Tactile Medical Provides A Healing Touch

Tactile Medical Provides A Healing Touch

Tactile Medical of Minneapolis is confident its ACTitouch brace is a game-changer in the wound-care category.

In 2007, Tactile Medical announced it had raised $11.8 million to bring an at-home lymphedema-care product to market. It was the Flexitouch, an electronically charged wearable garment to treat the condition, which causes swelling in the arms or legs. Flexitouch pushes fluids out of the area swollen or damaged by a wound or poor circulation. The notion was that instead of asking a patient to go to a clinic to have the lymphatic condition manually treated (massage therapists manipulating the tissue so blood flows back up into the heart) patients would buy the device and spend an hour at home getting the treatment, and insurance would cover it.

It proved very popular. Tactile’s revenue jumped from $6.1 million that year to $29.6 million last year, and it expects to reach $35 million this year. And the market has far from matured. It’s estimated that 1 million Americans require treatment for the condition, and so far, the Flexitouch has only reached 25,000 people. That, to CEO Jerry Mattys, speaks of opportunity.

“There’s plenty of growth out there just in driving awareness of lymphedema,” he says from his company’s northeast Minneapolis facilities, where 150 people work. “That doesn’t even speak to the market growing, which demographically, due to the aging of the population, should happen. A lot of elderly people have circulation challenges.”

That’s lymphedema care. But there’s also the market for treating chronic wounds, which affects 6 million Americans, a much larger market. “That would be the real home run,” Mattys says.

Mattys thinks the company just hit it. In October 2012 it announced it had raised $10.4 million in Series B financing to acquire a product that provides the continuous pressure patients require to manage chronic wounds.

And this time the product is not only for at-home use; it’s wearable. It’s a leg brace patients strap on that applies constant pressure all day long, and can be plugged in for cyclic pressure. Tactile bought the technology from a company Mattys won’t name, other than to say the company decided not to develop the product for strategic reasons. Tactile and the company agreed on a price, and as of August, the product is now available to patients. It’s called the ACTitouch. It costs $1,200, of which Mattys estimates most patients will only need to come up with a 10 percent co-pay. Mattys puts one on to demonstrate how it works.

“It’s disruptive in two ways,” he explains. “It does consistent pressure all day long, and does intermittent pressure. There’s nothing on the market that does both. It fits smack-dab in the middle of two established markets. I mean, just the ability to push fluid upstream is a $2 billion opportunity right there. But this thing is portable and goes with you everywhere. It’s a huge step forward.”

And, perhaps sadly, the chronic wound market is a growth area. Mattys doesn’t hesitate to list the market drivers: “Obesity. Inactivity. Diabetes.”

So while Americans may not be overwhelmingly healthy, Tactile’s business is. Mattys reports that the company’s balance sheet has been in the black for the past three years, and he has confidence its revenue trajectory will continue. Part of its success is its full-service, direct approach to putting this product into the hands of patients.

“Our sale is to the patient and the insurance company. There’s no middleman. We bill and collect from the payer and the patient’s co-pay amount, and we advocate for the patient. If the insurance companies deny their coverage, we become their advocate. We will collect their medical records and we will submit an appeal on their behalf to get this product covered,” he says. “We also have our own sales force. We have 46 employees in the field throughout the United States.”

His employees enjoy working there, as evidenced by the company’s appearance on the Star Tribune’s “Top 100 Workplaces” list the last four years.

There is competition. Last year the research firm Kalorama Information projected that the global market for wound care products will rise to nearly $21 billion in 2015 from $16.8 billion this year. Mattys notes that Kinetic Concepts, Inc., based in San Antonio, is the industry leader. It’s a much bigger company with a greater capacity to develop medical technology related to wounds and wound healing. It employs more than 5,000 employees and on June 30 reported operating profits of $110.8 million on sales of $317.8 million for the three months prior.

But it doesn’t have the ACTitouch. Mattys is convinced it’s a game-changer.

Well, at least until Tactile’s ready to change the game again.

And he knows with what. “We made a second purchase from the company that gave us the ACTitouch technology for a device that will do what our Flexitouch does with lymphedema but will also be wearable,” he says.

He estimates that the product will make it to market in 2016, and he acknowledges that it could make the Flexitouch obsolete. But the gleam in his eye indicates he’s comfortable with that.

One thing he can confirm is it will be called a Something-Touch.

“That you can count on,” he says. “Touch is what our company means, after all.”

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