Q2 2021 Tactile Systems Technology Inc Earnings Call
Please standby.
Good evening, ladies and gentlemen, and welcome to the second quarter of 2021 earnings conference call for tactile medical.
At this time, all participants have been placed in a listen only mode.
At the end of the company's prepared remarks, we will conduct a question and answer session. Please note that this conference call is being recorded and will be available on the company's website for replay shortly.
Before we begin I would like to remind everyone that our remarks and responses to your questions. Today may contain forward looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including those identified in the risk factors set.
<unk> of our annual report on form 10-K.
As well as our most recent 10-Q filing filed today with the Securities and Exchange Commission.
Such factors may be updated from time to time in our filings with the SEC.
Which are available on our website, we undertake no obligation to publicly update or revise our forward looking statements as a result of new information future events or otherwise.
This call will also include references to certain financial measures that are not calculated in accordance with the generally accepted accounting principles or GAAP.
We generally refer to these as non-GAAP financial measures reconciliations of nose of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investor Relations portion of our website.
I would now like to turn the call over to Mr. Dan Rivers.
Sectile, Medical's, President and Chief Executive Officer. Please go ahead Sir.
Thank you operator, and welcome everyone to our second quarter of 2021 earnings call I'm joined on the line by Brent Moen, Our Chief Financial Officer.
In terms of what we intend to cover this afternoon I'll begin with an overview of our second quarter sales performance.
Along with the discussion of the drivers trends and operational highlights we saw during the quarter.
Then Brent will discuss our financial results in greater detail and review our financial guidance for 2021, which we updated in our earnings release. This afternoon.
I'll conclude by sharing some additional thoughts on our outlook and key focus areas for the second half of 2021before we open up the line for questions now, let's get started with the review of our sales performance.
In the second quarter of 'twenty 'twenty..1 we were excited to achieve sales results that reflected easing of some of the pandemic related headwinds and that's exceeded our expectations total revenue for the second quarter increased 45% year over year to $51.1 million.
Exceeding the 40% to 43% year over year increase that we expected and shared on our first quarter earnings call.
Our total revenue growth was largely driven by sales and rentals of our flexi touch systems, which increased 45% year over year and contributions from sales and rentals of our entre systems, which increased 49% year over year.
Given that the second quarter of 2020 was notably impacted by the disruption caused by the COVID-19 pandemic we were.
Particularly pleased to see that our total revenue in the second quarter of 2021 increased 13% on a reported basis and 17% on an operational basis compared to the pre pandemic sales in Q2 of 2019.
Our sales performance in the second quarter was driven by a combination of strong execution by our team and progressive improvements in the broader healthcare environment.
Looking at our second quarter trends a bit more closely during the first half of the quarter. Our business remains substantially impacted by the Covid related health and safety protocols adopted by many of the clinics that we serve the.
These protocols continued to impact our business in 2 primary ways.
First the restricted clinics treatment capacity as clinics continued to operate with fewer exam rooms, and <expletive> dedicated additional time to turning over these rooms, reducing their patient throughput.
Some of the surveys of our top accounts in April found that 2 thirds, we're still operating at less than 80% of normal levels consistent with our surveys earlier on the year.
Second clinics continued to restrict in clinic access to patients limiting the ability of our sales reps to conduct patient demos in person.
While we continue to face these COVID-19 related headwinds throughout Q2, we were pleased to see both clinic throughput and in clinic patient access improve in the second half of the quarter as a larger portion of the population receive vaccinations and government restrictions were relaxed.
Looking at our recovery trends by site of care outpatient based privately owned practices, most notably vascular clinics continued to exhibit the fastest pace of recovery.
With this trend as the back as a backdrop our teams focus on targeting and engaging with vascular specialists was again, an important contributor to the strong growth that we saw during the quarter, especially the growth in the sales of our entre systems.
While sales to practices based on hospitals and health systems remained slower we were pleased to see incremental evidence of recovery in some of the facilities that we serve with a portion enabling our sales reps to resume in person patient demos.
The VA hospital system on the other hand remained more challenging as restrictions persisted through the quarter with many VA hospitals, continuing to redirect lymphedema patients away from specialists settings to their network of approximately 700 community based outpatient clinics.
Sales increased 69% year over year in the second quarter.
