Growth Stock Conference. My name is Margaret Kaczor Andrew. I am the analyst that covers Tactile Medical. For a complete list of research disclosures and conflicts of interest, please look at williamblair.com. With that, I'll turn it over to the team.
Thank you, Margaret.
So excited to be here. I'm going to be presenting on my favorite topic. I love talking about Tactile Medical, love telling the story, and I'm telling the story on behalf of tens of thousands of patients, thousands of providers, and about 1,000 employees. Here are our disclosures. Investment highlights. The business is one—and I'm often asked about this—what excites you about this, and it really is the business fundamentals. The investment thesis here is a really attractive market, a history, and ability to deliver, and being a company, a small-cap company that is profitable, profitable growth, and has a really nice cash balance. We are often considered a bit unique in our space, and hopefully by the end of this presentation, you'll see exactly why. Let me walk through this a bit, though. First of all, really attractive end markets.
The market itself is large, it's growing, and it comprises a very underserved population. When we talk about underserved, it's two fronts, and I have a slide on this. It's both patients that are not yet diagnosed and those that are diagnosed that haven't yet been put on appropriate therapy. This is not changing, unfortunately, from the patient standpoint, but fortunate for us, that's bringing technology into the market. We have a very broad payer adoption. This is a product that does not have a challenge with coding, coverage, or reimbursement. All three are in place and have been in place in both commercial, the VA, as well as Medicare. Market leadership. When you think about even within our lymphedema business on both the basic and the advanced pumps, we are the leader in lymphedema and have been in very strong leadership in our AffloVest business.
From a unique assets standpoint, a huge body of clinical evidence. In fact, today we had a press release announcing the two-month data from a head and neck study. I have a slide on that. I can tell you a little bit about that. Great to see Tactile leading some of the largest prospective studies ever in this space and being able to demonstrate significant value for patients. We have a very large distribution reach. We are across the country in the United States. We have a large sales organization, and as we shared in our Q1, we will be continuing to grow that sales organization out. Scalable revenue cycle management. We have an entire back office that takes care of all of the order management pieces, which includes seeking reimbursement from our payers and all of those collections. We also have a multiple product pipeline.
We are both in the basic and the advanced pump space, as well as in the AffloVest business with respiratory therapy. We have a very strong tech-forward digital strategy, which is going to optimize how we do our work from a process standpoint, as well as patient value on that front. Value creation. Again, as I mentioned, a profitable market leader that's poised for scale. A lot of our investments this year have been specifically to help support that foundational piece. Gross margins that sit at about 74% and have been healthy for a while. This is a very sustainable gross margin and a very strong cash position. Investment highlights. I'm really glad that you're here. Here is the way we think about the market. It's a classic kind of iceberg slide.
What is common across both lymphedema and bronchiectasis is a very similar picture. You have a large underdiagnosed population, so it's under the waterline. You have a patient population that has been diagnosed per this slide. It's 2 million in lymphedema and 500,000 in the bronchiectasis space. As you saw and will see in future slides, you'll see where this gets very underpenetrated. Even though they finally get diagnosed, are they on standard of care? Large underpenetrated U.S. patient populations, significant gaps in patient access, and then a very long and complicated patient treatment journey. This is not a disease condition I would wish on anyone. While many of you may not know or have lymphedema yourself, once you start to understand the disease, you start to see it everywhere.
The patient's journey, by the time they get diagnosed, by the time they get on therapy, is long and arduous. We have an opportunity of helping to support them. When we start to break down what is this market, I'm actually going to go from the bottom up. Mentioned that 20 million specifically in lymphedema that sit in underdiagnosed. What we're doing from a longer-term strategy is looking at how do we go after helping to support the diagnosis. This is a clinical diagnosis. The clinician sees and assesses and determines whether or not that patient has lymphedema. Often it's a rule out. In the area of cardiovascular disease and in chronic venous insufficiency, they are first assessing to understand, is this just venous insufficiency? Does this have a DVT? What actually is going on here?
