The quarter beat on profit but missed on sales. Q2 revenue was $85.7 million versus the published consensus of approximately $87.2 million, while diluted EPS was $0.34 versus roughly $0.14 expected. The earnings beat was helped in part by a $0.4 million tax benefit, compared with a $1.3 million tax expense last year (Income Statement), so the bottom-line upside was stronger than the underlying revenue delivery alone suggests.
| Metric | Q2 2026 | Q2 2025 | External expectation / prior guide |
|---|---|---|---|
| Total revenue | $85.7M (Income Statement) | $78.9M (Income Statement) | ~$87.2M consensus |
| Diluted EPS | $0.34 (Income Statement) | $0.14 (Income Statement) | ~$0.14 consensus |
| Gross margin | 76% (Financial Results) | 75% (Financial Results) | — |
| Adjusted EBITDA | $11.4M (Adjusted EBITDA reconciliation) | $7.7M (Adjusted EBITDA reconciliation) | — |
| FY 2026 revenue guidance | $360M–$366M (2026 Financial Outlook) | $329.5M in 2025 (2026 Financial Outlook) | Prior: $360M–$368M |
| FY 2026 adjusted EBITDA guidance | $49M–$51M (2026 Financial Outlook) | $44.8M in 2025 (2026 Financial Outlook) | Unchanged |
The core lymphedema business is carrying the growth. Lymphedema revenue rose 12% to $73.6 million in Q2, while airway-clearance revenue fell 7% to $12.1 million (Revenue by Product Line). That mix shift matters because the shortfall was not broad-based: several large DME providers reduced AffloVest orders while working through inventory ahead of the next-generation product launch (Second Quarter Financial Results). Management describes the issue as temporary, but the filing provides no quantified timetable for normalization.
The outlook is stable at the midpoint, but less confident at the top end. Revenue guidance was narrowed from $360 million–$368 million to $360 million–$366 million, leaving the midpoint unchanged at $363 million, while adjusted EBITDA guidance remained $49 million–$51 million (2026 Financial Outlook). That is not a wholesale reset, but it removes the prior upside case and confirms that airway-clearance ordering will be softer than previously assumed.
Profitability improved materially, although cash conversion weakened. Gross margin expanded to 76%, operating income rose to $6.8 million from $4.1 million, and adjusted EBITDA increased 49% to $11.4 million (Financial Results; Adjusted EBITDA reconciliation). However, operating cash flow fell to $2.9 million from $15.2 million for the first six months, while inventory increased to $16.8 million from $14.0 million and cash fell to $69.9 million from $83.4 million (Cash Flow statement; Balance Sheet). Acquisition spending, the $3.0 million distribution payment, capital expenditures, and share repurchases explain much of the cash use, but the weak conversion is an important offset to the strong earnings headline.
Net read: a genuine profit beat, offset by a sales miss and a trimmed revenue ceiling. The filing improves confidence in the lymphedema franchise and near-term margins, but it does not support a higher growth outlook because AffloVest channel inventory has become a real constraint. Relative to expectations, this lands as mixed rather than clearly positive.
Read the original 8-K on SEC EDGAR ↗