Electromed, Inc. (NYSE Amex: ELMD) today announced financial
results for the three-month period ended September 30, 2011. Net
Revenues for the three months ended September 30, 2011 were
approximately $5,379,000, a 29.1% increase compared to Net Revenues
of approximately $4,165,000 for the same period last year. The
Company also announced Net Income of approximately $246,000, or
$0.03 per basic and diluted share, for the three months ended
September 30, 2011, compared to Net Income of approximately
$112,000, or $0.02 per basic and diluted share, for the same period
last year. Net Revenues increased in correlation with the expansion
of the sales force. Net Income results were attributable to higher
Net Revenues, offset by increased expenses related to increases in
sales force. Research investments, additions to senior management,
and additional facilities have all added to expenses in the first
quarter.
Robert Hansen, Chairman and CEO, commented on the Company,
saying,“In very uncertain times, Electromed, Inc. continues to
execute successfully on its business plans. The Company is
committed to building a platform in sales, product innovation, and
patient services sufficient to assure its expanding position in
airway clearance therapy.”
Gross Profit increased to approximately $4,058,000, or 75.4% of
Net Revenues, for the three months ended September 30, 2011,
compared to $2,934,000, or 70.4% for the same period in Fiscal
2011. The increase in Gross Profit dollars resulted primarily from
the increase in Sales volume. The change in Gross Profit percentage
for the three-month period ended September 30, 2011, was primarily
the result of higher reimbursement from the mix of referrals and
approvals compared to the three-month period ended September 30,
2010. Factors such as diagnoses that are not assured of
reimbursement, along with insurance programs which present lower
allowable reimbursement amounts (for example, state Medicaid
programs) affect average reimbursement received on a short-term
basis and tend to cause margins to fluctuate on a quarterly
basis.
Operating Expenses, which consist of Selling, General, and
Administrative Expenses and Research and Development expenses, were
approximately $3,605,000 for the three months ended September 30,
2011, an increase of approximately 34.2% over total Operating
Expenses for the same period last year. These planned increases
resulted from higher payroll and marketing expenses related to
increasing the size of the sales team, increases in reimbursement,
administration, patient services staff, and patient training costs
related to the higher Sales volume, increased expenses relating to
being a new public Company, and increased Research and Development
expenses.
Total cash was approximately $2,946,000 as of September 30,
2011. For the three months ended September 30, 2011, cash used in
financing activities was approximately $86,000, consisting of
primarily $110,000 on payments of Long-term Debt and capital lease
obligations offset by proceeds from a warrant exercise and
subscription notes receivable of approximately $24,000. An
aggregate of $237,000 was used for investing activities during the
three months ended September 30, 2011, including $22,000 in
payments for patent-related costs and $215,000 in expenditures for
property and equipment. The Company used approximately $823,000 in
operating activities composed primarily of an increase in the
Company’s receivable position, which increased approximately
$807,000, or 8.4% to approximately $10,400,000 during the three
months ended September 30, 2011.
About Electromed, Inc.Electromed, Inc., founded in 1992
and headquartered in New Prague, Minnesota, manufactures, markets,
and sells products that provide airway clearance therapy, including
the SmartVest® Airway Clearance System and related products, to
patients with compromised pulmonary function. Further information
about the Company can be found at www.electromed.com.
Cautionary StatementsCertain statements found in this
release may constitute forward-looking statements as defined in the
U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements reflect the speaker’s current views with
respect to future events and financial performance and include any
statement that does not directly relate to a current or historical
fact. Forward-looking statements can generally be identified by the
words “believe,” “expect,” “anticipate” or “intend” or similar
words. Forward-looking statements made in this release include the
Company’s plans and expectations regarding sales growth and product
innovation. Forward-looking statements cannot be guaranteed and
actual results may vary materially due to the uncertainties and
risks, known and unknown, associated with such statements. Examples
of risks and uncertainties for Electromed include, but are not
limited to, the impact of emerging and existing competitors, the
effectiveness of our sales and marketing initiatives, changes to
reimbursement programs, as well as other factors described from
time to time in our reports to the Securities and Exchange
Commission (including our Annual Report on Form 10-K). Investors
should not consider any list of such factors to be an exhaustive
statement of all of 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 release.
