Electromed (ELMD) FY Conference August 12, 2025 12:30 PM ET Speaker0Great. Good afternoon, Thank you for joining the conference over the next couple of days. I'm Richard Close. I lead research at Canaccord for digital and tech enabled health. I have a very interesting company with us today in the airway management area growing and profitable with their differentiated smart vest system.From the company, we have CEO, Jim Cunniff, to tell the story and CFO, Brad Nagel as well. So with that, Jim, thanks for com ...

Summary of Electromed's Conference Call Company Overview - **Company Name**: Electromed - **Industry**: Respiratory Care - **Focus**: Airway clearance technology using high frequency chest wall oscillation (HFCWO) [2][3] Financial Performance - **Revenue**: Approximately $62 million [3] - **Market Capitalization**: Not specified but noted as outdated [3] - **Profitability**: Growing and profitable with no debt [5][27] - **Gross Profit Margin**: Mid-seventies percentage, significantly higher than the industry average of around 50% [22][27] Market Dynamics - **Target Disease**: Bronchiectasis, a chronic and irreversible condition affecting airway passages [6][12] - **Market Growth**: Bronchiectasis population growing at approximately 12% per year [8][26] - **Patient Statistics**: - 824,000 diagnosed with bronchiectasis in the U.S. - Only 127,000 currently using Electromed's technology or competitors' [8] - 230,000 patients treated by pulmonologists, representing a significant market opportunity [9] Product and Technology - **Product**: SmartVest, a single-hose device for airway clearance [13] - **Usage**: Patients typically use the device twice daily for 30 minutes [12] - **Unique Selling Proposition**: - Lightweight and portable design - Intuitive touch screen interface - Lifetime warranty [15][18] Patient Outcomes - **Patient Satisfaction**: - 95% of patients would recommend SmartVest - 97% report feeling better [18] - **Health Impact**: - 57% reduction in antibiotic use - 59% reduction in hospitalizations - 75% fewer emergency department visits [19][20] Business Model - **Direct-to-Patient Model**: Electromed operates both as a manufacturer and a durable medical equipment (DME) distributor, allowing for higher profit margins [21][22] - **Revenue Sources**: 50% from Medicare and 50% from commercial payers [23] Growth Strategy - **Sales Expansion**: Plans to add more sales representatives to increase market penetration [24] - **Marketing Efforts**: Investment in direct-to-consumer and physician marketing to raise awareness of bronchiectasis [24] - **Technology Adoption**: Transitioning to e-prescribing to streamline prescription processes [25] Long-term Objectives - **Revenue Growth**: Consistent double-digit revenue growth expected [26] - **Market Position**: Positioned in a growing market with increasing visibility and prevalence [27] - **Management Alignment**: Management incentives tied to shareholder returns, focusing on revenue and operating income growth [29][30] Competitive Advantage - **Performance Metrics**: Outperforming Russell Medical Index averages in sales growth, gross profit margin, and operating margin [30][31] - **Financial Health**: No debt, strong cash generation, and high gross profit margins [31]

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with Electromed, Inc. (ELMD) being highlighted as a strong candidate due to its favorable growth metrics and Zacks Rank [1][2]. Earnings Growth - Electromed has a historical EPS growth rate of 16.8%, with projected EPS growth of 39.7% for the current year, significantly outperforming the industry average of 15% [5]. Cash Flow Growth - The company exhibits a year-over-year cash flow growth of 58.5%, which is substantially higher than the industry average of -0.4%. Additionally, its annualized cash flow growth rate over the past 3-5 years stands at 15.6%, compared to the industry average of 6.5% [6][7]. Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Electromed, with the Zacks Consensus Estimate for the current year increasing by 1.3% over the past month [8]. Overall Positioning - Electromed holds a Zacks Rank of 2 (Buy) and a Growth Score of B, positioning it well for potential outperformance in the growth stock category [9][10].

