good for patients, and I think it'll be good for us.
So, just to go back a little bit, because you had referenced the back half of 2025 as a potential impactor. So do you think you can get reimbursement with Medicare by that time?
So yeah, I'll, you know, maybe step back. So I think, you know, we have re-established reimbursement for other categories, but head and neck has always been a bit more on the investigational side. And we think, you know, we, we get asked the question, why? And I think probably two reasons. One is the lymphedema usually creates internal swelling, so it's not as obvious from an external perspective, so it doesn't get recognized as frequently. And then second, from an advocacy perspective, if you think about the advocacy support around breast cancer and getting treatment for those patients versus head and neck, it just hasn't been as strong. And so that, though, has actually been gradually changing.
And so some of the things that we're starting to see, which are, you know, I think getting momentum to further reimbursement is first, the Lymphedema Treatment Act, that was enacted in January, actually recognizes head and neck as an area where lymphedema occurs and needs treatment, and that act was specific to compression garments. And as I think Dan mentioned, compression garments in this area of the body are not very practical. And so I think this really starts to pave the way for kind of that better solution on this area that's been recognized. I think secondarily, the advocacy and society support has really increased, and we're partnering with them.
So, you know, while we're waiting for these results to be ready, and we do believe those are going to be really helping us kind of tip the scale, we're doing a lot of work, you know, kind of behind the scenes to start to kind of further that dialogue. So it's not a new conversation, but really a conversation that we're setting up and then kind of coming in with support. So, I can't give you a definitive answer 'cause I can't predict Medicare or CMS, but I think we're doing everything we can to be ready and so that we're really just able to sort of bring that forth once it's available early next year.
Great. And so, you know, if we look at the back half of this year, you kind of filtered in, I would say, a lot of sprinkled or maybe sprinkled in. I don't know what the right comment is, but you kept talking about all these potential growth accelerators, whether it's sales force productivity accelerators, whether it's new products like the new lymphedema product you referenced. You know, you have new sales reps that you've hired just in general. So as we think about the first half versus the second half, should we assume more of an acceleration in revenue growth, and that continues as you go into 2025? Is that the right way of cadence? And then obviously, head and neck in second half of 25.
Yeah. So I think, you know, what we've shared, in part, there's one part of the story is that, you know, last year, our growth rate actually was kind of strongest earlier in the year due to what we were lapping versus the second half. So there's a little bit of just the comp story, but I think, you know, probably what is more around sort of some of the initiatives that you're mentioning is they will start to come in play more and more as the year progresses, and even more so in 2025. And so, it's not one, it's actually a portfolio, which is, I think, nice, in that, you know, we've got our sales reps that we added that are coming on board. We've got the e-prescribing tool that's in pilot that we will continue to expand.
CRM will become available. And then the new product, which will be, you know, more limited, at the end of this year, but more expansive as we look into 2025. All of those things will start to kind of grow in their impact as the year progresses and then, even more so in 2025.
Perfect. Well, Dan, I was gonna finish off with a statement on yourself, just because obviously it's been wonderful to get to know you over the last few years, and you've shepherded Tactile into a new direction. You know, maybe in 15 seconds before I get yelled at, you can kind of summarize your time and maybe what you're looking forward to most out of Tactile, and then we'll head to the breakout.
Yeah. So, Margaret's alluded to the fact that I've announced my retirement at the end of this quarter, and we're gonna have one of our board members, Sheri Dodd, will be succeeding effective July first. She's been part of the journey for the last three years as a member of the board. I would just say, as I reflect over my last four-plus years in the seat, that I'm really proud of the fact that we've increased the scope of the business. We've added another segment in bronchiectasis. We've seen the leadership team, I think, hand-selected, admittedly, with the kind of talent and scalability to lead this into the next generation of growth.
I think the investments we're making this year in tech, the portfolio having been refreshed, I can't think of a better time for a new CEO to take the reins and have an opportunity to have, I think, things really well positioned. So Sheri's excited about the role, and I'm looking forward to continue to serve as an advisor for the next-