ELMD Electromed Inc

Record Q4 and full year financial results

Electromed, Inc. (“Electromed”) (NYSE American: ELMD), a leader in innovative airway clearance technologies, today announced financial results for the three months (“Q4 FY 2024”) and full year (“FY 2024”) ended June 30, 2024.

Q4 FY 2024 Financial Highlights

• Net revenues increased 9.0% to a record $14.8 million in Q4 FY 2024, from $13.6 million in the fourth quarter of the prior fiscal year.
• Gross margin was 76.2% of revenue, compared to 76.8% in the fourth quarter of the prior fiscal year.
• Operating income increased by 56.3% to a record $2.3 million or 15.7% of revenue, compared with $1.5 million or 11.0% of revenue in the fourth quarter of the prior fiscal year.
• Net income was a record $1.8 million for the quarter, or $0.20 per diluted share, compared to $1.0 million, or $0.12 per diluted share in the fourth quarter of the prior fiscal year.
• Cash as of June 30, 2024, was $16.1 million.

FY 2024 Financial Highlights

• Net revenue increased 13.8% year over year to a record $54.7 million, from $48.1 million in the fiscal year ended June 30, 2023 (“FY 2023”).
• Operating income totaled a record $6.6 million, a 64.2% increase compared to $4.0 million in FY 2023.
• Net income totaled a record $5.2 million, or $0.58 per diluted share, compared to $3.2 million, or $0.36 per diluted share, in FY 2023.

“I’m extremely pleased with the Electromed team’s performance in fiscal 2024, as we continued to drive double-digit top line growth coupled with strong operating leverage,” said Jim Cunniff, President, and Chief Executive Officer. “The end results were excellent, namely delivering record revenues, record operating income, and record earnings for the year, an impressive feat for any company. We again gained market share, driven largely by ongoing infrastructure investments across the commercial team, as well as ongoing market development initiatives to raise awareness of HFCWO therapy with physicians and clinics treating bronchiectasis patients. These results were achieved despite headwinds from the expiration of the CMS waiver that we benefited from in FY 2023. We will continue to make deliberate investments in our growth and believe Electromed is well-positioned to deliver similar outstanding results in fiscal 2025.”

Q4 FY 2024 Results

All amounts below are for the three months ended June 30, 2024, and compare to the three months ended June 30, 2023 (“Q4 FY 2023”) unless otherwise noted.

Net revenues grew 9.0% to $14.8 million, from $13.6 million in Q4 FY 2023.

Revenue in our direct homecare business increased year-over-year by 6.2% to $13.4 million, from $12.6 million. The increase in revenue was due to an increase in direct sales representatives, higher quality referrals, and efficiencies within our reimbursement department.

Gross profit increased to $11.3 million, or 76.2% of net revenues, from $10.5 million or 76.8% of net revenues in the prior fiscal year. The increase in gross profit in Q4 FY2024 was primarily due to increased revenues during the quarter. The decrease in gross margin rate compared to Q4 FY 2023 was primarily due to increased material costs and less favorable revenue mix across channels.

Selling, general and administrative (“SG&A”) expenses were $8.8 million representing an increase of $0.1 million, or 1.5%, compared to Q4 FY 2023. The increase in SG&A expense was primarily due to increases in share-based compensation, salaries, and incentive compensation.

Operating income for the quarter was $2.3 million, compared to $1.5 million in Q4 FY 2023. The increase in operating income was driven primarily by increased net revenues and gross profit.

Net income for the quarter was $1.8 million or $0.20 per diluted share, compared to $1.0 million, or $0.12 per diluted share, in Q4 FY 2023.

FY 2024 Summary

Net revenues for the full year grew 13.8% to $54.7 million, from $48.1 million in fiscal 2023.

Revenue in our direct homecare market increased year-over-year by 12.6% to $49.5 million, from $44.0 million. The increase in revenue was due to an increase in direct sales representatives, and efficiencies recognized within our reimbursement department because of recent investments made to streamline the claims process. Field sales force employees totaled 62 at year end, 53 of which were direct sales representatives. Homecare revenue per weighted average direct sales representative in FY 2024 was $967,000, slightly higher than Electromed’s annual target range of $850,000 to $950,000.

Revenue in our hospital market increased by $0.5 million, or 21.9%, in fiscal 2024 compared to fiscal 2023. Hospital revenue includes sales to hospitals, rental companies and other institutions. The increase was primarily due to an increase in sales representatives focused on the hospital market as well as increased capital and disposable demand.

Revenue in our homecare distributor market increased by $0.2 million, or 14.5%, in fiscal 2024 compared to fiscal 2023. The revenue increase in fiscal 2024 was due to increased demand from one of our primary homecare distribution partners. We sell to a limited number of home medical equipment distributors, who in turn sell our SmartVest System in the U.S. homecare market.

