ELMD Electromed Inc

Electromed delivers eighth consecutive quarter of year-over-year revenue and profit growth, while continuing to invest in strategic growth initiatives

Electromed, Inc. (“Electromed”) (NYSE American: ELMD), a leader in innovative airway clearance technologies, today announced financial results for the three months ended September 30, 2024 (“Q1 FY 2025”).

Q1 FY 2025 Financial Highlights

• Net revenue increased 19.0% to $14.7 million in Q1 FY 2025, from $12.3 million in the first quarter of the prior fiscal year.
• Gross margin was 78.3% of net revenues, compared to 77.1% in the first quarter of the prior fiscal year.
• Operating income increased to $1.9 million or 13.2% of revenue compared to $0.1 million or 1.2% of revenue in the first quarter of the prior fiscal year.
• Net income was $1.5 million, or $0.16 per diluted share, compared to $0.2 million, or $0.02 per diluted share in the first quarter of the prior fiscal year.
• Share repurchases of Electromed stock totaled 262,756 at an average price of $17.26 per share, or an aggregate amount of approximately $4.5 million against an authorization of $5 million.

“The Electromed team performed at a high level in the first quarter, generating strong results and getting fiscal 2025 off to an outstanding start,” said Jim Cunniff, President, and Chief Executive Officer. “This is particularly impressive given our excellent results in fiscal 2024, and demonstrates the team’s ability to grow profitably, enhancing shareholder value. Our direct sales force now totals 53 reps and we increased our total number of sales territories to 57 by the end of the first quarter of fiscal 2025. This highly accomplished team has been the catalyst for our growth. Additionally, we launched an exciting new marketing campaign, called Triple Down on Bronchiectasis, which highlights the vital role of airway clearance as a key component of a complete bronchiectasis treatment program, and the response has been overwhelmingly positive. Finally, to lead our various market development initiatives, we have hired Peter Horwich as our new VP of Marketing. It has been an exciting quarter, and I look forward to working towards another record-breaking year in fiscal 2025.”

Q1 FY 2025 Results

All amounts below are for the three months ended September 30, 2024 (“Q1 FY 2025”) and compare to the three months ended September 30, 2023 (“Q1 FY 2024”).

Net revenues grew 19.0% to $14.7 million, from $12.3 million in Q1 FY 2024.

Revenue in our direct homecare business increased year-over-year by 18.5% to $13.2 million, from $11.2 million. The increase in revenue was due to an increase in referrals driven by an increase in direct sales representatives, higher quality referrals, higher net revenue per approval, and efficiencies within our reimbursement department. Field sales force employees totaled 60 at quarter end, 53 of which were direct sales representatives. The annualized homecare revenue per weighted average direct sales representative in Q1 FY 2025 was $985,000, at the higher end of Electromed’s increased annual target range of $900,000 to $1,000,000.

Gross profit increased to $11.5 million, or 78.3% of net revenues from $9.5 million or 77.1% of net revenues, in Q1 FY 2024. The increase in gross profit dollars for the three months ended September 30, 2024, was primarily due to increased revenue volume and a higher average net revenue per device. The gross margin rate increased year over year, primarily driven by a higher average net revenue per device.

Selling, general and administrative expenses were $9.4 million representing an increase of $0.2 million or 2.6%, compared to Q1 FY 2024. The increase in the current period was primarily due to increases in share-based compensation associated with the vesting of performance-based equity awards, salaries, and incentive compensation related to the higher average number of sales, sales support, marketing, and an increase in reimbursement personnel to process higher patient referrals.

Operating income was $1.9 million, compared to $0.1 million in Q1 FY 2024. The increase in operating income was driven primarily by increased revenue and gross profit and growth in selling, general and administrative expense growth tracking below revenue growth.

Net income was $1.5 million, or $0.16 per diluted share, compared to $0.2 million, or $0.02 per diluted share in Q1 FY 2024.

As of September 30, 2024, Electromed had $13.9 million in cash, $22.4 million in accounts receivable and no debt, achieving an overall working capital of $33.6 million. The cash balance reflects a decrease of $2.2 million in the quarter. The decrease primarily resulted from the share repurchase of approximately $4.5 million of Electromed common stock, offset by $2.3 million of positive operating cash flow within the quarter.

Conference Call and Webcast Information

The conference call with members of Electromed management will be held at 5:00 p.m. Eastern Time on Tuesday, November 12, 2024.

