Tactile Systems Technology Primed To Go Public

Medical device firm would be first Minnesota IPO in nearly 18 months.

Initial public offerings have been rare for Minnesota companies of late, but Minneapolis-based Tactile Systems Technology Inc. is set to go public. The company, also known as Tactile Medical, makes home therapy medical devices to treat lymphedema and venous leg ulcers. Lymphedema can cause swelling of the legs, arms or torso. There is currently no cure for the chronic, progressive condition.
In a June 9 filing with the U.S. Securities and Exchange Commission, Tactile outlined plans to sell 4 million shares of common stock priced in the range of $14 to $16 per share. If the stock is ultimately priced in that range, proceeds from the IPO would range from $56 million to $64 million, before offering expenses are deducted. The company initially registered to go public in a January filing with the SEC.
Statistics from Greenwich, Connecticut-based Renaissance Capital show that only 39 U.S. companies have gone public so far in 2016, down 55 percent from the IPO pace of 2015. Renaissance Capital is a manager of IPO-focused Exchange Traded Funds (ETFs).
Kathleen Smith, a principal with Renaissance Capital, said that she is seeing many companies price IPOs at less than or at the lower end of original expectations. That means less money flowing to the companies selling stock, but potentially better returns for IPO investors. Smith said that so far this year, IPO stocks are up 17.1 percent compared to initial share prices.
“IPO investors are looking for discounts on many of the IPOs that are being done,” Smith told TCB. “The class of 2015 IPOs didn’t turn out so well…investors lost money.”
Smith said that Tactile Systems could price its stock tonight and start trading tomorrow.
“The bulk of the IPOs done have been in the health care segment,” noted Smith.
Tactile’s filings indicate that it had $62.9 million in revenue for 2015 with net income of $1.9 million. The company is no fledging startup: Tactile was founded in 1995. The company will trade under the ticker symbol “TCMD.” Under SEC “quiet period” guidelines governing pending IPOs, company executives avoid making any public statements about the company and the offering.
Shaye Mandle, president and CEO of the Golden Valley-based Medical Alley Association, says that in the current market, the overriding emphasis is on finding ways to remove or cut costs from the health care system. He says that Tactile Systems Technology offers home-based treatments, which can save money in treating chronic conditions.
“I think Tactile is in a sweet spot of having a great product that improves care while lowering costs. That’s the magic combination,” said Mandle.
The last Minnesota IPO was Plymouth-based Entellus Medical Inc., which went public in late January of 2015 at $17 per share. Entellus shares closed at $18.66 on Tuesday, reflecting a 9.8 percent gain from its IPO price. The company has developed minimally invasive devices to treat sinus conditions. For 2015 Entellus reported revenue of $61.6 million and a net loss of $18.3 million.
“In an environment where you’re not seeing a ton of med tech companies go public…Tactile really addresses the current state of the market,” said Mandle.

“It’s exciting to see Minnesota get another public company headquarters.”