TACTILE SYSTEMS TECHNOLOGY, INC. REPORTS FIRST QUARTER 2022 FINANCIAL RESULTS; REAFFIRMS FULL YEAR 2022 OUTLOOK First Quarter Revenue Increased 12% Year-Over-Year MINNEAPOLIS, MN

TACTILE SYSTEMS TECHNOLOGY, INC. REPORTS FIRST QUARTER 2022 FINANCIAL RESULTS; REAFFIRMS FULL YEAR 2022 OUTLOOK

First Quarter Revenue Increased 12% Year-Over-Year

MINNEAPOLIS, MN, May 2, 2022 - Tactile Systems Technology, Inc. ("Tactile Medical") (Nasdaq: TCMD), a medical technology company focused on developing medical devices for the treatment of patients with underserved chronic diseases at home, today reported financial results for the first quarter ended March 31, 2022.

First Quarter 2022 Summary:

First Quarter 2022 Highlights:

"During the first quarter, we were pleased to achieve overall sales performance that exceeded our expectations, while navigating the anticipated headwinds related to COVID variants and salesforce staffing challenges," said Dan Reuvers, President and Chief Executive Officer of Tactile Medical. "While we saw high rates of patient, provider and employee absenteeism related to the Omicron variant surge, our team continued to make progress in supporting our existing prescribers, educating new accounts and filling key sales roles. The strength we saw in sales of our airway clearance products, which drove our increased revenue, was an encouraging early indicator that our AffloVest product line is an important addition to the other therapies chronic respiratory patients depend upon."

Mr. Reuvers continued, "We are reaffirming our 2022 total revenue guidance today based on our progress to-date, and expect strong performance as our recently hired and promoted sales representatives become more productive and COVID-related headwinds give way to more normalized conditions. We remain focused on onboarding and training new sales representatives,

leveraging our expanded base of prescribers, enhancing our lymphedema product portfolio and supporting our AffloVest channel partners. We believe that our continued execution with respect to these initiatives will position Tactile Medical for strong sales performance in 2022 and beyond as we address the needs of the millions of underserved patients living with lymphedema, bronchiectasis and other related chronic conditions."

First Quarter 2022 Financial Results

Total revenue in the first quarter of 2022 increased $5.2 million, or 12%, to $48.0 million, compared to $42.8 million in the first quarter of 2021. The increase in total revenue was attributable to $7.3 million in sales of the airway clearance product line, which includes the AffloVest product acquired on September 8, 2021, partially offset by a decrease of $2.1 million, or 5%, in sales and rentals of the lymphedema product line in the quarter ended March 31, 2022, compared to the 2021 first quarter. First quarter 2022 revenue was negatively impacted by the prolonged recovery from COVID-19, including the resurgence due to the Omicron variant during the period, which resulted in restricted access to clinics and hospitals and disrupted the recovery in patient visits versus the pre-COVID environment. In addition, the challenging labor market impacted the Company's ability to recruit and retain quality candidates for its direct sales force.

Gross profit in the first quarter of 2022 increased $3.6 million, or 12%, to $33.9 million, compared to $30.2 million in the first quarter of 2021. Gross margin was 70.6% of revenue, compared to 70.7% of revenue in the first quarter of 2021. Non-GAAP gross margin was 71.2% of revenue, compared to 70.7% of revenue in the first quarter of 2021.

Operating expenses in the first quarter of 2022 increased $14.4 million, or 42%, to $48.8 million, compared to $34.3 million in the first quarter of 2021. The increase in operating expenses was primarily driven by a:

Operating loss was $14.9 million in the first quarter of 2022, compared to $4.1 million in the first quarter of 2021. Non-GAAP operating loss in the first quarter of 2022 was $5.4 million, compared to $3.1 million in the first quarter of 2021.

Other expense was $0.5 million in the first quarter of 2022, compared to $10,000 in the first quarter of 2021. The change in other expense was primarily due to an increase in interest expense.

Income tax expense was $0.2 million in the first quarter of 2022, compared to an income tax benefit of $1.8 million in the first quarter of 2021. The difference is related to a full valuation allowance being recorded against all deferred tax assets in the current year period.

Net loss in the first quarter of 2022 was $15.6 million, or $0.78 per diluted share, compared to $2.3 million, or $0.12 per diluted share, in the first quarter of 2021. Non-GAAP net loss in the first quarter of 2022 was $8.4 million, compared to $1.5 million in the first quarter of 2021.

Weighted average shares used to compute diluted net loss per share was 19.9 million and 19.5 million in the first quarters of 2022 and 2021, respectively.

Adjusted EBITDA loss was $2.6 million in the first quarter of 2022, compared to an adjusted EBITDA loss of $7,000 in the first quarter of 2021.

Balance Sheet Summary

As of March 31, 2022, the Company had $21.2 million in cash and cash equivalents and $51.3 million of outstanding borrowings under its credit agreement, compared to $28.2 million in cash and cash equivalents and $55.0 million of outstanding borrowings under its credit agreement as of December 31, 2021.