The majority of patients with cardiovascular disease in the vascular space specifically, ultimately, if their CVI continues to progress, they will have lymphedema. It will be a secondary diagnosis to CVI. For the oncology patients, they have their cancer treatment, which could be surgical or could be radiation. Often what happens is the lymph nodes are damaged. The lymphatic system is damaged. Whether you have breast cancer or whether you have head and neck cancer, whether you have pelvic genital cancers, your lymphatic system is going to be damaged and you will have edema and you will have lymphedema. What's also important about this disease state is, it is chronic, it is progressive, and is not reversible.
Even conditions like obesity, which can help contribute to overall lymphedema, a patient could lose weight, but once you have been obese and you have damaged the lymphatic system, there is no amount of GLP-1 you can take and as skinny as you can get, and you will reverse course with the lymphedema once it is there. Of those that finally get diagnosis, and often it is years in the making, especially on the vascular side, about 2 million of them. What we are talking about here is patients who have been diagnosed and have not been treated with what we call a PCD, which is a pneumatic compression device, or an NPCD, non-pneumatic. The only difference is, yeah, pneumatic versus non-pneumatic, but we are talking about medical-grade compression devices.
What we're sharing here, and we haven't actually shared this level of detail before today, is this is really kind of showing what the penetration is of those that are diagnosed to treatment, which is about 145,000 patients annually are treated with either a pneumatic compression device or non-pneumatic. The market in this space is growing at about 10%. Huge opportunity. Lymphedema has a lot of causes and effects. I talked about that a little bit. As you see here, chronic venous insufficiency, cancer treatment, trauma, surgery. Majority of lymphedema is secondary. It is secondary to something else. Very few people, about one in 100,000, actually have primary lymphedema. They're born with it. Everyone else, it is secondary, and you can see the causes of that.
What you see here in the circles is that of those that have chronic venous insufficiency, very actual common disease, 42% of the patients who have lower lymphedema, lower extremity lymphedema, actually have chronic venous insufficiency. Direct correlation there. When you think about the breast cancer patient, actually up to 40% of breast cancer patients are going to have lymphedema. Even a higher prevalence is in head and neck cancers, where 90% of people who have head and neck cancer are going to have lymphedema. It has a severe impact on patients' quality of life as well as their symptom management. Again, not reversible, chronic, and it's going to be progressive. When we think about what are some of the complications associated with the disease, you see here a whole listing of cellulitis, which can turn into sepsis.
You see swelling, hard-to-heal wounds, limb heaviness, fibrosis, et cetera, skin changes, limited range of motion, and DVT. These are conditions and sequelae that are really impactful to the healthcare system, but really impactful and complicate a care journey. A patient already has lymphedema. They already have to be managing through compression therapy. If you have an open wound, these patients will bounce between vascular and wound clinics. A wound clinic does not want to use compression because they want the wound to heal. While the compression is not happening, that wound is potentially going to get worse or more wounds. You can see this whole cycle that happens with these patients. We also know that of the patients that are expressing and saying that they have symptoms, they also bounce around.
Not on this slide, but a lot of these patients are showing up in primary care. The primary care physician is thinking, "I'm not sure if this is DVT. I don't know if it's heart failure. Let's see you get worked up for it." They finally get to a place where they're going to get diagnosed. There is not a lymphedema doctor. You don't assign yourself to a physician. You have to go in as a patient, somewhat educated. Your physician has to be educated, and that will start your journey to diagnosis and treatment. These here are pictures of patients with lymphedema. What's interesting, you see the gentlemen, two gentlemen in the top that actually have head and neck cancer.
They have lymphedema external, but lymphedema also can take place internal in the actual neck, which can prevent swallowing, can prevent speech, and obviously can prevent range of motions. You see here other examples. One arm is bigger than the other. One leg is bigger than the other. Both legs are quite big. Sometimes we think about lymphedema as being this extreme example. You can think about the truly very severe stage four lymphedema cases. Even in stage one and stage two, these patients are often not identified and go on with the symptoms and do not get a diagnosis until later when actually they could be receiving therapy earlier in their care journey. Now let me switch to the other part of our business, which is our respiratory business. I am going to talk about bronchiectasis. Bronchiectasis is actually one of the most common respiratory diseases.