Gross profit increased to $41.7 million in fiscal 2024, or 76.3% of net revenues, from $36.5 million or 76.0% of net revenues, in fiscal 2023. The increase in gross profit was primarily related to increased revenue, decreased shipping expenses and increased material costs in the prior year to expedite purchases which did not recur in the current year.

Selling, general and administrative (“SG&A”) expenses were $34.5 million in fiscal 2024, representing an increase of $2.9 million or 9.2% from $31.6 million in fiscal 2023. The increase in SG&A expenses was primarily related to increases in share-based compensation, salaries, and incentive compensation related to the higher average number of sales, sales support, marketing, and reimbursement personnel to process higher patient referrals.

Operating income for fiscal 2024 was $6.6 million compared to $4.0 million in fiscal 2023. The increase in operating income was driven primarily by increased net revenues and gross profit.

Net income for fiscal 2024 was $5.2 million, or $0.58 per diluted share, compared to net income of $3.2 million, or $0.36 per diluted share, in fiscal 2023.

As of June 30, 2024, Electromed had $16.1 million in cash, $23.3 million in accounts receivable and no debt, achieving working capital of $36.5 million, and total shareholders’ equity of $44.5 million.

Conference Call and Webcast Information

A conference call with members of Electromed management will be held at 5:00 p.m. Eastern Time on Tuesday, August 27, 2024.

Interested parties may participate in the call by dialing (877) 407-0789 (Domestic) or (201) 689-8562 (International).

The live conference call webcast will be accessible in the Investor Relations section of Electromed’s website and directly via the following link: https://viavid.webcasts.com/starthere.jsp?ei=1681151&tp_key=13db7f17a1

For those who cannot listen to the live broadcast, a replay will be available by dialing (844) 512-2921 (Domestic) or (412) 317-6671 (International) and referencing the replay pin number 13748052. Additionally, an online replay will be available for one year in the Investor Relations section of Electromed’s web site at: https://investors.smartvest.com/events-and-presentations/default.aspx

About Electromed, Inc.

Electromed, Inc. manufactures, markets, and sells products that provide airway clearance therapy, including the SmartVest® Airway Clearance System, to patients with compromised pulmonary function. It is headquartered in New Prague, Minnesota, and was founded in 1992. Further information about Electromed can be found at www.smartvest.com.

Cautionary Statements

Certain statements in this press release constitute forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can generally be identified by words such as “anticipate,” “believe,” “estimate,” “continue,” “expect,” “intend,” “may,” “plan” “potential,” “should,” “will,” and similar expressions, including the negative of these terms, but they are not the exclusive means of identifying such statements. Forward-looking statements cannot be guaranteed, and actual results may vary materially due to the uncertainties and risks, known or unknown associated with such statements. Examples of risks and uncertainties for Electromed include, but are not limited to, the competitive nature of our market; changes to Medicare, Medicaid, or private insurance reimbursement policies; changes to state and federal health care laws; changes affecting the medical device industry; our ability to develop new sales channels for our products such as the homecare distributor channel; our need to maintain regulatory compliance and to gain future regulatory approvals and clearances; new drug or pharmaceutical discoveries; general economic and business conditions; our ability to renew our line of credit or obtain additional credit as necessary; our ability to protect and expand our intellectual property portfolio; the risks associated with expansion into international markets, as well as other factors we may describe from time to time in Electromed’s reports filed with the Securities and Exchange Commission (including Electromed’s most recent Annual Report on Form 10-K, as amended from time to time, and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K). Investors should not consider any list of such factors to be an exhaustive statement of all the risks, uncertainties or potentially inaccurate assumptions investors should take into account when making investment decisions. Shareholders and other readers should not place undue reliance on “forward-looking statements,” as such statements speak only as of the date of this press release. We undertake no obligation to update them in light of new information or future events.

Electromed, Inc.

Condensed Balance Sheets

June 30,

2024

June 30,

2023

 

Assets

 

Current Assets

 

Cash and cash equivalents

$

16,080,000

$

7,372,000

Accounts receivable (net of allowances for credit losses of $45,000)

 

23,333,000

 

24,130,000

Contract assets

 

719,000

 

487,000

Inventories

 

3,712,000

 

4,221,000

Prepaid expenses and other current assets

 

329,000

 

1,577,000

Total current assets

 

44,173,000

 

37,787,000

Property and equipment, net

 

5,165,000

 

5,672,000

Finite-life intangible assets, net

 

657,000

 

605,000

Other assets

 

87,000

 

161,000

Deferred income taxes

 

2,152,000

 

1,581,000

Total assets

$

52,234,000

$

45,806,000

 

Liabilities and Shareholders' Equity

 

Current Liabilities

 

Accounts payable

$

1,010,000

$

1,372,000

Accrued compensation

 

3,893,000

 