2022 Financial Outlook

The Company continues to expect full year 2022 total revenue in the range of $235.0 million to $240.0 million, representing growth of approximately 13% to 15% year-over-year, compared to total revenue of $208.1 million in 2021.

Management will host a conference call at 5:00 p.m. Eastern Time on May 2, 2022, to discuss the results of the quarter with a question-and-answer session. Those who would like to participate may dial 877-407-3088 (201-389-0927 for international callers) and provide access code 13728512. A live webcast of the call will also be provided on the investor relations section of the Company's website at investors.tactilemedical.com.

For those unable to participate, a replay of the call will be available for two weeks at 877-660-6853 (201-612-7415 for international callers); access code 13728512. The webcast will be archived at investors.tactilemedical.com.

About Tactile Systems Technology, Inc. (DBA Tactile Medical)

Tactile Medical is a leader in developing and marketing at-home therapies for people suffering from underserved, chronic conditions including lymphedema, lipedema, chronic venous insufficiency and chronic pulmonary disease by helping them live better and care for themselves at home. The company collaborates with clinicians to expand clinical evidence, raise awareness, increase access to care, reduce overall healthcare costs and improve the quality of life for tens of thousands of patients each year.

Legal Notice Regarding Forward-Looking Statements

This release contains forward-looking statements. Forward-looking statements are generally identifiable by the use of words like "may," "will," "should," "could," "expect," "anticipate," "estimate," "believe," "intend," "continue," "confident," "outlook," "guidance," "project," "goals," "look forward," "poised," "designed," "plan," "return," "focused," "prospects" or "remain" or the negative of these words or other variations on these words or comparable terminology. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties outside of the Company's control that can make such statements untrue, including, but not limited to, the impacts of the COVID-19 pandemic on the Company's business, financial condition and results of operations; and the Company's inability to mitigate such impacts, the adequacy of the Company's liquidity to pursue its business objectives; the Company's ability to obtain reimbursement from third party payers for its products; loss or retirement of key executives, including prior to identifying a successor; adverse economic conditions or intense competition; loss of a key supplier; entry of new competitors and products; adverse federal, state and local government regulation; technological obsolescence of the Company's products; technical problems with the Company's research and products; the Company's ability to expand its business through strategic acquisitions; the Company's ability to integrate acquisitions and related businesses; price increases for supplies and components; the effects of current and future U.S. and foreign trade policy and tariff actions; or the inability to carry out research, development and commercialization plans. In addition, other factors that could cause actual results to differ materially are discussed in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's website at http://www.sec.gov. The Company undertakes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

This press release includes the non-GAAP financial measures of Adjusted EBITDA loss, non-GAAP gross margin, non-GAAP operating loss, and non-GAAP net income (loss), which differ from financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP").

Adjusted EBITDA loss in this release represents net income or loss, plus interest expense, net, or less interest income, net, less income tax benefit or plus income tax expense, plus depreciation and amortization, plus stock-based compensation expense, plus litigation defense costs, plus or minus the change in fair value of earn-out, and plus executive transition costs. Non-GAAP gross margin in this release represents gross margin plus non-cash intangible amortization expense. Non-GAAP operating income (loss) in this release represents operating income (loss) adjusted for non-cash intangible amortization expense, change in fair value of earn-out, litigation defense costs and executive transition expenses. Non-GAAP net income (loss) represents net income (loss) adjusted for non-cash intangible amortization expense, change in fair value of earn-out, litigation defense costs and executive transition expenses and adjusted for the income tax effect on reconciling items. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures are included in this press release.

These non-GAAP financial measures are presented because the Company believes they are useful indicators of its operating performance. Management uses these measures principally as measures of the Company's operating performance and for planning purposes, including the preparation of the Company's annual operating plan and financial projections. The Company believes these measures are useful to investors as supplemental information and because they are frequently used by analysts, investors and other interested parties to evaluate companies in its industry. The Company also believes these non-GAAP financial measures are useful to its management and investors as a measure of comparative operating performance from period to period. In addition, Adjusted EBITDA is used as a performance metric in the Company's compensation program.

The non-GAAP financial measures presented in this release should not be considered as an alternative to, or superior to, their respective GAAP financial measures, as measures of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and they should not be construed to imply that the Company's future results will be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not reflect certain cash requirements such as tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. In evaluating non-GAAP financial measures, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in this presentation. The Company's presentation of non-GAAP financial measures should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company's GAAP results in addition to using non-GAAP financial measures on a supplemental basis. The Company's definition of these non-GAAP financial measures is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.

The following table summarizes revenue by product line for the three months ended March 31, 2022 and 2021:

The following table contains a reconciliation of gross margin to non-GAAP gross margin:

The following table contains a reconciliation of GAAP operating income (loss) to non-GAAP operating income (loss):

The following table contains a reconciliation of GAAP net income (loss) to non-GAAP net income (loss):

The following table contains a reconciliation of net (loss) income to Adjusted EBITDA loss for the three months ended March 31, 2022 and 2021, as well as the dollar and percentage change between the comparable periods: