Tactile Systems Technology Inc (TCMD) 2021 Q2 法說會逐字稿

Good evening, ladies and gentlemen, and welcome to the Second Quarter of 2021 Earnings Conference Call for Tactile Medical. (Operator Instructions) 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 section 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 generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations 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 Reuvers, Tactile 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 a 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 2021 before we open up the line for questions.

Now let's get started with a review of our sales performance. In the second quarter of 2021, we were excited to achieve sales results that reflected easing of some of the pandemic-related headwinds and thus 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 Flexitouch 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 health care environment.

Looking at our second quarter trends a bit more closely. During the first half of the quarter, our business remained substantially impacted by the COVID-related health and safety protocols adopted by many of the clinics that we serve. These protocols continued to impact our business in 2 primary ways: first, they restricted clinics' treatment capacity, as clinics continued to operate with fewer exam rooms and dedicated additional time to turning over these rooms, reducing their patient throughput. Some of the surveys of our top accounts in April found that 2/3 were still operating at less than 80% of normal levels, consistent with our surveys earlier in 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 continued to face these COVID-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 received 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 a backdrop, our team's 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 in 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 specialist settings to their network of approximately 700 community-based outpatient clinics. VA sales increased 69% year-over-year in the second quarter. However, 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 VA's shift in site 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 2021 outlook. 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 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-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 1.5 years in using virtual programming to engage and educate a variety 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 conducted in person. These events were attended by nearly 1,600 clinicians, bringing the total to approximately 2,800 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 focus 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 continued 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 FSS team members going forward.

Our top line results enabled us to deliver solid gross margins and a return to net income and adjusted EBITDA profitability.

With that, let me turn it over to Brent to provide you with a more detailed review of our quarterly financial results, along with our updated guidance for 2021. Brent?

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 of 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 to our effective virtual clinician education activities.

By product, sales and rentals of our Flexitouch systems increased 45% 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. Flexitouch revenue accounted for 88% of our total revenue in the second quarter of 2021 compared to 89% in the prior year period.

By payer, 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 $3.4 million or 10%. 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 $100,000 to $1.2 million.

Second quarter reimbursement, general and administrative expenses decreased by approximately $200,000 to $14.1 million and included approximately $900,000 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, our reimbursement and G&A expenses increased approximately 25% year-over-year.

Second quarter operating loss was $76,000 compared to 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 year-over-year change was primarily due to a tax credit for a research and development study recognized in the second quarter of 2021.

Net income was $1.3 million or $0.07 per diluted share for the second quarter of 2021 compared to a net loss of $13.9 million or $0.72 per diluted share for the second quarter of 2020. Weighted average shares used to compute diluted net income per share were 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 $700,000 in the second quarter of 2020. As a reminder, we have provided a reconciliation of certain GAAP to non-GAAP measures in our earnings press release.

As of June 30, 2021, we had cash and cash equivalents of $49 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 30, 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 million 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 million to $224.5 million or 15% to 20% year-over-year growth.

By product, our updated 2021 total revenue guidance range assumes sales of our Flexitouch systems increase approximately 14% to 18% year-over-year and sales of our Entre systems increase 26% to 34%.

For modeling purposes, for the full year, we expect our gross margin to be in the low 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 $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-related headwinds outlined earlier during the remaining months of 2021. Although the Delta variant has served as a bit of a caution flag, we anticipate these headwinds will continue to subsidize -- or subside as we -- as widespread vaccine inoculation drives a 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 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 return to growth. I'd also like to thank our investors and those on today's call for their interest and support in Tactile Medical and our mission.

Operator, we'll now open the call for questions.

(Operator Instructions) And our first question will come from Chris Pasquale with Guggenheim.

Dan, I'd like to start by just getting an updated baseline on where you guys are in terms of the COVID impact on the business. So starting outside of the VA, what limitations, if any, are you still facing there today? And then for the VA segment, do you have 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.

Yes. Thanks for the questions, Chris. Let me start with kind of what we're seeing on the COVID front. I think one of the things that led to a really strong quarter for us was the continued normalization trends that we're seeing. Back when we were serving our customers, top prescribers, 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% value as we got later into the quarter, and that certainly helped.

We don't expect that we'll get back to 100% or rather that the clinics will get back to 100% throughput by the end of the year. Some of the sanitation procedures they're doing to continue to turn over rooms, some of the new office policies about limiting the number of patients either in exam rooms or in the waiting rooms, we continue to expect those to persist, however, not at the same levels. So we've 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, will 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 were 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'd 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 in 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 environment, we've kind of modeled the assumption that the CBOC 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 VA.