Interested parties may participate in the call by dialing (844) 826-3033 (Domestic) or (412) 317-5185 (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://url.us.m.mimecastprotect.com/s/7BVqCR6MPEIA8DR8fPijF15Pbr?domain=viavid.webcasts.com

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 10193708. Additionally, an online replay will be available for one year in the Investor Relations section of Electromed’s web site at: Events & Presentations | SmartVest

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,” continue,” “estimate,” “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

 

September 30, 2024

June 30, 2024

(Unaudited)

(Audited)

Assets

Current Assets

Cash and cash equivalents

$

13,864,000

$

16,080,000

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

 

22,366,000

 

23,333,000

Contract assets

 

754,000

 

719,000

Inventories

 

3,434,000

 

3,712,000

Prepaid expenses and other current assets

 

592,000

 

329,000

Total current assets

 

41,010,000

 

44,173,000

Property and equipment, net

 

5,003,000

 

5,165,000

Finite-life intangible assets, net

 

660,000

 

657,000

Other assets

 

90,000

 

87,000

Deferred income taxes

 

2,152,000

 

2,152,000

Total assets

$

48,915,000

$

52,234,000

 

Liabilities and Shareholders' Equity

Current Liabilities

Accounts payable

 

1,784,000

$

1,010,000

Accrued compensation

 

2,150,000

 

3,893,000

Income tax payable

 

188,000

 

277,000

Warranty reserve

 

1,641,000

 

1,567,000

Other accrued liabilities

 

1,656,000

 

930,000

Total current liabilities

 

7,419,000

 

7,677,000

Other long-term liabilities

 

8,000

 

12,000

Total liabilities

 

7,427,000

 

7,689,000

 

Shareholders' Equity

Common stock, $0.01 par value per share, 13,000,000 shares authorized; 8,457,071 and 8,637,883 shares issued and outstanding, as of September 30, 2024, and June 30, 2024, respectively

 

85,000

 

87,000

Additional paid-in capital

 

20,816,000

 

20,790,000

Retained earnings

 

20,587,000

 

23,668,000

Total shareholders' equity

 

41,488,000

 

44,545,000

Total liabilities and shareholders' equity

$

48,915,000

$

52,234,000

 

Electromed, Inc.

Condensed Statements of Operations

 

Three Months Ended

September 30

2024

2023

(Unaudited)

(Unaudited)

Net revenues

$

14,668,000

$

12,324,000

Cost of revenues

 

3,177,000

 

2,826,000

Gross profit

 

11,491,000

 

9,498,000

Operating expenses

Selling, general and administrative

 

9,387,000

 

9,150,000

Research and development

 

166,000

 

206,000

Total operating expenses

 

9,553,000

 

9,356,000

Operating income

 

1,938,000

 

142,000

Interest income, net

 

195,000

 

77,000

Net income before income taxes

 

2,133,000

 

219,000

Income tax expense (benefit)

 

659,000

 

64,000

Net income

$

1,474,000

$

155,000

Income per share:

Basic

$

0.17

$

0.02

Diluted

$

0.16

$

0.02

 

Weighted-average common shares outstanding:

Basic

 

8,564,489

 

8,537,388

Diluted

 

8,980,714

 

8,782,824

 

Electromed, Inc.

Condensed Statements of Cash Flows

 

Three Months Ended September 30,

2024

2023

 

(Unaudited)

 

(Unaudited)

Cash Flows from Operating Activities

Net income

$

1,474,000

 

$

155,000

 

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

Depreciation

 

202,000

 

 

202,000

 

Amortization of finite-life intangible assets

 

18,000

 

 

12,000

 

Share-based compensation expense

 

697,000

 

 

371,000

 

Changes in operating assets and liabilities:

Accounts receivable

 

967,000

 

 

675,000

 

Contract assets

 

(35,000

)

 

(57,000

)

Inventories

 

278,000

 

 

(240,000

)

Prepaid expenses and other assets

 

(266,000

)

 

901,000

 

Income tax payable, net

 

(89,000

)

 

(226,000

)

Accounts payable and accrued liabilities

 

806,000

 

 

(863,000

)

Accrued compensation

 

(1,743,000

)

 

(1,174,000

)

Net cash provided by (used for) operating activities

 

2,309,000

 

 

(244,000

)

 

Cash Flows from Investing Activities

Expenditures for property and equipment

 

(37,000

)

 

(109,000

)

Expenditures for finite-life intangible assets

 

(21,000

)

 

(24,000

)

Net cash used for investing activities

 

(58,000

)

 

(133,000

)

 

Cash Flows from Financing Activities

Issuance of common stock upon exercise of options

 

84,000

 

 

29,000

 

Taxes paid on net share settlement of stock awards

 

(15,000

)

 

-

 

Repurchase of common stock

 

(4,536,000

)

 

-

 

Net cash (used for) provided by financing activities

 

(4,467,000

)

 

29,000

 

Net decrease in cash

 

(2,216,000

)

 

(348,000

)

 

Cash And Cash Equivalents

Beginning of period

 

16,080,000

 

 

7,372,000

 

End of period

$

13,864,000

 

$

7,024,000

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241112795106/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