Summary of Electromed (ELMD) FY Conference Call - August 12, 2025 Company Overview - **Company Name**: Electromed (ELMD) - **Industry**: Airway management and medical devices - **Headquarters**: New Prague, Minnesota - **Market Position**: Approximately $62 million company, single product focus on SmartVest system - **Financial Health**: Growing, profitable, generating cash, and has no debt [5][6][28] Core Product and Market - **Product**: SmartVest, a high-frequency chest wall oscillation (HFCWO) device designed for patients with bronchiectasis and other respiratory diseases [7][8] - **Primary Disease Target**: Bronchiectasis, a chronic and irreversible respiratory condition affecting approximately 824,000 patients in the U.S. [8][9] - **Market Opportunity**: Only 127,000 patients have been prescribed the technology, indicating a significant untapped market of 700,000 patients [9] - **Revenue Potential**: If all identified patients were prescribed the technology, it could represent a $2.3 billion revenue opportunity [9] Competitive Landscape - **Market Competitors**: Electromed is one of four companies offering HFCWO devices, with a focus on ergonomic design and patient compliance [14][15] - **Unique Selling Proposition**: Lightest weight vest on the market, single hose design, and direct-to-patient delivery model [14][20] Clinical Evidence and Patient Impact - **Patient Outcomes**: 97% of patients report feeling better or the same after using SmartVest; 98% report increased sputum production [18] - **Clinical Goals**: Aim to reduce hospitalizations and minimize antibiotic use by improving airway clearance [19] Business Model and Revenue Streams - **Revenue Sources**: Primarily from home care, with about half from Medicare and the other half from commercial payers [22][23] - **Direct-to-Patient Model**: Electromed delivers products directly to patients, maintaining higher margins compared to traditional distribution models [20][21] - **Growth Strategy**: Focus on increasing awareness among pulmonologists and expanding direct-to-consumer outreach [24][31] Financial Performance and Growth Strategy - **Profitability**: Historically profitable, with recent improvements in operating income due to better efficiency in back-office functions and sales processes [41][42] - **Shareholder Value**: Engaged in share repurchase programs to return value to shareholders [44] - **Future Outlook**: Anticipates continued double-digit revenue growth and plans to invest in expanding sales channels and operational efficiencies [26][43] Regulatory and Market Environment - **Impact of Legislation**: Current healthcare legislation has not significantly impacted Electromed's business, with stable Medicare reimbursement expected [45][46] - **Market Positioning**: Positioned well within the home care space, with a focus on chronic disease management and patient quality of life [28][46] Conclusion Electromed is strategically positioned in a growing market with a unique product that addresses significant unmet medical needs. The company’s focus on direct patient engagement, strong clinical outcomes, and efficient operational practices supports its growth trajectory and profitability.

Financial Data and Key Metrics Changes - Revenue for the third quarter increased by 13.1% to $15,700,000 from $13,900,000 in the same period last year [5][15] - 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 [6][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 [15] - Non-home care revenue remained consistent at $1,600,000, with home care distributor revenue growing by 32.8% to $696,000 [16] - Hospital revenue declined by 7.5% to $724,000, and other revenue decreased by 41.5% to $162,000 [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 annualized home care revenue per weighted average direct sales representative was $1,028,000, slightly above the target range of $900,000 to $1,000,000 [15][24] Company Strategy and Development Direction - The company is focused on the airway clearance space, aiming to be the most trusted solution for patients with bronchiectasis [6] - Initiatives include expanding the sales team and launching a Veterans Administration outreach program to raise awareness [7][9] - The "Triple Down on Bronchiectasis Campaign" aims to increase awareness of bronchiectasis and the benefits of SmartVest therapy [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong delivery performance and gross margins despite tariff concerns, as operations are primarily U.S.-based [14] - 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 [13][18] - A new CRM system is set to launch at the beginning of the next fiscal year, aimed at improving sales team efficiency [30][31] Q&A Session Summary Question: Comment on the environment and appetite for adding salespeople - Management is taking a deliberate approach to adding sales reps, ensuring existing reps are prepared and territories are managed effectively [20][21] Question: Suitability of the $900,000 to $1,000,000 revenue per rep target - The company has exceeded this target in two out of three quarters and aims to maintain or improve this figure [24] Question: Outlook on the reimbursement environment - The company has been insulated from volatility and is actively working to improve payer coverage [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 [30][31] 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 [32][33]