Electromed (NYSEAM:ELMD) Q2 2026 Earnings call February 10, 2026 05:00 PM ET Company ParticipantsBrad Nagel - Chief Financial OfficerJim Cunniff - President and CEOMike Cavanaugh - Investor RelationsConference Call ParticipantsBen Haynor - Managing Director and Senior Research AnalystKyle Bauser - Managing Director and Senior Research AnalystOperatorGood day and welcome to the Electromed second quarter fiscal year 2026 earnings conference call. All participants will be in listen-only mode. Should you need a ...

Electromed (NYSEAM:ELMD) Q2 2026 Earnings call February 10, 2026 05:00 PM ET Company ParticipantsBrad Nagel - Chief Financial OfficerJim Cunniff - President and CEOMike Cavanaugh - Investor RelationsConference Call ParticipantsBen Haynor - Managing Director and Senior Research AnalystKyle Bauser - Managing Director and Senior Research AnalystOperatorGood day and welcome to the Electromed second quarter fiscal year 2026 earnings conference call. All participants will be in listen-only mode. Should you need a ...

Financial Data and Key Metrics Changes - Electromed achieved record revenue of $18.9 million for Q2 fiscal year 2026, representing a 16.3% year-over-year growth compared to $16.3 million in Q2 fiscal year 2025 [4][13] - Operating income increased by 42.4% year-over-year to $3.6 million, with operating income as a percentage of sales reaching 19% [5][15] - Net income rose by 40.3% to $2.8 million, or $0.32 per diluted share, compared to $2 million, or $0.22 per diluted share in the same quarter last year [5][16] - The company maintained a strong balance sheet with $13.8 million in cash and no debt [5][16] Business Line Data and Key Metrics Changes - Revenue from the direct home care business increased by 18.4% to $17.3 million, driven by an increase in direct sales representatives and higher revenue per representative [4][13] - Home care distributor revenue grew by 12.1% to $0.9 million [4][14] - Hospital revenue decreased by 9.4% to $0.7 million due to strategic prioritization of shipments to home patients [5][15] Market Data and Key Metrics Changes - The company executed 25 payer contracts in the first half of the fiscal year, adding 2.9 million covered lives to the existing 270 million [9][35] - Approximately 923,000 patients in the U.S. are diagnosed with bronchiectasis, with only 16% currently benefiting from high-frequency chest wall oscillation therapy [6][7] Company Strategy and Development Direction - Electromed's primary strategic opportunity lies in addressing the underserved bronchiectasis market, with a focus on raising awareness and educating healthcare providers [6][9] - The company launched the "Triple Down on Bronchiectasis" campaign to promote a comprehensive treatment approach [7][9] - The company is enhancing its sales organization, planning to increase the number of direct sales representatives from 58 to 61 by the end of the fiscal year [9][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, highlighting the 13th consecutive quarter of revenue and profit growth [4][42] - The management noted that increased awareness of bronchiectasis among prescribing physicians is positively impacting sales [19][20] - The company anticipates a rebound in hospital demand in the coming quarters despite the current decline [5][19] Other Important Information - The company has implemented a Smart Order ePrescribe solution to improve order fulfillment efficiency, with over one-third of orders received through this platform in Q2 [10][11] - Electromed's operations are entirely U.S.-based, which helps mitigate tariff impacts and maintain competitive advantages [11][12] Q&A Session Summary Question: What contributed to the strong performance in the home care Medicare segment? - Management attributed the success to improved sales force execution and increased awareness of bronchiectasis among physicians [19][20] Question: How is the launch of Brinsupri impacting the business? - Management views Brinsupri as complementary to airway clearance, enhancing awareness of bronchiectasis and contributing to their sales growth [22][23] Question: What is the outlook for sales representative productivity as headcount increases? - Management expects productivity to stabilize within the $1 million-$1.1 million range per rep, accounting for training and relationship-building time for new hires [27][32] Question: Are there any significant trends in payer mix growth? - Management noted volatility in payer growth rates but did not identify significant trends favoring one payer type over another [34][35] Question: How often does the board revisit share buyback strategies? - The board continuously monitors cash position and share pricing to optimize share repurchase timing and value for shareholders [36][37]