You see here that one in four smokers have bronchiectasis, and about 42% of COPD patients are going to have it. It's a really complex respiratory disease of where your airway is going to have infection. It's going to get inflamed. It's going to get scarred. You're not going to be able to move mucus. It's this whole, it's actually called a vicious vortex where the patient just is undergoing inflammation, infection, mucus needing to kind of move all that. It actually damages the airways, very similar to lymphedema, where this is not reversible. Once you have bronchiectasis, you're not going to not have it. As well, it can get very progressive and make it very difficult for people to breathe. It's also a disease, unfortunately, that gets misdiagnosed. Patients that have an overlap with COPD, they tend to be frequent flyers in the emergency room with pneumonia.
They try antibiotics. They try other airway clearance type of technologies. The only way to definitively diagnose bronchiectasis is actually with a CT scan. That will tell the physician that they have bronchiectasis. The relationship between radiology and pulmonologist is interesting because a pulmonologist typically has to have the radiologist rule out bronchiectasis for that to even come up in the radiology report. Otherwise, if it is there and has not been ruled out, it will have to be to the pulmonologist to actually say whether they see it or not. You can imagine a lot of education in the radiology to pulmonology, making sure that that is a rule out is talked about before that scan is done. A lot of patients actually have it that are receiving suboptimal care and not actually on best therapy.
When we think about these two businesses, you think about the total of lymphedema and the total of bronchiectasis in terms of that addressable market, we're talking about a $10 billion opportunity. Again, the patients in terms of where they have actual kind of gaps in treatment have a lot to do with basic market development, basic market access. How do they get access in training and education of their clinicians? How is it that we have solutions that make the patient amenable to what we are presenting to them? How do we make sure that this therapy can get to the patient anywhere that they are? I'm going to talk now about a couple of our actual therapies, and this is in our lymphedema space. We have two platforms. One is called a basic pump, and the other one is called an advanced pump.
Actually, go across the top, not in the individual columns. For a long time, our basic device was called Entree and Entree Plus. It was a controller. You have tubing and you have garments. For a basic device, your garments are basically legs and arms. Think about edema that is only located in the limbs. Very convenient design for patients to do their therapy in home. It is about a one-hour program. It is squeezing that lymphatic fluid into an area of the lymphatics that actually is functioning versus it pooling in an area where the body is unable to process the lymphatics. We recently launched a brand new device in October for lower leg and in February for upper extremity. Now we have a full body system for Nimble. We completely overhauled this platform. We made the controller lighter, smaller.
We took away a significant amount of less tubing. We have a travel bag for it. Patients can be on the go and they can see themselves more in this therapy because, again, they have basic pump needs. It's been wildly successful. We're really pleased with the adoption both by patients and by physicians. The other thing that we did is this device is Bluetooth connected, as is our advanced pump. By having Bluetooth connectivity, patients are able to connect to our patient engagement app, and I'll talk about some of the benefit of that. Having a Bluetooth-enabled technology, one that's smaller and lighter and being so well adopted has really been a nice advance for patients that have basic pump needs. An advanced pump, our advanced pump is called Flexitouch. Flexitouch supports patients that have additional needs.
You may have swelling in your chest and trunk. You may or may not have arm or leg swelling. You have edema in an area that is not limbs or it could also be with limbs, as well as your needs could be for more programming. If you have a wound in the Flexitouch, you can actually program the compression around the wound. That allows for patients to get therapy at the same time that they have wound. Our Flexitouch business has been a great business and continued to grow for a long time. Last year, we had some changes in the Medicare coverage policy, which forced patients to try a basic pump before you could go to an advanced pump.
You can imagine the frustration because if you have chest swelling and you're not allowed to go directly to a, you have to show failure of a pump that doesn't even cover the part of the body of which you have edema created for us. The good news is that policy has been retired, and now we actually have the national coverage decision, which allows patients that have a certain unique characteristics to go directly to an advanced pump. It has been wobbly based on that coverage environment, but we are in a good place since November. Our technology and where we want to continue to go is how do we think about a next-generation technology. Flexitouch, because of the additional programming as well as the limb and body coverage, has a heavier controller and it has more tubing.
