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# Tactile Medical's Tax Rate Fell Eight Points On Flat Tax Dollars, Flattering A Weaker Quarter
- URL: https://www.bullished.co/tactile-medicals-tax-rate-fell-eight-points-on-flat-tax-dollars-flattering-a-weaker-20d254b4/
- Published: 2026-11-02T22:17:35.000Z
- Updated: 2026-11-02T22:17:35.000Z
- Description: Nine-month net income rose to $13.2 million, but third-quarter operating income fell to $9.6 million and a $2.2 million earnout is due.
- Author: Matteo Parrino
- Tags: Earnings, TCMD, Industry: Healthcare

Tactile Medical's nine-month profit gain leans on a lower tax rate: the [effective rate fell to 20.6%](https://www.sec.gov/Archives/edgar/data/0001027838/000110465926121325/tcmd-20260930x10q.htm?ref=bullished.co) from 28.9% while the tax bill stayed at $3.4 million, the company said in its quarterly report Monday. Third-quarter operating income, meanwhile, slipped to $9.6 million from $11.0 million.

## Flat tax dollars, lower rate

Tactile Systems Technology, which does business as Tactile Medical and makes at-home devices for chronic conditions such as lymphedema, booked [$3.4 million of tax expense](https://finance.yahoo.com/healthcare/articles/tactile-systems-technology-inc-reports-210500795.html?ref=bullished.co) in both the first nine months of 2026 and the same period of 2025\. Pre-tax income rose to $16.6 million from $11.9 million, so the same tax dollars translate into a much lower rate.

The company attributes the change to stock-based compensation discrete items, meaning one-off tax effects from stock pay. Nine-month net income rose to $13.2 million from $8.5 million.

The benefit did not carry into the third quarter. Tax was $3.0 million at a 29.3% rate, against 28.2% a year earlier. In the second quarter, [the prior filing](https://www.sec.gov/Archives/edgar/data/0001027838/000110465926093352/tcmd-20260630x10q.htm?ref=bullished.co) showed a $0.4 million tax benefit.

Cash tells a different story: cash paid for taxes in the nine months was $5.2 million, versus $0.9 million a year earlier.

## A quarter of rising costs

Third-quarter revenue rose 7% to [$91.9 million](https://finance.yahoo.com/healthcare/articles/tactile-systems-technology-inc-reports-210500795.html?ref=bullished.co). Operating expenses rose 13% to $60.9 million, and net income fell to $7.2 million from $8.2 million.

Lymphedema products grew 13% to $81.8 million. Airway clearance sales fell 25% to $10.0 million, which the company [attributed](https://www.sec.gov/Archives/edgar/data/0001027838/000110465926121315/tcmd-ex99d1.htm?ref=bullished.co) to a distributor inventory transition tied to the launch of its next-generation AffloVest.

For the full year, the company continues to expect revenue of [$360 million](https://seekingalpha.com/news/4662942-tactile-systems-technology-gaap-eps-of-0%5F31-beats-by-0%5F02-revenue-of-91%5F86m-misses-by-0%5F13m?ref=bullished.co) to $366 million and now expects adjusted EBITDA of $50 million to $52 million, up from a prior $49 million to $51 million.

## An earnout and a fee fight

Tactile bought LymphaTech, a 3D lymphedema measurement company, on February 17, and the contingent payout could reach $4.9 million. One milestone was met in October, so about $2.2 million is payable on or before November 12.

In a related matter, the court dismissed the False Claims Act cases on August 21, but relators in the Gorham case seek $0.6 million in fees. The company filed an opposition on September 11, and the matter is pending decision. It has accrued about $0.2 million for those fees.

The $2.2 million LymphaTech payment is due by November 12.

### Sources

- [10-Q Filing — Tactile Systems Technology (TCMD)](https://www.sec.gov/Archives/edgar/data/0001027838/000110465926121325/tcmd-20260930x10q.htm?ref=bullished.co) — SEC EDGAR
- [10-Q Filing — Tactile Systems Technology (TCMD), Q2 FY2026 filed 2026-08-10 (comparison basis)](https://www.sec.gov/Archives/edgar/data/0001027838/000110465926093352/tcmd-20260630x10q.htm?ref=bullished.co) — SEC EDGAR
- [Earnings release (8-K Item 2.02, tcmd-ex99d1.htm) — Tactile Systems Technology, filed 2026-11-02](https://www.sec.gov/Archives/edgar/data/0001027838/000110465926121315/tcmd-ex99d1.htm?ref=bullished.co) — SEC EDGAR
- [Tactile Systems Technology GAAP EPS of $0.31 beats by $0.02, revenue of $91.86M misses by $0.13M (NASDAQ:TCMD) | Seeking Alpha](https://seekingalpha.com/news/4662942-tactile-systems-technology-gaap-eps-of-0%5F31-beats-by-0%5F02-revenue-of-91%5F86m-misses-by-0%5F13m?ref=bullished.co) — seekingalpha.com
- [Tactile Systems Technology, Inc. Reports Third Quarter 2026 Financial Results](https://finance.yahoo.com/healthcare/articles/tactile-systems-technology-inc-reports-210500795.html?ref=bullished.co) — Yahoo Finance
- [Tactile Systems Technology, Inc. Reports Third Quarter 2026](https://www.globenewswire.com/news-release/2026/11/02/3393718/0/en/tactile-systems-technology-inc-reports-third-quarter-2026-financial-results.html?ref=bullished.co) — globenewswire.com