Financial Data and Key Metrics Changes - The company achieved record quarterly revenue of $17.4 million, representing a robust 17% year-over-year growth, bringing net revenues for the year to $64 million, also a record [6][17] - Operating income reached $3 million in Q4, marking a 30% increase year-over-year, with net income of $2.2 million, a 21% increase compared to the same quarter last year [7][8] - The diluted earnings per share increased to $0.25, a 24% increase versus the prior year [8] - Gross profit increased to $50 million, or 78.1% of net revenues, compared to 76.3% in the previous year [19] Business Line Data and Key Metrics Changes - Home Care segment revenue grew 15% year-over-year to $57.3 million, driven by an increase in direct sales representatives and higher net revenues per approval [6][17] - Hospital Surge revenue increased by 60%, while the distributor channel delivered 76% growth [6] - Non-home care business revenue grew 28.8% to $6.7 million, primarily due to increased distributor and hospital revenue [18] Market Data and Key Metrics Changes - The company reported a significant milestone with the addition of its common stock into the Russell 2000 index, which is expected to improve trading liquidity [9] - The company is targeting the large unrecognized market for bronchiectasis treatment, with an estimated 800,000 patients who could benefit from its SmartVest therapy [11] Company Strategy and Development Direction - The company is focused on expanding its direct sales team, ending the year with 55 representatives, up from 53 the previous year, and plans to increase this number to 61 in fiscal year 2026 [9][18] - The company is implementing a manufacturing optimization plan to add new capacity, expected to be completed in early fiscal year 2026 [14][35] - The company is enhancing its Smart Order e-prescribe solution to streamline order submissions and improve efficiency [15][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future prospects, expecting to deliver double-digit top-line growth and strong operating cash flows in the upcoming fiscal year [21] - The company is well insulated from tariff-related turbulence, with 99% of revenues generated domestically [13] - Management highlighted the importance of the recent FDA approval of a drug for bronchiectasis, which is expected to raise awareness and potentially benefit the company [30][50] Other Important Information - The company completed a $5 million stock repurchase program in Q4, demonstrating confidence in its future [8] - The company maintained zero back orders in Q4 with a first pass yield of 99% [13] Q&A Session Summary Question: Can you provide more color on the strong margins in the quarter? - Management noted that strong growth in home care revenue, a high-margin channel, and a favorable mix within that channel contributed to the gross margin strength [25] Question: What caused the hospital channel to be so strong? - Management indicated that investments in hospital-focused sales reps and the untapped market dynamics contributed to the growth [27] Question: Are you seeing increased awareness around bronchiectasis due to new entrants in the market? - Management believes that the introduction of new drugs has raised awareness of bronchiectasis, which could serve as a tailwind for the company [30] Question: How does the manufacturing optimization plan expand current capacity? - Management stated that the plan is not primarily a margin play but aims to expand growth opportunities within the existing footprint [35] Question: What has been the response to the new CRM system? - Management reported positive feedback from the sales team, indicating that the new system has improved access to data and productivity [42]

Financial Data and Key Metrics Changes - The company achieved record quarterly revenue of $17.4 million, representing a robust 17% year-over-year growth, bringing net revenues for the year to $64 million, also a record [6][17] - Operating income reached $3 million in Q4, marking a 30% increase year-over-year, with net income of $2.2 million, a 21% increase compared to the same quarter last year [7][19] - Diluted earnings per share were $0.25, a 24% increase versus the prior year [7] - Gross profit increased to $50 million, or 78.1% of net revenues, up from 76.3% in the previous year [19] Business Line Data and Key Metrics Changes - Home Care segment revenue grew 15% year-over-year to $57.3 million, while Hospital Surge revenue increased by 60% and distributor channel revenue grew by 76% [6][17] - Non-home care business revenue grew 28.8% to $6.7 million, primarily due to increased distributor and hospital revenue [18] Market Data and Key Metrics Changes - The company noted a significant opportunity in the bronchiectasis treatment market, estimating nearly 800,000 patients could benefit from their SmartVest therapy, with over 4 million more potentially undiagnosed [11][12] - The company was recognized as the seventh fastest growing public company in Minnesota, highlighting its competitive position in the medical technology sector [8] Company Strategy and Development Direction - The company is focused on expanding its direct sales team, ending the year with 55 representatives, and plans to increase this number to 61 in fiscal year 2026 [9][18] - A manufacturing optimization plan is underway to add new capacity, expected to be completed in early fiscal year 2026 [14][35] - The company is actively working on a campaign to raise awareness about bronchiectasis and the role of HFCWO therapy in treatment [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, expecting to leverage investments made to drive double-digit top-line growth and strong operating cash flows [21] - The company is well insulated from tariff-related issues due to its domestic manufacturing operations [13] Other Important Information - The company completed a $5 million stock repurchase program in Q4, demonstrating confidence in its future [7] - The implementation of a new CRM system is expected to enhance sales productivity and provide better market insights [14][44] Q&A Session Summary Question: Can you provide more color on the strong margins in the quarter? - Management indicated that strong growth in home care revenue, a high-margin channel, contributed to favorable mix and margins [24] Question: What caused the hospital channel to be so strong? - Management noted investments in hospital-focused sales reps and the potential for hospitals to serve as gateways for home care prescriptions [26] Question: Are new entrants in the market increasing awareness around bronchiectasis? - Management believes that new drug approvals are raising awareness, which could be a tailwind for the market [29] Question: How will the manufacturing optimization plan impact capacity and margins? - Management stated that the plan is aimed at expanding growth opportunities rather than directly impacting margins [35] Question: Will there be further expansion of the hospital-focused team? - Management confirmed plans to expand the team cautiously, ensuring a successful algorithm for growth [41] Question: How is the new CRM system performing? - Management reported positive feedback from the sales team regarding the new CRM system, which is expected to enhance productivity [44] Question: What response has been seen from VA-specific marketing efforts? - Management indicated that over a million dollars of hospital revenue was generated from VA calls, highlighting the potential in that market segment [54]

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.

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]