ELMD Electromed Inc

Growth initiatives drive record revenue

Electromed, Inc. (“Electromed”) (NYSE American: ELMD), a leader in innovative airway clearance technologies, today announced financial results for the three months ended March 31, 2024 (“Q3 FY 2024”).

Q3 FY 2024 Financial Highlights

• Net revenues increased 15% to a record $13.9 million in Q3 FY 2024, from $12.1 million in the third quarter of the prior fiscal year.
• Gross margins were 75% of net revenues in the third quarters of both the current and prior fiscal years.
• Operating income increased by 54% to $1,841,000 or 13% of revenue, compared with $1,196,000 or 10% of revenue in the third quarter of the prior fiscal year.
• Net income was $1,493,000 for the quarter, or $0.17 per diluted share, compared to $1,075,000, or $0.12 per diluted share in the third quarter of the prior fiscal year.
• Cash as of March 31, 2024, was $11.7 million, an increase of $4.3 million from the June 30, 2023, balance.

“I am excited to announce another record revenue quarter in the third quarter of fiscal year 2024,” said Jim Cunniff, President, and Chief Executive officer. “Our company continues to operate at a high level, further driving the adoption of our best-in-class product, backed by careful commercial expansion and excellent operational efficiency. Our strategy has again generated double-digit revenue growth, with significant operating leverage that is resulting in strong profitability. The team remains focused on serving patients and providers while simultaneously enhancing shareholder value through strong operating results. I look forward to continuing this momentum into our final quarter of fiscal year 2024.”

Q3 FY 2024 Results

All amounts below are for the three months ended March 31, 2024, and compare to the three months ended March 31, 2023 (“Q3 FY 2023”) unless otherwise noted.

Net revenues grew 14.9% to $13.9 million, from $12.1 million in Q3 FY 2023.

Revenue in our direct homecare business increased year-over-year by 12.0% to $12.3 million, from $11.0 million. The increase in revenue was due to an increase in sales representatives and efficiencies recognized within our reimbursement department as a result of recent investments made to streamline the claims process. Field sales force employees totaled 59 at quarter end, 51 of which were direct sales representatives. The annualized homecare revenue per weighted average direct sales representative in Q3 FY 2024 was $969,000, slightly higher than Electromed’s annual target range of $850,000 to $950,000.

Gross profit increased to $10,382,000, or 74.8% of net revenues from $9,056,000 or 75.0% of net revenues in the prior fiscal year. The increase in gross profit in Q3 FY2024 was primarily due to increased net revenues. The decrease in gross margin compared to Q3 FY 2023 was primarily due to costs associated with the wind down of our previous generator models.

Selling, general and administrative (“SG&A”) expenses were $8,374,000 representing an increase of $680,000, or 8.8%, compared to Q3 FY 2023. The increase in SG&A expense was primarily due to increased share-based compensation expense and payroll expense related to the higher average number of sales, sales support, marketing, and reimbursement personnel to process an increased volume of patient referrals.

Operating income for the quarter was $1,841,000, compared to $1,196,000 in Q3 FY 2023. The increase in operating income was driven primarily by increased net revenues.

Net income for the quarter was $1,493,000, or $0.17 per diluted share, compared to $1,075,000, or $0.12 per diluted share in Q3 FY 2023.

As of March 31, 2024, Electromed had $11.7 million in cash, $23.9 million in accounts receivable and no debt, achieving working capital of $35.0 million, and total shareholders’ equity of $42.6 million. The cash balance reflects an increase of $4.3 million for the nine months ended March 31, 2024, compared to a decrease in cash of $1.4 million in the nine months ended March 31, 2023. This increase in cash in the current year was driven by an increase in operating income and management of working capital.

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, May 7, 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=1665471&tp_key=f09d972070

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 13743606. 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 the Company 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 the Company’s reports filed with the Securities and Exchange Commission (including the Company’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

March 31, 2024

June 30, 2023

(Unaudited)

(Audited)

Assets

Current Assets

Cash and cash equivalents

$

11,712,000

$

7,372,000

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

 

23,907,000

 

24,130,000

Contract assets

 

642,000

 

487,000

Inventories

 

4,178,000

 

4,221,000

Prepaid expenses and other current assets

 

592,000

 

1,577,000

Income tax receivable

 

291,000

 

-

Total current assets

 

41,322,000

 

37,787,000

Property and equipment, net

 

5,283,000

 

5,672,000

Finite-life intangible assets, net

 

648,000

 

605,000

Other assets

 

106,000

 

161,000

Deferred income taxes

 

1,542,000

 

1,581,000

Total assets

$

48,901,000

$

45,806,000

 

Liabilities and Shareholders' Equity

Current Liabilities

Accounts payable

 