Financial Data and Key Metrics Changes - Revenue for the third quarter increased by 13.1% to $15,700,000 compared to $13,900,000 in the same period last year [6][16] - Operating income rose by 16.2% to $2,100,000, while net income increased by 26.7% to $1,900,000, equating to $0.21 per diluted share [7][18] - Gross profit increased to $12,200,000, representing 78% of net revenues, up from 74.8% in the previous year [16][17] Business Line Data and Key Metrics Changes - Revenue in the direct home care business grew by 14.8% to $14,100,000, driven by increased referrals and approvals [16] - Home care distributor revenue increased by 32.8% to $696,000, while hospital revenue declined by 7.5% to $724,000 [16] - Non-home care revenue remained consistent year over year at $1,600,000, with a year-to-date growth of 24.5% [16] Market Data and Key Metrics Changes - The company reported a healthy cash position of $15,200,000 and total shareholders' equity of $43,900,000 as of March 31, 2025 [18] - The company has seen over 1,300,000 visits to its website this fiscal year, indicating strong interest in its SmartVest technology [13] Company Strategy and Development Direction - The company is focused on expanding its team of direct sales representatives, increasing from 51 to 55 reps [8] - A new Veterans Administration outreach program was launched to raise awareness of airway clearance therapy among veterans [9] - The "Triple Down on Bronchiectasis Campaign" aims to increase awareness of bronchiectasis and the benefits of SmartVest therapy [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong delivery performance and gross margins due to the company's U.S.-based operations [15] - The reimbursement environment is currently viewed as stable, with efforts to enhance payer relations yielding positive results [25][26] Other Important Information - The company repurchased approximately $1,400,000 worth of stock in Q3, totaling $6,400,000 for the fiscal year to date [14] - The company is preparing to launch a new CRM system at the beginning of the next fiscal year [31][32] Q&A Session Summary Question: What is the appetite for adding additional salespeople? - Management indicated a deliberate approach to adding sales reps, with plans to continue hiring while ensuring existing reps are supported [22][23] Question: Is the revenue per rep target still suitable? - The company has exceeded the target of $900,000 to $1,000,000 per rep in two out of three quarters this year and aims for a million plus in the future [24] Question: What is the outlook on the reimbursement environment? - Management feels insulated from reimbursement volatility and has made investments to improve payer relations, resulting in more coverage opportunities [25][26] Question: Update on the new CRM system implementation? - The CRM system is on track to launch at the beginning of the next fiscal year, with user training planned in advance [31][32] Question: Impact of the "Triple Down on Bronchiectasis" campaign? - The campaign has generated over 27,000 views, contributing to increased awareness and revenue growth, although direct correlation to prescriptions is challenging to quantify [33]

Electromed (ELMD) Q3 2025 Earnings Call May 13, 2025 05:00 PM ET Speaker0 Greetings, and welcome to the Electromed Third Quarter Fiscal twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Mike Kavanaugh, Investor Relations. Thank you, Mike. You may begin. Speaker1 Good afternoon, and thank you for joi ...

Financial Performance - Net revenues for the three months ended March 31, 2025, increased by $1,813,000 or 13.1% to $15,684,000 compared to the same period in the prior year, while for the nine months, revenues increased by $6,723,000 or 16.9% to $46,607,000[60]. - Homecare revenue for the three months ended March 31, 2025, increased by $1,815,000 or 14.8%, and for the nine months, it increased by $5,798,000 or 16.1%[61]. - Gross profit for the three months ended March 31, 2025, increased to $12,229,000, or 78.0% of net revenues, compared to $10,382,000, or 74.8% in the same period last year[65]. - Operating income for the three months ended March 31, 2025, increased by $299,000 or 16.2% to $2,140,000, while for the nine months, it increased by $2,374,000 or 55.9% to $6,620,000[72]. - Net income for the three months ended March 31, 2025, was $1,891,000, an increase from $1,493,000 in the same period last year, and for the nine months, it was $5,333,000 compared to $3,322,000[76]. Expenses - Research and development expenses for the three months ended March 31, 2025, increased by $110,000 or 65.9%, and for the nine months, they increased by $214,000 or 44.6%[71]. - Selling, general and administrative expenses for the three months ended March 31, 2025, were $9,812,000, an increase of $1,438,000 or 17.2% compared to the same period last year[66]. Cash Flow and Financing - Cash flows from operating activities for the nine months ended March 31, 2025, were $7,534,000, consisting of net income of $5,333,000 and non-cash expenses of $3,184,000[77]. - Cash used for financing activities for the nine months ended March 31, 2025, was $8,228,000, primarily for share repurchase and taxes on stock awards[79]. - The company believes its working capital of approximately $35,684,000 will provide sufficient liquidity for the next twelve months[80]. - The company maintains a credit facility with a maximum borrowing limit of $2,500,000, which is secured by a security interest in substantially all tangible and intangible assets[81]. - As of March 31, 2025, there was no outstanding principal balance on the line of credit, and the interest rate on borrowings is set at 6.50% (prime rate of 7.50% less 1.0%)[81]. - For the nine months ended March 31, 2025, the company spent approximately $117,000 on property and equipment, a decrease from $265,000 in the same period of 2024[84]. - The company expects to finance planned equipment purchases through cash flows from operations or borrowings under the credit facility, with potential additional debt if unforeseen capital needs arise[84]. - The company believes its cash, cash equivalents, and cash flows from operations will be sufficient to meet working capital and capital expenditure requirements for fiscal 2025 and the foreseeable future[85]. - The company has a minimum tangible net worth covenant of not less than $10,125,000 as part of its credit facility agreements[82]. - Failure to comply with covenants could lead to an event of default, potentially resulting in accelerated debt maturity or refusal to renew the line of credit[83]. Regulatory and Market Risks - The company is focused on maintaining regulatory compliance and gaining future regulatory approvals for its products[88]. - The company anticipates ongoing availability of credit and intends to evaluate financing alternatives to meet cash requirements[85]. - The company faces risks including component shortages, adverse changes in healthcare regulations, and competition from new entrants in the market[88].