Whoever given the slower pace of recovery in the VA and related persistent challenges our VA revenue in the second quarter of 2021 was still 11% lower than what we reported in the second quarter of 2019.
That said, we were pleased to see that the VA business improved modestly as the broader operating environment improved during the second quarter.
In fact, our VA revenue increased 25% sequentially in comparison to the first quarter of 2021, which speaks to our team's progress in navigating the V as shift inside of care.
We look forward to a broader recovery within the VA, but we've also accounted for them maintaining their current posture in our second half of 2021outlook.
While we expect a continued recovery of our VA business into next year, it's worth noting that our non VA revenue growth increased 23% in the second quarter of 2021 on an operational basis compared to the second quarter of 2019.
From an execution standpoint during.
During the second quarter, our team did a nice job of using virtual solutions to train patients raise awareness and expand adoption among both new and existing prescribers ultimately moderating the COVID-19 related access issues that we faced.
Specifically, we leveraged our expanded menu of patient training options to meet the needs and preferences of our customers roughly half of whom were trained via our virtual or out of the box alternatives during the second quarter.
From a medical education standpoint, our team kept up the momentum we saw over the last year and a half and using virtual programming to engage and educate a variety of of potential new prescribers on the diagnosis care and management of lymphedema.
We hosted a total of 39 medical education programs over the course of the quarter 27 of which were held virtually and the rest of conducted in person.
These events were attended by nearly 1600 clinicians, bringing the total to approximately 2800 in the first half of the year and we've continued to see our overall base of prescribers expand as a consequence, which served as an important tailwind for our business during this challenging period.
And lastly, we continued to lay the foundation for future improvements in the overall productivity of our field commercial team by bringing on field support specialists to help our sales reps focused on engaging with new physicians.
We expanded the size of our team to slightly over 300 members by quarter end.
Feedback from our sales meetings, just last month continue to reaffirm our sales reps appreciation for the new field support specialist role and we look forward to leveraging the potential of our recently hired F. S. S team members going forward.
Our top line result enabled us to deliver solid gross margins and of returned to net income and adjusted EBITDA profitability.
With that let me turn it over to Brent to provide you with the more detailed review of our quarterly financial results along with our updated guidance for 2021.
Net.
Thanks, Dan.
Total revenue in the second quarter increased 45% year over year to $51.1 million compared to $35.1 million in the second quarter 2020.
Our revenue in the second quarter benefited from the initial stages of recovery from the COVID-19 pandemic with a portion of health care facilities and clinics relaxing restrictions and increasing patient throughput.
Additionally, the year over year increase in second quarter revenue was driven by improvements in the productivity of our sales force as well as the expansion of our prescriber base due in part tour of effective virtual clinician education activities.
Byproduct sales and rentals of our flexi touch systems increased 45 per cent year over year to $45.1 million in the quarter and sales and rentals of our entre systems increased 49% year over year to $6 million.
Flexi touch revenue accounted for 88% of our total revenue in the second quarter of 2021 compared to 89% in the prior year period.
By Payor second quarter revenue was approximately 70% commercial 16%, Medicare and 14% VA compared to 73% commercial 15% Medicare and 12% VA, respectively in the second quarter of 2020.
Continuing down the P&L gross margin was 71% of sales in the second quarter of 2021 unchanged compared to the same period last year.
Second quarter operating expenses came in at $36.3 million, an increase of $33.4 million or 10% the.
The increase in operating expenses was driven by higher sales and marketing expenses, which increased $3.5 million to $20.9 million and to a lesser extent by higher research and development expense, which increased to $100000 to $1.2 million.
Second quarter reimbursement general and administrative expenses decreased by approximately $200000 to $14.1 million and included approximately $900000 of litigation defense costs in the period.
Excluding litigation expenses in the second quarter of 2021, and the impairment charge in the second quarter of 2020 on.
Reimbursement and G&A expenses increased approximately 25% year over year.
Second quarter operating loss was $76000 compared to the operating loss of $8 million in the second quarter of 2020.
Income tax benefit in the second quarter of 2021 was $1.4 million compared to an income tax expense of $5.9 million in the second quarter of 2020 the.
The year over year change was primarily due to a tax credit for a research and development studying recognized in the second quarter of 2021.