That's helpful. I'm curious whether -- maybe the vascular clinics are a good leading indicator of this. But lymphedema as a chronic condition, it's not going to go away if these patients are not treated. And many of them maybe have not been getting the kind of treatment that they would have otherwise now for 18 months. In the settings where things have normalized fastest, have you seen a bolus of pent-up demand as access returns in those sites? Or is that not something you expect to materialize in your 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 would say that there's certainly been no shortage of a steady diet of patients wanting to fill those rooms. It's been more of the, I think, the control or the capacity, rather, of the clinics themselves. They're seeing what they can with this new normal and some of the precautionary models that they 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 environment. I've heard there were clinics that were -- back in early Q1, it was you had to wait down in your car and you were summoned one 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 4, but there is a queue of patients in the waiting room now that has helped with some of the throughput. And I think those are the things that are the difference between sub-70% and starting to get closer to 80% or better on the throughput, especially of our bigger prescribers.

Our next question comes from Matthew O'Brien with Piper Sandler.

It's Adam on for Matt. And congrats on the solid print. To start, I wanted to ask about the guidance. The guide implies a nice ramp in 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.

Yes. 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 one. We really don't think anything's changed, I guess, in the -- in how we saw the market, how we saw the recovery even a few months ago. So our outlook at this point really hasn't 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 environment or progressive improvements as the year continues to unfold.

We don't think that the throughput of patients will get back to 100%, but we do expect that we'll get certainly north of 80% and approaching 90% by the time we exit the year. We do expect 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 posture, as 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 are the same assumptions that we really had a few months ago.

As far as kind of 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 we had the good fortune of having a really solid Q2. And I think that gave us the confidence to bring up the lower end as a result of what we had achieved in the first half. Still a fair amount of wood to chop in the second half, there's still some uncertainty in the marketplace. We like to think that we've tried to account for those, and I think it's provided us with a pretty good balance in how we've tried to lay out the back half of the year.

Yes. No, I would -- Adam, it's Brent. I would just echo everything 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 progress through the second half of the year, all of those things were kind of built into our expectations.

In terms of the sequencing for Q3 and Q4, I feel confident that we'll be able to hit that approaching 20% mark as we exit 2021, and quarterly sequencing looks pretty consistent.

Got it, guys. And if I can just sneak in one more. Would be curious if there's any update just on the top prescriber cohort as it relates to their performance in Q2. I think you talked about this group being down roughly 20% in Q1. So just curious if you saw some recovery there and just trying to get a sense for what that trajectory could look like going forward.

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 patient from a prescriber perspective kind 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. But I think where we're seeing a bit of the offset is in the new prescribers, and we don't quantify what those new prescribers are. But certainly, we're seeing an add to clinicians out there that are interested and the -- are the byproduct of the virtual education events that we've done. So continuing to see progress as we expected.

Our next question comes from Ryan Zimmerman with BTIG.

This is Carolyn on for Ryan. On the commercial organization, can you share where you're at in terms of adding the 45 field support specialists over the course of the year? Is 45 still a goal? You mentioned expectations for a modest increase through the balance of the year here. And then you noted over 300 on that team or over the entire commercial team exiting the quarter versus over 295 last quarter. So is that 5 net added through the quarter? So again, just where are you in terms of that 45 field support specialist additions for the year? And then I have one follow-up.

Okay. Thanks for the question, Carolyn. First, as we put in the press release, I think one of the important things on the sales team also is that we brought in this new leader in Eric Pauls, our new Senior Vice President, with a long, storied experience from Philips. And I think he's done a really nice job of engaging with this team. He's kind of gotten his arms around it probably quickly than I expected. We've got -- we finished the quarter at just over 300, to your point. There's -- while we had about 45 targeted for new heads in the field, we're about 1/3 of the way there at the end of Q2. And we got about 2/3 of the way to go in 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 specialists who had the good fortune of being paired with a field support specialist had reiterated the fact that it did liberate them from a lot of the patient demos that is an important part of the selling process but not necessarily why 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 participated or attended one of our education events or 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 continued expansion of the field team and good progress between the harmony, I think, between these support reps and our product sales specialists.

Great. And then just one more on the qui tam trial. So previously, we had thought the case might go to trial sometime in the early fall. We saw the case was recently delayed until December. So just appreciating there's only so much you can share, can you provide any color around the reasoning for the new time line?

Carolyn, it's 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. A lot of that has to do with preparation on the relator side more so than it is on our side.