Financial Performance - Net revenues increased by 13.1% to $15.7 million in Q3 FY 2025, compared to $13.9 million in Q3 FY 2024[5] - Direct homecare business revenue grew by 14.8% to $14.1 million, driven by increased referrals and sales efficiencies[6] - Gross profit rose to $12.2 million, representing 78.0% of net revenues, up from 74.8% in the prior year[8] - Operating income increased by 16.2% to $2.1 million, or 13.6% of net revenues, compared to 13.3% in Q3 FY 2024[11] - Net income grew by 26.7% to $1.9 million, or $0.21 per diluted share, compared to $1.5 million, or $0.17 per diluted share in the prior year[9] Cash Flow and Balance Sheet - Operating cash flow for the nine months ended Q3 FY 2025 was $7.5 million, an increase of $3.0 million year-over-year[9] - Cash balance as of March 31, 2025, was $15.2 million, with total shareholders' equity at $43.9 million[12] - Net cash provided by operating activities increased to $7,534,000 from $4,578,000, representing a growth of 64% year-over-year[23] - Cash and cash equivalents at the end of the period were $15,237,000, up from $11,712,000, indicating a year-over-year increase of 30.5%[23] - The beginning cash balance was $16,080,000, which decreased to $15,237,000 by the end of the period, resulting in a net decrease of $843,000[23] Expenses and Investments - Selling, general and administrative expenses rose by 17.2% to $9.8 million, primarily due to increased personnel costs[10] - Research and development expenses increased to $277,000 from $167,000 in Q3 FY 2024, reflecting ongoing investment in new product development[20] - Share-based compensation expense rose to $2,409,000, compared to $1,250,000, reflecting a 92.5% increase[23] Stock and Equity - The board approved a stock repurchase authorization of $5 million in Q3 FY 2025[9] - The company repurchased common stock amounting to $6,331,000 during the period[23] - The company issued common stock upon exercise of options totaling $381,000, up from $111,000 in the previous year[23] Inventory and Receivables - Accounts receivable showed a negative change of $109,000, contrasting with a positive change of $223,000 in the previous year[23] - Inventories increased by $564,000, compared to an increase of $78,000 in the prior year[23] Year-to-Date Performance - Net income for the nine months ended March 31, 2025, was $5,333,000, an increase of 60.5% compared to $3,322,000 in 2024[23]

Company Overview - Electromed, Inc. is a profitable and growing medical device company that develops, manufactures, markets, and sells innovative High Frequency Chest Wall Oscillation (HFCWO) airway clearance products, primarily for home use [4] - The flagship product, SmartVest® Airway Clearance System, is designed for patient comfort and ease of use [4] - The domestic market for HFCWO devices is largely untapped, with fewer than 15% of the approximately 824,000 patients diagnosed with bronchiectasis in the US currently using this non-invasive therapy [4] Business Model - The company employs an efficient direct-to-patient and provider model, obtaining patient referrals directly from clinicians [5] - Electromed manages the entire insurance claim, product delivery, and training processes on behalf of patients and providers, thereby improving the quality of life for patients with compromised pulmonary function [5] - This model reduces healthcare utilization and enhances value for shareholders [5] Event Participation - Electromed, Inc. will participate in the 15th Annual LD Micro Invitational on April 9th and 10th, 2025, at the Westin Grand Central in New York [1][2] - Jim Cunniff, President and CEO, will represent the company during the presentation scheduled for April 10, 2025, at 02:30 PM ET [2] - The event will feature over 50 companies presenting in half-hour increments and attending private meetings with investors [3]