Net income was $1.3 million or 7 cents per diluted share for the second quarter of 2021 compared to a net loss of $13.9 million or <unk> 72 cents per diluted share for the second quarter of 2020.
Weighted average shares used to compute diluted net income per share or $20 million and $19.3 million shares for the second quarters of 2021 and 2020, respectively.
Adjusted EBITDA for the second quarter was $4.1 million compared to adjusted EBITDA loss of approximately $700000 in the second quarter of 2020 as.
As a reminder, we have provided a reconciliation of certain GAAP to non-GAAP measures in our earnings press release.
As of June 30 of 2021, we had cash and cash equivalents of 40 of $9 million a high watermark for the company compared to $47.9 million at the December 31, 2020 period.
We had no outstanding borrowings at quarter end.
On April 30th we entered into a restated credit agreement with Wells Fargo Bank, which increases our borrowing capacity up to $55 million.
Turning in review of our 2021 outlook.
We updated our earnings press release. This afternoon, we are raising the full year guidance range to account for our stronger than expected performance in the second quarter as our conviction in our ability to deliver strong sales performance during the second half of 2021.
For 2021, we now expect total revenue in the range of $216.3 to $224.5 million, which represents growth of approximately 16% to 20% year over year compared to revenue of $187.1 million in 2020.
This revised outlook compares to our prior revenue guidance range of 215.3 to $224.5 million or 15% to 20% year over year of growth.
Byproduct, our updated 2021 total revenue guidance range assumes sales of our flexi touch systems increased approximately 14% to 18% year over year and sales of our entre systems increased 26% to 34%.
For modeling purposes for the full year, we expect our gross margin to be in the low of 70% range.
Our adjusted EBITDA margin to be in the range of 12% to 13% and please note. This adjusted EBITDA range assumes depreciation and amortization expense of approximately $3 million.
Stock based compensation expense of approximately $11 million and litigation related defense costs, and other nonrecurring expenses of approximately $4 million to of $4.5 million.
We expect our fully diluted weighted average share count to be approximately 20 million shares.
With that I'll turn the call back to Dan for some closing remarks Dan.
Thanks, Brent the performance and trends that we observed to date are largely consistent with our expectations and it gives us incremental confidence in our full year outlook.
We expect to see continued relief from the primary COVID-19 related headwinds outlined earlier during the remaining months of 2021on.
Though the Delta variant of served as a bit of of caution flag. We anticipate these headwinds will continue to subsidize or sub side as we as widespread vaccine inoculation drives the progressive return to normalcy in the health care environment as conditions continue to improve we remain committed to delivering strong performance as we.
Increase the size and productivity of our commercial field team expand our base of prescribing clinicians by continuing our targeting outreach and education events and.
And leverage our leadership position in the lymphedema space with clinically proven products that enjoy broad in network reimbursement coverage.
By focusing on these objectives, we remain confident in our ability to expand our share of the $5 billion U S market for lymphedema and related chronic conditions and deliver growth approaching 20% in the second half of 2021 continuing along the path to resume our long term revenue and margin trajectory.
I'd like to close by thanking the entire tactile medical team for their efforts in continuing to navigate this challenging environment, which has enabled us to continue serving our customers and patients safely and returned to growth I'd also like to thank our investors and those on today's call for their interest and support.
The tactile medical and our mission.
Operator, we'll now open the call for questions.
Thank you.
If you'd like to ask a question. Please signal by pressing star 1 on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
We do ask that you limit yourself to 1 question and 1 follow up.
If you would like to ask additional questions. We invite you to add yourself to the queue again by pressing star 1.
The first question will come from Chris Pasquale with Guggenheim Guggenheim. Please state your question.
Thanks.
Dan I'd like to start by just getting an updated baseline on where you guys are in terms of the COVID-19 impact on the business. So starting outside of the VA what limitations if any of you still facing there today.
And then for the V. A segment do you of any visibility on what the trigger would be to bring those patients back from the outpatient clinics or if that's even likely to occur it sounded like guidance is not really assuming any progress there.
Yeah. Thanks for the thanks for the questions, Chris Let me start with kind of what we're seeing on the Covid front.
I think 1 of the things that led to a really strong quarter for US was the continued normalization trends that we're seeing.
You know back when we were surveying our customers top prescribers Bakken.
Back in early April we were still hearing that they were well below 80% of normal throughput. We've seen that continue to approach the 80% the value as we got later into the quarter and that certainly helped.
We don't expect that we'll get back to a 100% or rather that the clinics will get back to a 100% throughput by the end of the year.
Some of the sanitation procedures. They are doing to continue to turnover of rooms. Some of the new office policies about limiting the number of patients either in exam rooms or on this in the waiting room. We continue to expect those to persist however, not at the same levels. So we have kind of had the expectation that we will continue.
To see progressive improvements I don't know that we'll get back to what was truly the old normal by the end of the year, but I think conditions. We certainly expect we'll continue to get better.
On the vascular side, that's been the most.
Responsive under the circumstances and it continued to be so in Q2, so vascular clinics.
Probably the place we saw the biggest rebound or continued growth we've seen a good amount of increase in new prescribers in that environment and simply access just is better most of those tend to be private or smaller clinics as opposed to big University settings, where we find more of our oncology afflicted.
Patients and those conditions I would say are still a little slower moving they're getting better but not at the pace of vascular.
On the VA side.
It's hard to say we've seen a few very very episodic examples where some patients were allowed to be seen back by the specialists and the VA centers, but on a wholesale basis. The majority of them have continued to stay with the community based outpatient centers.
And since it's hard for us to predict when they might reverse their posture to the pre COVID-19 environment, we've kind of modeled with the assumption that this the seebach or community outpatient center will be the prevailing place where these patients will continue to be seen through the year.
I think on the flip side, our teams have done a really good job of navigating that environment, they've gotten better at finding the right people in the outpatient centers and as a result, we certainly saw some recovery in the V. A.
That's helpful. Thanks, I'm curious, whether maybe the vascular clinics are on a good leading indicator of this but let the game is a chronic condition.
I'm not going to go away any of these patients are not treated many of them maybe have not been getting the kind of treatment that they would have otherwise now for 18 months.
In the in those settings, where things at normalized fastest have you seen a bolus of pent up demand.
As as access returns on those sites or is that not something you expect to materialize in the business.
I don't know that I'd say I've seen a bolus of pent up demand simply because of the governor on the amount of patients that are being seen in these clinics, but I wouldn't say that there's certainly been no shortage of of steady diet of patients.
Wanting to fill those rooms.
It's been more of the the I think the.
Control of the the <unk>.
Capacity rather of the clinics themselves.
Theyre seeing what they can with this new normal and some of the precautionary models that they've put in place, but I think the good news for patients is that access to these clinics has started to recover.
They're allowing more patients in the throughput the environment.
I've heard there were clinics that were back in early Q1. It was you had to weigh down on your card some of them 1 at a time when an exam room was ready now instead of having as many patients as can sit in the waiting room. They may have a limit on for but there is a queue of patients in the waiting room now the.
It has helped with some of the throughput and I think those of the things that of the difference between sub 70, and starting to get closer to 80% or better on the throughput, especially of our bigger prescribers.
Thanks.
Yes.
Thank you. Our next question comes from Matthew O'brien with Piper Sandler. Please go ahead.
Hey, guys, it's Adam on for Matt Thanks for taking the questions and congrats on the solid trend.
The start wanted to ask about the guidance. The guide implies the nice ramp on the back half of the year, maybe just talk about your level of confidence in achieving the updated guide that you've laid out and kind of how you built up the guidance range and why not take up the upper end as well.
And then the second part of the question is just around quarterly cadence I think the street shows Q3 revenue of about 58 million are you comfortable with that figure just any thoughts on quarterly progression would be great. Thank you so much.
Yeah. Thanks for the question Adam Let me give you a little bit at the kind of high level on the guidance and then I'll, let Brent kind of back clean up on this 1.
You know, we really don't think anything's changed I guess in the AR in how we saw the market. How we saw the recovery even a few months ago. So our outlook at this point really hasnt changed hence our reaffirming of the guidance for the most part.
Some of the assumptions that are built into that is as I mentioned, some ongoing improvements in the COVID-19 environment or progressive improvements as the year continues to unfold.
We don't think that the throughput of patients will get back to a 100%, but we do expect that we will get certainly north of 80 and approaching 90 by the time, we exit the year.