3,018,000

Income tax payable

 

277,000

 

336,000

Warranty reserve

 

1,567,000

 

1,378,000

Other accrued liabilities

 

930,000

 

1,949,000

Total current liabilities

 

7,677,000

 

8,053,000

Other long-term liabilities

 

12,000

 

86,000

Total liabilities

 

7,689,000

 

8,139,000

 

 

 

Shareholders' Equity

Common stock, $0.01 par value per share, 13,000,000 shares authorized; 8,637,883 and 8,555,236 shares issued and outstanding, respectively

 

87,000

 

86,000

Additional paid-in capital

 

20,790,000

 

18,788,000

Retained earnings

 

23,668,000

 

18,793,000

Total shareholders' equity

 

44,545,000

 

37,667,000

Total liabilities and shareholders' equity

$

52,234,000

$

45,806,000

Electromed, Inc.

Condensed Statements of Operations

 

Three Months Ended

June 30

 

Twelve Months Ended

June 30

 

2024

 

 

2023

 

 

2024

 

 

2023

(Unaudited)

 

(Unaudited)

 

 

 

 

Net revenues

$

14,832,000

$

13,612,000

$

54,716,000

$

48,067,000

Cost of revenues

 

3,531,000

 

3,162,000

 

12,990,000

 

11,548,000

Gross profit

 

11,301,000

 

10,450,000

 

41,726,000

 

36,519,000

 

Operating expenses

Selling, general and administrative

 

8,790,000

 

8,658,000

 

34,489,000

 

31,595,000

Research and development

 

176,000

 

298,000

 

656,000

 

916,000

Total operating expenses

 

8,966,000

 

8,956,000

 

35,145,000

 

32,511,000

Operating income

 

2,335,000

 

1,494,000

 

6,581,000

 

4,008,000

 

 

 

 

 

Interest income (expense), net

 

162,000

 

41,000

 

455,000

 

78,000

Net income before income taxes

 

2,497,000

 

1,535,000

 

7,036,000

 

4,086,000

 

Income tax expense

 

669,000

 

502,000

 

1,886,000

 

920,000

 

Net income

$

1,828,000

$

1,033,000

$

5,150,000

$

3,166,000

 

 

 

 

Income per share:

Basic

$

0.21

$

0.12

$

0.60

$

0.37

 

Diluted

$

0.20

$

0.12

$

0.58

$

0.36

 

Weighted-average common shares outstanding:

Basic

 

8,601,206

 

8,511,632

 

8,562,245

 

8,463,684

Diluted

 

8,997,310

 

8,723,700

 

8,864,585

 

8,700,833

Electromed, Inc.

Condensed Statements of Cash Flows

For the Years Ended June 30,

 

2024

 

 

2023

 

Cash Flows from Operating Activities

Net income

$

5,150,000

 

$

3,166,000

 

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

 

789,000

 

 

550,000

 

Amortization of finite-life intangible assets

 

52,000

 

 

63,000

 

Share-based compensation expense

 

1,692,000

 

 

708,000

 

Deferred income taxes

 

(571,000

)

 

(43,000

)

Changes in operating assets and liabilities:

Accounts receivable

 

797,000

 

 

(3,078,000

)

Contract assets

 

(232,000

)

 

(201,000

)

Inventories

 

459,000

 

 

(1,033,000

)

Prepaid expenses and other assets

 

1,321,000

 

 

202,000

 

Income tax payable

 

(59,000

)

 

285,000

 

Accounts payable and accrued liabilities

 

(1,206,000

)

 

420,000

 

Accrued compensation

 

875,000

 

 

276,000

 

Net cash provided by operating activities

 

9,067,000

 

 

1,315,000

 

 

Cash Flows from Investing Activities

Expenditures for property and equipment

 

(287,000

)

 

(1,648,000

)

Expenditures for in finite-life intangible assets

 

(108,000

)

 

(68,000

)

Net cash used in investing activities

 

(395,000

)

 

(1,716,000

)

 

Cash Flows from Financing Activities

Issuance of common stock upon exercise of options

 

311,000

 

 

83,000

 

Taxes paid on stock options exercised on a net basis

 

-

 

 

(310,000

)

Repurchase of common stock

 

(275,000

)

 

(153,000

)

Net cash provided by (used in) financing activities

 

36,000

 

 

(380,000

)

Net increase (decrease) in cash

 

8,708,000

 

 

(781,000

)

 

Cash and Cash Equivalents

Beginning of period

 

7,372,000

 

 

8,153,000

 

End of period

$

16,080,000

 

$

7,372,000

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240827710530/en/

Brad Nagel, Chief Financial Officer (952) 758-9299 investorrelations@electromed.com Mike Cavanaugh, Investor Relations ICR Westwicke (617) 877-9641 mike.cavanaugh@westwicke.com