Financial Data and Key Metrics Changes - Electromed reported record revenues of $16.3 million for Q2 FY 2025, an increase of 18.7% from $13.7 million in Q2 FY 2024 [7][18] - Operating income reached a record $2.5 million, compared to $2.3 million in Q2 FY 2024, driven by increased revenue and gross profit [7][23] - Net income was $2 million, or $0.22 per fully diluted share, marking a significant improvement in earnings per share [7][24] Business Line Data and Key Metrics Changes - Revenue from the direct homecare business increased by 15.2% to $14.6 million from $12.7 million, attributed to more referrals and improved efficiencies [19] - Hospital segment revenue grew by 16.8% to $723,000, driven by increased demand for capital and disposable products [20] - Homecare distributor revenue surged by 188% year-over-year to $807,000, reflecting strong demand from DME partners [20] Market Data and Key Metrics Changes - The company improved working capital by reducing inventory by 35% compared to Q2 FY 2024 while meeting patient therapy needs [12] - The annualized homecare revenue per weighted average direct sales representative was $1,077,000, slightly above the target range of $900,000 to $1 million [19] Company Strategy and Development Direction - The company aims to diversify its customer base beyond the core homecare segment, with a focus on the hospital segment and DME distributor relationships [9][10] - Investments in personnel, technology, and process improvements are ongoing to enhance operational efficiency and customer experience [11][12] - The "Triple Down on Bronchiectasis" campaign aims to raise awareness and increase prescriptions for SmartVest Clearway technology [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed satisfaction with the operational performance and market response, indicating a strong trajectory for continued growth [16] - The company remains focused on delivering double-digit top-line growth and expanded operating leverage for the full year [25] Other Important Information - Electromed had $16.2 million in cash, $22.8 million in accounts receivable, and no debt, achieving a working capital of $35.5 million [24] - The company is investing in a new CRM system to enhance productivity and market insights [12] Q&A Session Summary Question: Competitive response to SmartVest marketing - Management noted that while competitors have upgraded their technology, it has not significantly impacted Electromed's business, which continues to show strong results [30][33] Question: Developments in drugs for bronchiectasis - Management indicated that a new drug for bronchiectasis is under FDA review, expected to be complementary to airway clearance rather than a replacement [35][38] Question: Revenue per sales representative outlook - Management expressed optimism about maintaining or improving revenue per sales representative, citing better performance management and onboarding processes [40][41]

Financial Data and Key Metrics Changes - The company reported record revenues of $16.3 million for Q2 FY 2025, an increase of 18.7% from $13.7 million in Q2 FY 2024 [5][13] - Net income reached $2 million, or $0.22 per fully diluted share, compared to $1.8 million in the same quarter last year [5][15] - Gross profit increased to $12.6 million, representing 77.7% of net revenues, up from 77% in the previous year [14] Business Line Data and Key Metrics Changes - Direct Home Care revenue grew by 15.2% to $14.6 million from $12.7 million year over year [13] - Hospital segment revenue increased by 16.8% to $723,000, driven by higher demand for capital and disposable products [13] - Durable Medical Equipment (DME) distributor revenue surged by 188% to $807,000, reflecting strong demand from DME partners [13][7] Market Data and Key Metrics Changes - The company is diversifying its customer base beyond the core Home Care segment, with significant growth in the hospital and DME segments [7] - The annualized home care revenue per weighted average direct sales representative was $1,077,000, slightly above the target range of $900,000 to $1,000,000 [13] Company Strategy and Development Direction - The company aims to enhance shareholder value through operational improvements and revenue diversification [6][12] - Investments in personnel, technology, and process improvements are ongoing to support growth and efficiency [9][10] - The "Triple Down on Bronchiectasis" campaign is focused on raising awareness and increasing prescriptions for SmartVest Clearway technology [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining operational momentum and achieving double-digit top-line growth for the full year [16] - The company remains focused on improving execution and penetrating new revenue sources while investing in infrastructure [12] Other Important Information - As of December 31, 2024, the company had $16.2 million in cash and no debt, achieving a working capital of $35.5 million [16] - The company has seen a significant appreciation in stock value over the past six and twelve months [6] Q&A Session Summary Question: Competitive response to SmartVest marketing - Management noted that while competitors have upgraded their products, it has not significantly impacted their business [20][21] Question: Developments in drugs for bronchiectasis - Management indicated that new drugs are being developed but emphasized that airway clearance remains essential for patient care [24][23] Question: Revenue per sales representative outlook - Management expressed optimism about maintaining or improving revenue per sales rep, attributing recent success to better performance management and onboarding processes [25][26]