We continue to look at ways of how do we bring a new platform or enhancements to that device that also supports a patient experience and supports them in their care continuum. There are a certain number of patients that will start in basic and then need to move to advanced technology. Once you're in advanced and you meet the criteria, you're not going to move to a basic pump. I talked before in some of those key components on market access. You have to have a great technology, and the technologies you saw aren't even our technologies that not only work well, but they can be manufactured. We have a very strong supply chain. We don't end up in back order. We can make this product and get it to the patient. There is great evidence behind these products.
You see here the reduction in volume for patients in Flexitouch. You can see some great numbers in the 80s and 90s here on satisfaction with Flexitouch as well as the overall benefit. You even see some economic data showing that we're able to demonstrate a reduction in total cost of care with patients who are going on our technology. What you see below the line is some exciting data that we just, again, did a press release today on. About three years ago, Tactile undertook to conduct a randomized control study in head and neck cancer survivors and wanted to look at the difference between what is usual care. Usual care with these patients is going to a physical therapist, massage therapist, and getting manual drainage on your head and neck area as well as potentially using wraps and self-massage.
Patients in this study were randomized to usual care in both academic and community centers as well. The other arm of the study was for patients that actually got Flexitouch and went directly to therapy. These results that we press released today were the two-month data. This is a six-month study. Those six-month results will be looking for conferences as well as in publication. It is really great to see this benefit for patients. It really boils down to three areas of benefit. First is all patients got better, whether you went to usual care or whether you had Flexitouch. There was some symptom improvement, which was great to see. What we see here is that with Flexitouch, there was actually more significant reduction in swelling as measured by imaging. You get swelling internal. You cannot see it external.
That reduction in swelling internal, you can imagine how that can help improve the use of feeding tubes and being able to swallow and speak really significantly. Significant improvement in that area. We also saw the number of patients that were able to have quality life benefits as well on the subscale improve more than those. I want to point here to that middle bucket because this is a thesis. What we had understood was the problem, but it really came out here in the study. Patients who were randomized to usual care, only 79% of them actually got an appointment with a therapist at randomization. There is a lack of therapists. There aren't that many. They have very full schedules. Even getting access to a therapy, a therapist is really challenging for these patients versus people being able to get access to a pump.
It goes much faster. We can't solve the number of therapists that are out there, but we can solve the time to therapy by actually having a product that is able to effectively treat the symptoms and actually show improvement on quality of life and on symptom reduction. Kylie. I don't know how many presentations you've been to where someone's talking about there's an app for it. I know I tune out on things like that. I do want to talk about our patient engagement platform, which we call Kylie. Kylie is a resource that anyone can get. You can all download it now and check it out. What we have found is that the Kylie app is really to help the patient engage with their lymphedema therapy, which could be a therapist and may not be actually on a pump.
You can actually get on the app and you can start tracking your therapy sessions. You can send pictures of your swollen parts of your body to your clinician, and you're able to actually show your therapy times and see how you're tracking with therapy. Obviously, patients that are going on to being on our therapy with the Bluetooth enablement, it automatically is uploading your therapy session and it's tracking all of that. Tons of information on education, awareness, training is all on that app. It really helps that patient with self-management at home. I think on the Q1 call, we announced that we have and we'll be hitting a milestone with 50,000 patients who have signed up on the Kylie app that have a unique profile. That's them doing it themselves or their therapist encouraging them to do it.
We will be hitting 1 million patient engagements probably by July. That means 1 million touch points we now have of a patient recording their symptoms or their therapy sessions. This is really significant. On the Google App Store, we're four stars. Do not put one star. Do not change this for me. We're really excited with the Kylie app. It's a service, but it's becoming a product for us. You could imagine all the things that we're going to learn about these patients as we're able to see what happens prior to them getting pump therapy, if they do not go on pump therapy, when they go on pump therapy, and what happens to them after therapy.
When we think about kind of the space here, we've been around a long time, and that doesn't give us a right to own the space, but it certainly gives us a lot of knowledge about this market. We do sit at number one market share for both combining our basic and our advanced pumps. It's a huge market to go after. We have the products. We have the evidence, as you saw. We have a very large sales reach. Our Q2 guidance supported us being at 285 sales reps. This is a direct sales organization. We have a scalable back office, multi-channel referrals. We call on vascular surgeons, vein clinics, oncologists, therapists, and the VA and have really significant and impressive coverage in the U.S. for reimbursement of these products. AffloVest business, also a great technology.