792,000

 

1,372,000

Accrued compensation

 

2,987,000

 

3,018,000

Income tax payable

 

-

 

336,000

Warranty reserve

 

1,525,000

 

1,378,000

Other accrued liabilities

 

1,022,000

 

1,949,000

Total current liabilities

 

6,326,000

 

8,053,000

Other long-term liabilities

 

31,000

 

86,000

Total liabilities

 

6,357,000

 

8,139,000

 

Commitments and Contingencies

 

Shareholders' Equity

Common stock, $0.01 par value per share, 13,000,000 shares authorized;

8,655,727 and 8,555,238 shares issued and outstanding,

as of March 31, 2024, and June 30, 2023, respectively

 

87,000

 

86,000

Additional paid-in capital

 

20,342,000

 

18,788,000

Retained earnings

 

22,115,000

 

18,793,000

Total shareholders' equity

 

42,544,000

 

37,667,000

Total liabilities and shareholders' equity

$

48,901,000

$

45,806,000

Electromed, Inc.

 

Condensed Statements of Operations

 

Three Months Ended

Nine Months Ended

March 31,

March 31,

2024

2023

2024

2023

Net revenues

$

13,871,000

$

12,068,000

$

39,884,000

$

34,455,000

Cost of revenues

 

3,489,000

 

3,012,000

 

9,459,000

 

8,386,000

Gross profit

 

10,382,000

 

9,056,000

 

30,425,000

 

26,069,000

 

Operating expenses

Selling, general and administrative

 

8,374,000

 

7,694,000

 

25,699,000

 

22,937,000

Research and development

 

167,000

 

166,000

 

480,000

 

618,000

Total operating expenses

 

8,541,000

 

7,860,000

 

26,179,000

 

23,555,000

Operating income

 

1,841,000

 

1,196,000

 

4,246,000

 

2,514,000

Interest income, net

 

120,000

 

26,000

 

293,000

 

37,000

Net income before income taxes

 

1,961,000

 

1,222,000

 

4,539,000

 

2,551,000

 

Income tax expense

 

468,000

 

147,000

 

1,217,000

 

418,000

 

Net income

$

1,493,000

$

1,075,000

$

3,322,000

$

2,133,000

 

 

 

 

Income per share:

Basic

$

0.17

$

0.13

$

0.39

$

0.25

 

Diluted

$

0.17

$

0.12

$

0.38

$

0.25

 

Weighted-average common shares outstanding:

Basic

 

8,565,725

 

8,461,531

 

8,549,352

 

8,449,623

Diluted

 

8,892,821

 

8,710,106

 

8,822,938

 

8,694,407

Electromed, Inc.

 

Condensed Statements of Cash Flows

 

Nine Months Ended March 31,

2024

2023

 

(Unaudited)

(Unaudited)

Cash Flows From Operating Activities

Net income

$

3,322,000

 

$

2,133,000

 

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

Depreciation

 

594,000

 

 

370,000

 

Amortization of finite-life intangible assets

 

37,000

 

 

52,000

 

Share-based compensation expense

 

1,250,000

 

 

506,000

 

Deferred income taxes

 

39,000

 

 

32,000

 

Changes in operating assets and liabilities:

Accounts receivable

 

223,000

 

 

(1,293,000

)

Contract assets

 

(155,000

)

 

(284,000

)

Inventories

 

78,000

 

 

(264,000

)

Prepaid expenses and other current assets

 

1,234,000

 

 

105,000

 

Income tax payable, net

 

(627,000

)

 

(270,000

)

Accounts payable and accrued liabilities

 

(1,386,000

)

 

(111,000

)

Accrued compensation

 

(31,000

)

 

(660,000

)

Net cash provided by operating activities

 

4,578,000

 

 

316,000

 

 

Cash Flows From Investing Activities

Expenditures for property and equipment

 

(265,000

)

 

(1,221,000

)

Expenditures for finite-life intangible assets

 

(84,000

)

 

(54,000

)

Net cash used in investing activities

 

(349,000

)

 

(1,275,000

)

 

Cash Flows From Financing Activities

Issuance of common stock upon exercise of options

 

111,000

 

 

40,000

 

Taxes paid on net share settlement of stock option exercises

 

-

 

 

(305,000

)

Repurchase of common stock

 

-

 

 

(153,000

)

Net cash provided by (used in) financing activities

 

111,000

 

 

(418,000

)

Net increase (decrease) in cash

 

4,340,000

 

 

(1,377,000

)

 

Cash And Cash Equivalents

Beginning of period

 

7,372,000

 

 

8,153,000

 

End of period

$

11,712,000

 

$

6,776,000

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240507898776/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