Tactile Systems Technology, Inc. (TCMD) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Virtual 2020 Annual Meeting of Stockholders for Tactile Systems Technology. Please note that today's meeting is being recorded. However, participants are not permitted to use any recording device. [Operator Instructions] I would now like to introduce Jerry Mattys, the Chief Executive Officer and the Director of Tactile Systems Technology, to begin the meeting. Please go ahead, sir.

Thank you, operator. It is my pleasure to welcome all of you to the 2020 Annual Meeting of Stockholders of Tactile Systems Technology. In these unprecedented times with the COVID-19 pandemic and stay-at-home orders, we decided in April to use remote technology to host today's meeting in the interest of safety. Thank you for your flexibility, and thank you for joining us today. It's approximately 2:00 p.m. Central time and in accordance with the Notice of the Meeting and at the request of our Chairman, I call this meeting to order and announce that the polls are now open. First, I would like to introduce the other Tactile Directors who are attending this meeting through the webcast: Bill Burke; Ray Huggenberger; Dick Nigon; Cheryl Pegus; Kevin Roche; and our Board Chairman, Peter Soderberg. I would also like to introduce the other senior leaders of Tactile Systems Technology, who are attending remotely: Brent Moen, our Chief Financial Officer; and Jill Hansen, our Controller. I'd also like to introduce Jon Zimmerman, the inspector of election and a partner with Faegre Drinker Biddle & Reath, our legal counsel. He will be tabulating the votes at today's meeting. Also attending today through the webcast are Josh Bushard and Brittney Johnson with Grant Thornton LLP, our independent auditors. Today's procedures are simple and designed to ensure that we have a fair and orderly meeting. We will address procedural matters, discuss: one, the election of directors; two, the appointment of our auditors; and three, the advisory approval of named executive officer compensation, announce the results of the vote and conclude the meeting. Most stockholders have already voted by proxy, and the proxy votes have been tallied. You may vote today by pressing the Vote Here button on your screen and following the instructions provided. If you've already voted by proxy, you do not need to vote during the meeting or take any other action at this time. Stockholders may submit questions electronically during the meeting by entering your question in the "ask a question" field on your screen. Questions received during the meeting will be addressed following the formal part of the meeting unless they directly relate to the matters to be voted on. March 10, 2020, was designated as the record date for this meeting. A notice of Internet availability related to the proxy statement was distributed to stockholders of record in advance of the meeting and an affidavit of distribution will be included in the minutes of today's meeting. The holders of at least a majority of the shares of common stock outstanding on the record date and entitled to vote at this meeting are represented here today via webcast or by proxy. Accordingly, a valid quorum is present. I will now review the matters to be voted on. For stockholders voting today, please vote now as we will close the polls immediately after I review the 3 matters up for vote. If you have previously voted by proxy, you need to do nothing at this time. First item to be considered is the election of 7 directors, each to serve until the election of directors at the 2021 Annual Meeting of Stockholders. The Board of Directors has nominated me, along with Bill Burke, Raymond Huggenberger, Dick Nigon, Cheryl Pegus, Kevin Roche and Peter Soderberg as directors and recommends a vote in favor of electing each of them. The second item is the ratification of the appointment of Grant Thornton LLP as the company's independent auditor for the current fiscal year that ends on December 31, 2020. The Audit Committee of the Board of Directors has appointed Grant Thornton LLP, and the Board recommends a vote in favor of ratifying such appointment. The third item is an advisory vote on the company's compensation of its named executive officers, often referred to as "say on pay" vote. Information regarding the company's executive compensation plans and payments are disclosed in detail in the proxy statement for this meeting. The Board recommends a vote to approve the compensation of the named executive officers as disclosed in the proxy statement. The polls are now closed. The inspector of election has advised me that the preliminary tabulation of the votes cast at today's meeting is complete, and I am pleased to announce the following preliminary results: The election of the 7 Director nominees has been approved by the requisite vote of the shareholders. The ratification of the appointment of Grant Thornton LLP as the company's independent registered public accounting firm for 2020 has been approved by the requisite vote of the stockholders. On an advisory basis, the stockholders have voted to approve the compensation paid to the named executive officers. The exact vote totals will be certified by the inspector of election and incorporated in the minutes of today's meetings. Thank you for your participation. There being no other matters required to come before this annual meeting of stockholders, I declare the formal meeting to be adjourned. I wanted to add some additional comments based upon the fact that we released results this morning from our first quarter and commented on the impact of COVID-19 on our business. Revenue in the first quarter was $43.7 million, up 26% on an operational basis. We were running ahead of our plan, both in January and February but slowed materially in March -- in mid-March due to the impact of the COVID-19 pandemic. Our order run rate was down 50% in week 4 compared to the first 2 weeks of the month of March. The company's priority was to protect the health and safety of our employees and those that we serve. We moved quickly to virtual sales and service. Our team both inside and in the field adapted quickly to these changes. We also moved to virtual education seminars, raising awareness about lymphedema and its treatment. In April, we educated about 1,300 clinicians in 1 month about lymphedema. Last year, we educated 2,300 clinicians in all of 2019. We began outreach to our top customers in late March and early April and found that 1/3 of our clinics were temporarily closed due to the restrictions imposed by their state or local authorities. We're now pleased to report that half of our open accounts are using telehealth to reach out and to care for their patient population. That's a very positive trend that happened in late April. We came into the COVID-19 pandemic with a strong balance sheet to weather this storm, and continue to add to our commercial capabilities. We're confident about the long-term opportunity in front of Tactile Medical, the underpenetrated market that we're in, the leadership position that we have, the strong team that's in place. I'd like to thank our employees, clinicians, patients and suppliers for their support throughout this period. Thank you for joining our meeting today. We'll now address any stockholder questions. Where we receive similar questions on the same topic, we've grouped them together and provide one answer.

There are no questions.

The moderator has informed me that there are no questions. So with that, I will thank you for your participation in our stockholder meeting today. Thanks, everyone.

This now concludes the meeting. Thank you for joining and have a pleasant day.