Electromed (ELMD) Q4 2025 Earnings Call August 26, 2025 05:00 PM ET Company ParticipantsMike Cavanaugh - Managing DirectorJim Cunniff - President, CEO & DirectorBrad Nagel - CFOBen Haynor - MD - Medical Technology ResearchConference Call ParticipantsKyle Bauser - MD & Senior Research AnalystAnderson Schock - Medtech Equity Research AnalystOperatorGood day and welcome to the Electromed Fourth Quarter Fiscal Year twenty twenty five Earnings Conference Call. All participants will be in listen only mode. Please ...

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]