And so continuing to navigate their request to push the trial out and our quest to actually finalize the trial and put this behind us. But as you might expect, Carolyn, we continue to believe that the case is without merit. And we'll continue to vigorously defend ourselves on these claims. But that's generally the storyline as of now.

Our next question comes from Margaret Kaczor with William Blair.

Yes. I'll be #3 or 4 with guidance here, but I'll kind of be more specific and see what I can get. If we back into the guidance for Flexitouch, and I know the total guidance gets you close to 20%, but it seems like Flexitouch is maybe in the mid-teens for the second half, which seems a bit conservative, I guess, versus what we typically see sequentially more likely in Q4, yes. So I know there's uncertainty in the numbers. But I guess, anything that would suggest that traditional seasonality isn't applicable here, especially since Q4 is probably more commercial versus VA and should see that uplift?

Margaret, it's Brent. Thanks for the question. I would say your analysis is pretty typical, and I think it's pacing with the recovery that we've seen in 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 Flexitouch. So that's one component that's contributing to this. And if they don't recover like they historically have in terms of Q3 and Q4 performance, that puts a little bit of pressure on the Flexitouch line of business.

The other piece that we've talked about in Q1 and Q2 is vascular. We expect that, that continues to recover at a faster pace than some of the other categories that are out there. Then just as the third payer, Medicare, they're predominantly Entre as well and follow quite closely the pace of 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. Yes, fair enough. And I guess, ultimately, the question is, what does that imply for '22 growth? And so is that mid-teens to start and improving from there? Or can we kind of get back to that 20%? And yes, if you don't touch that, I guess, the bigger question is, from a broad strategic perspective, what's that catalyst, what's that growth driver outside of just COVID recovery that you guys are prepping for as you look at '22 and beyond?

Yes. I would tell you, nothing's changed in our overall expectations for 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 '22 expectations or guidance. But certainly, there is nothing in our line of sight that wouldn't give us pause relative to the opportunity that's in front of us. So I would tell you that once we kind of traverse through that gate, things should look a bit more normal.

Yes. I would just add, Margaret, there's a lot of things for us to be enthusiastic about, I guess, as we look down the -- 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 normalcy. And I think it has stretched out a little longer than some of us might have expected if you asked us a year ago. But I still am of the mind that we'll get back to a more normal environment next year.

I think some of the new prescribers that we continue to add haven't been prescribing yet at the full pace of recognition. As we've kind of described, I think, in the past, new prescribers typically start with a few -- 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.

When we think about the VA, I think back to Chris' question about when are they going to recover, it's 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 '22 and beyond, we're certainly enthusiastic about 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'll come. But I think there's certainly a number of things that we're enthusiastic about as we start to contemplate it.

(Operator Instructions) Our next question comes from Suraj Kalia with Oppenheimer.

Sorry, Dan. My phone is behaving goofy. So Dan, a 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 and Missouri. How do those specific geographic regions contribute to the overall performance and the outlook for the remainder of '21?

Well, I think it's a good question, and certainly paying attention to what's going on in Florida and some of the other states get people's attention. But I think you've hit it exactly, Suraj. That's what would point to the lower end of the range, right? There's -- talked a little bit about the assumptions. I think there's 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 to the 90-plus percent throughput from our big prescribers, unfettered access to patients for demos, things like that and perhaps even a pivot in 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 or the Delta variant causes a bit more pause in certain markets, that's what would 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 kind of that cone of variables, but those would certainly be the things that would kind of pull us down towards the lower end. But we feel like we've tried to balance the handicap. We certainly haven't modeled in perfection in 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 quickly. What was the independent contractor usage in the quarter? And if I could piggyback, I believe one of the other guys asked this question, I'll ask it slightly differently. When we look at average prescriptions per clinic, right, does the Pareto rule still apply in terms of what you all are seeing? Or is it more normally -- I shouldn't say normally, but it's getting back to what historical patterns were? Any color would be greatly appreciated.

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 there's been pretty even balance in the second quarter between patients that were trained in the home by one 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 1/4 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 contractors are best suited for us in those markets where there's either big geographic ranges to be covered or simply less developed markets where we don't have enough of a steady diet to fulfill a full-time employee. So that gives you a little bit on kind of what the training piece looked like. I think what portion will be in-home and virtual over time, 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 in 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 it's a 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 existing clinic prescribers as well.

We are currently seeing no remaining questions at this time. I'll turn it back to Mr. Reuvers for closing remarks.

Thanks, operator, and thanks to everyone for your interest in Tactile Medical's journey. We remain focused on revealing and 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.