We do expect new new prescribers to continue to contribute to our results as they have in the last couple of quarters.
We don't expect any material change in the VA postures, I mentioned, a moment ago and we've modeled in a modest increase in sales head count increase in the back half. So that's kind of how we've thought about it but frankly those of the same assumptions that we really had a few months ago as far as.
Kind of the the.
Guidance change.
Because we still see the outlook very much the same I think things are playing out very much like we expected.
But you know we had the good fortune of having a really solid Q2.
And I think that gave us the the confidence to bring up the lower end as a result of what we had had achieved in the first half.
There's still a fair amount of wood to chop in the second half there's still some uncertainty on the marketplace. We like to think that we've tried to account for those and the and I think it it's provided us with a pretty good balance and how we've tried to.
Lay out the back half of the year.
Yeah.
I would I would.
Adam It's Brian I would just echo everything that the that Dan said too.
Just the raising the low end of our guidance range just to reflect the better than expected Q2 results but.
As we progressed through the second half of the year on.
All of those things were kind of built in to our our expectations in terms of the sequencing for Q3 and Q4.
I feel confident that.
We will be able to hit that debt.
The approaching 20% Mark as we exit 2021.
The quarterly sequencing.
It looks pretty consistent.
Got it guys. Thanks, so much and if I can just sneak in 1 more would.
Would be curious if theres any update just on the top prescribers of cohort as it relates to the performance in Q2, I think you talked about this group being down roughly 20% in Q1, So just curious.
If your SaaS from recovery, there and just trying to get a sense for what that trajectory could look like going forward. Thanks again, yes, yes, Adam it's Brent again.
And I would tell you that we saw a progressive improvement.
In terms of just access throughput and then Oh.
And then patient from a prescriber perspective.
And of met expectations for the second quarter I think what.
We've always we've talked about at least for the past 2 quarters just.
Having a limited access relative to pre COVID-19, but I think where we're seeing a bit of the offset is in the new prescribers.
We don't quantify what those new prescribers are but certainly we're seeing an ad too.
The clinicians out there that are interested in the or the byproduct of the virtual education events that we've done so continuing to see progress as we expected.
That's helpful. Thank you.
Our next question comes from Ryan Zimmerman with D. T. I G. Please state your question.
Hi, This is Caroline on from Brian. Thanks for taking my questions on the commercial organization that can you share where you're at in terms of adding in the 45 field support specialists over the course of the year.
It's 45 still the goal you mentioned expectations for a modest increase through the balance of the year here and then on.
They had over 300 on that team are over the entire commercial team magazine, the coronary versus over of 295 last quarter or so is that is that 5.
Net added through the corner. So again, just where where are you in terms of that 45 field specialists on the additions for the year. Thank you and then I have 1 for all of it.
Okay. Thanks for the question Caroline.
First of as we put in the press release I think 1 of the important things on the sales team also is that we brought on this new leader in the Eric Paul as our new senior Vice President with the long story experience from.
From Phillips and I think he's done a really nice job of engaging with this team he's.
He has kind of gotten its arms around it probably quickly or than I expected.
We've got we finished the quarter of just over 300 to your point.
There is while we had about 45 targeted for new heads in the field. We're about a third of the way there at the end of Q2, and we got about 2 thirds of the way to go on the back half and that's still the plan is that we would continue to add those heads in the back half.
And then ultimately we continue to hear good things about those field support reps that we've positioned so far we hosted some sales meetings in July and just the feedback that we got from some of our senior product specialist who had the good fortunate of being paired with our field support specialists.
Had reiterated the fact that it did liberate them from a line of the patient demos.
That is an important part of the selling process, but not necessarily where we want our product specialists and it's allowing them to spend more time, not only with their higher quartile prescribers, but also to spend more time with the new prescribers. These.
New physicians that either participate or attended 1 of our education events, where some of the information that we've been able to equip them has resonated and now we're working to continue to develop them as more active prescribers as they recognize the right patients. So I'd say overall good progress being made.
In the in the continued expansion of the field team and the and good progress between the harmony I think between these support reps in our product sales specialists.
Great. Thank you and then just 1 more on the on the key time trials. The previously we had thought the case Mike go to trial sometime in the early fall. We saw the cases recently delayed until December so just appreciating theres only so much you can share can you provide any color around the everything for the.
The new timeline. Thank you so much for taking my questions.
Hi, Carolyn as Brent I'd be happy to share a little bit of color on the qui Tam lawsuit.
Just in terms of overall updates things are progressing we are essentially through discovery and the deposition process. So those are virtually complete.
We're working through the exchange of briefs and motions between now and later this fall.
You're absolutely correct. The trial date has been pushed back until the beginning of December.
Lot of that has to do with preparation on the relator side more so than it is on our side.
So continuing to navigate their request of pushed the trial out in our quest to actually finalize the trial.
And put this behind us, but as you might expect Caroline we continue to believe that the cases without merit and we will continue to vigorously defend ourselves on the on these claims but that's.
That's the that's generally the story line as of now.
Thank you.
Youre welcome.
Our next question comes from Margaret Cashmore with William Blair. Please state your question.
Hey, good afternoon, guys. Thanks for taking the question.
The number of 3 or 4 with guidance here, but kind of.
Of the more specific balance sheet.
You get on.
If we back into the guidance reflects the touch and I know the total guidance gets you close to 20%, but it seems like flexi touches may be in the mid teens for the second half of it.
It seems a bit conservative I guess versus what we typically see sequentially more likely in Q4, yeah. So I know there's uncertainty on the numbers, but I guess anything that would suggest that traditional seasonality isn't applicable here.
Q4 is probably the more commercial versus VA and you should see that uplift.
And all of that is Brent thanks for the question.
I would say your analysis is pretty typical on I think it's pacing with the recovery that we've seen in the the first half of 2021 so.
Just to kind of lay down the expectations with the VA recovering the slowest you have to remember that the VA is almost exclusively flexi touch. So that's 1 component that's contributing to this and if they don't recover like the historically have in terms of Q3 and Q4 of performance that puts a little.
Bit of pressure on the flexi touch.
The line of business. The other piece that we've talked about in Q1 and Q2 as vascular and we expect that that continues to recover at a faster pace than some of the other categories that are out there and then just as the third payer.
Medicare.
You know there are predominantly.
Entre as well and follow quite closely the pace of the the.
The vascular business so.
It's the expectation is really predicated on where we're starting to see the opportunity as we progress through the year.
Okay, Yeah fair.
Fair enough in the end.
I guess ultimately the question is what does that imply for 'twenty 2 growth.
So it was that mid teens to start on improving from there or can we kind of get back to that 20%.
And if you don't touch test of catch the bigger question is from a broad strategic perspective, what's the catalysts, what's that growth driver outside of just Covid recovery that you guys are profit towards you look at 'twenty 2 and beyond.
Yeah, I would tell you.
Nothing's changed in our overall expectations for this this marketplace. So.
Once we get through the Covid environment, we do expect that we'll return to a 20% plus top line revenue grower.
We haven't worked out our R 22.
Expectations, our guidance, but certainly there is nothing in our a.
Our our line of sight that would give us pause relative to the opportunity that's in front of us so.
I would tell you that once we once we kind of traversed through that gate.
Things things should look a bit more normal yes, I would just add Margaret.
Theres a lot of things force to be enthusiastic about I guess as we look down a little further down the line I mean, we're really anxious like the rest of the world is to get back to kind of pre COVID-19 normalcy and.
It has stretched out of the longer than some of us might have expected it.
You asked us a year ago, but I still am of the mind that we will get back to a more normal environment next year I think some of the new prescribers that we continue to add havent been prescribing yet at the full pace of recognition as we've kind of described I think in the past new prescribers.
Typically <unk>.
Start with the with 1 or 2 patients or a small group they want to see how they do in spite of the fact they may have written their first prescription based on a much broader body of evidence they still kind of want to see it with their own patients. We think about the VA I think back to <unk>.
To Chris's question about when are they going to recover its hard for us to predict so we haven't modeled it into 2021, but I expect at some point the Va's posture will return to normal and then when you think about the expanded organization. We continue to invest in and I think some of the other investments that we'll be making into 'twenty 2 and <unk>.
Beyond.
Were certainly enthusiastic about what what happens as we get past 2021, we haven't.
We won't be providing specific guidance for 2022 at this point, but it will come it will come but I think there's a there's certainly a number of things that we're enthusiastic about as we start to contemplate it.