You see the circles here in terms of the number of patients that are saying how much they use the best therapy, how much they have satisfaction, and then great data that also kind of shows the treatment effectiveness. There is a drug coming out from a company called Insmed. They have been doing a lot of promotion on bronchiectasis. It is not a curative product. It actually helps with some of the infection, but you still are going to have infection and inflammation and mucus development. It is going to be an and out there. On a benefit side, because market development is tough, it has actually been nice to have more awareness of the disease state. We believe strongly that our best therapy will provide a great benefit to this newly recognized population in this area. AffloVest as well, sitting at number two in the market.
Baxter is number one. AffloVest has been around for about, or the vest, sorry, has been around about 30 years. Very small innovation happening in this area, but we are in a dead heat here coming up on number one. What patients really like about our product is it's a portable design. It's the only non-tethered vest. A patient can move around. They don't need to be plugged into the wall. We have broad DME channel. This is an indirect sales force for us. We have our own sales routes, but we sell through the respiratory DME partners. It definitely fits in terms of this entire respiratory patient that's on service for them anyway, whether it's from oxygen or nebulizers or vents. Very strong reimbursement in this area as well, both payment, coding, and coverage. Some recent milestones that's happened with our launches.
You can see here, this is a combined of both our bronchiectasis and our lymphedema business. We have continued to look at how do we enhance and add value to the overall patient experience through technology. While we continue to streamline our back office and we go after that addressable market, one way of getting that is to make sure that you've got the very best products on the market. We feel very confident with that, not only with our recent launches, but continuing to improve the overall patient experience. From a revenue standpoint, this is a long timeline, but a 16% CAGR. You can see where we sit right now on our 2025 guidance. We had made more investment this year than in previous years from an OpEx standpoint, biting the bullet and saying, "Look, there's so much to get after that's in the market.
Not only do we need to add the field headcount, but we also need to add the technology that helps service both the front office as well as the back office. Everything we're investing in is meant for scale and for leverage. All of our investments are currently on track that we had planned to do in 2025, which includes launching our CRM tool, Salesforce, for our sales organization. We'll be launching Salesforce for our back office. In the back half of the year, we had e-prescribing platform out there already for the basic pump. We'll be adding e-prescribing for our advanced pump in the back half of the year and adding AI that helps with that medical documentation review, which helps streamline that whole process. We're making sure the documentation is there and that we can bill and collect.
Our strategies are very clear, outlined at the end of last year, but it really comes in three flavors. The first is improve access to care. I talked about that pretty substantially. This is not anything I would think surprising at all. This is a basic market access plan where you're making sure that your clinicians and your patients understand the disease that they have and what treatment options are available. You expand your evidence and you bake them into guidelines. You continue to advance your payer advocacy and policy, and then you ultimately make it a simple process for people to get your product. It seems easy. It's hard work, but it's definitely where we're focused. We know that we can grow and improve overall. Expand treatment options. You know you have to have technology to win in this space.
We've showed what we've done from an organic standpoint. We think about this as both being an organic and an inorganic opportunity. Then lifetime value. These are patients that have had a tremendous journey getting to the point of diagnosis. They were underwater in the iceberg. They're above water, and now they're finally getting into treatment. We have an opportunity through Kylie and others, through care navigation, of connecting with this patient and making sure that they get the therapy that they need, that they stay on the therapy, and that we learn more about what their total needs are. Very excited about these strategies. They're all designed to improve the patient experience, and there's an underbelly of technology across all. Our investments to penetrate often said, "How are you going to go after that, TAM?" The improved access to care details are here.
It's really foundational of doing it. It's going to be people and technology. I called out already some of the enhancements that we've made. We're going to continue to make these, and again, very leverageable as we not only see some benefit for this year, but into next year. With that, I really want to thank you all for attending. I know there's a lot of presentations today. As I shared, this is my most favorite topic to talk about. Having this amount of time is a privilege to get to share this journey with you. And Margaret, thanks again for the invitation.
Perfect. Thank you. We're going to cut the audio for the folks on the line and just do the breakout right here since we are the last presentation of the day in this room.