Great. Thanks, Scott.
Thanks Mark.
Thank you and just sort of minor task of question at this time press star 1 on your telephone keypad.
Once again press star 1 to queue up for question. Thank you.
Okay.
Our next question comes from Suraj Kalia with Oppenheimer. Please state your question.
Suraj Kalia of your line is open please on mute yourself.
Okay.
Hello.
Yes, hi crush.
Sorry, Dan Mike.
My phone was behaving goofy.
So Dan.
Couple of questions on the lower end of the guidance.
How have you all factored in any potential impact from the Delta variant and I'm, particularly curious about Florida in Missouri.
Those specific geographic regions contribute to the overall performance and the outlook for the remainder of 'twenty 1.
Well I think it's a good question.
Certainly paying attention to what's going on in Florida, and some of the other states get People's attention, but I think you hit it exactly suraj, that's what would point to the lower end of the range. There is talk a little bit about the assumptions I think theres certainly an opportunity to find our way on the higher end of the range. If we can see faster recovery, if we can get closer.
Of the 90 plus percent throughput from our big prescribers on.
<unk> access to patients for demos things like that and perhaps even a pivot on the va's posture before the end of the year I think on the low end.
The other end of the spectrum is if we see some resurgence of the delta variant causes a bit more.
Pause in certain markets, that's what we'd probably guide us there and that's why we've got a bigger range than normal for the back half than I think we historically would have provided we're trying to account for the kind of that cone of various variables, but those of.
Those would certainly be the things that we kind of pull us down towards the lower end, but we feel like we've tried to balance the handicap, we certainly havent modeled in perfection in our in our and our expectations. So.
We're certainly hopeful that we don't get a bigger surprise there.
Fair enough and then I'll just throw in a couple of quickly what was the independent contractor usage in the quarter.
And if I could piggyback I believe 1 of the other guys asked this question of Alaska slightly differently with me.
Look at average prescriptions per clinic right.
It does the parade of rules still apply in terms of what you are seeing or is it more.
Normally I shouldn't say normally but it's getting back to what the historical patterns, where any color would be greatly appreciated. Thank you for taking my questions.
Sure. So let me touch on the patient training first on the patient training front, let me just put it in perspective for the broader group is theres been pretty even balance in the second quarter between patients that were trained in the home by 1 of our representatives or done virtually or out of the box.
It's been pretty evenly balanced between those 2 in the second quarter of patients that were trained in the home.
The majority were done by an employee of tactile we've continued to expand our field trainers.
Who are full timers for the most part in those markets, where we've got a good steady diet of prescriptions contractors represented actually a small portion.
I think something less than a quarter of all in home training in the second quarter certainly by June was done by a contractor and I wouldn't say that we won't use contractors suraj, but I think the contractors are best suited for us in those markets, where there's either big geographic.
Range has to be covered or simply less developed markets, where we don't have enough of a steady diet to fulfill of full time employee. So that's what gives you a little bit on kind of what the training piece looked like I think what portion will be in home and virtual overtime I think that pendulum is still swinging a bit but.
In Q2, it was pretty even between in home and virtual.
And then as far as kind of prescribers per clinic.
We've certainly seen in the second quarter.
Solid increases in our more active prescribers and the amount of volume that we saw on prescriptions from those prescribers and it's not a big surprise to US I guess for a couple of reasons as their throughput has continued to recover.
That in essence has led to an increase in recovery of prescriptions that we've seen from those clinics.
So we've seen some complement certainly from new prescribers, but as the throughput which is why is it is the variable that we have tracked quite closely.
Because we're convinced it's a close barometer to the kind of activity, we're going to see from our existing customers as throughput has continued to improve.
We saw that in our in our existing clinic prescribers as well.
Thank you.
Mhm.
Yeah.
Thank you. We are currently seeing no remaining questions at this time I'll turn it back to Mr. Reverse for closing remarks.
Thanks, operator, and thanks to everyone for your interest in tactile Medical's journey, we remain focused on revealing in treating the underserved lymphedema segment, and we look forward to sharing updates.
Of our progress in the second half hope everybody has a great summer in the meantime, and thanks again for joining our call.
Thank you.
That does conclude our conference for today. Thank you for your participation.