Electromed, Inc. and Subsidiary Condensed
Consolidated Balance Sheets September 30
June 30 2011 2011
Assets (Unaudited) Current Assets
Cash and cash equivalents $ 2,946,173 $ 4,091,739 Accounts
receivable (net of allowances for doubtful accounts of $45,000)
10,400,466 9,593,105 Inventories 2,163,802 1,855,957 Prepaid
expenses and other current assets 419,203 371,257 Deferred income
taxes 722,000 722,000
Total current assets
16,651,644 16,634,058 Property and equipment, net 3,070,662
2,807,082 Finite-life intangible assets, net assets, net 1,227,572
1,235,828
Other assets
217,907 191,964
Total assets $
21,167,785 $ 20,868,932
Liabilities and
Shareholders’ Equity Current Liabilities Revolving line of
credit $ 1,768,128 $ 1,768,128 Current maturities of long-term debt
403,745 438,267 Accounts payable 758,986 733,621 Accrued
compensation 906,425 868,229 Warranty reserve 475,019 444,096
Other accrued liabilities
174,613 161,166
Total current
liabilities 4,486,916 4,413,507 Long-term debt, less current
maturities 1,506,654 1,582,102 Deferred income taxes
167,000 167,000
Total liabilities
6,160,570 6,162,609 Commitments
and Contingencies (Note 8) Shareholders’ Equity
Common stock, $0.01 par value; authorized:
13,000,000; shares; issued and outstanding: 8,101,085 and 8,100,485
shares respectively
81,011 81,005 Additional paid-in capital 12,827,215 12,794,368
Retained earnings 2,098,989 1,853,450 Common stock
subscriptions receivable for 15,000 shares outstanding as of June
30, 2011 - (22,500 )
Total shareholders’
equity 15,007,215 14,706,323
Total liabilities and shareholders’ equity $ 21,167,785
$ 20,868,932
Electromed, Inc. and
Subsidiary Condensed Consolidated Statements of Income
(Unaudited) For the Three Months Ended
September 30, 2011 2010 Net revenues $
5,378,918 $ 4,165,429 Cost of revenues 1,321,318
1,231,690
Gross profit 4,057,600
2,933,739 Operating expenses Selling, general
and administrative 3,397,553 2,487,595 Research and development
207,585 198,386
Total operating
expenses 3,605,138 2,685,981
Operating income 452,462 247,758 Interest expense, net of
interest income of $2,027 and $1,971 respectively 43,923
59,688
Net income before income taxes
408,539 188,070 Income tax expense (163,000 )
(76,000 )
Net income $ 245,539 $ 112,070
Earnings per share attributable to Electromed, Inc. common
shareholders: Basic $ 0.03 $ 0.02 Diluted $ 0.03
$ 0.02 Weighted-average Electromed, Inc.
common shares outstanding: Basic 8,100,915
6,986,798 Diluted 8,119,190 7,002,904
Electromed, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(Unaudited) For the Three Months Ended
September 30, 2011 2010 Cash Flows From Operating
Activities Net income $ 245,539 $ 112,070 Adjustments to reconcile
net income to net cash used in operating activities: Depreciation
90,552 78,684 Amortization of finite-life intangible assets 30,006
25,721 Amortization of debt issuance costs 3,297 13,408 Share-based
compensation expense 31,053 42,900 Loss on disposal of property and
equipment 9,864 2,385 Changes in operating assets and liabilities:
Accounts receivable (807,361 ) (470,716 ) Inventories (307,845 )
35,730 Prepaid expenses and other assets (77,186 ) (96,234 )
Accounts payable and accrued liabilities (40,754 )
194,943
Net cash used in operating activities
(822,835 ) (61,109 ) Cash Flows From Investing
Activities Expenditures for property and equipment (215,311 )
(97,544 ) Expenditures for finite-life intangible assets
(21,750 ) (196,332 )
Net cash used in investing
activities (237,061 ) (293,876 ) Cash
Flows From Financing Activities Net borrowings on revolving line of
credit - (500,000 ) Principal payments on long-term debt including
capital lease obligations (109,970 ) (105,428 ) Payments of
deferred financing fees - (4,659 ) Proceeds from warrant exercises
1,800 - Proceeds from sales of 1.9 million shares of common stock,
net of offering costs of $1,229,882 - 6,370,118 Proceeds from
subscription notes receivable 22,500 -
Net cash provided by (used in) financing activities
(85,670) 5,760,031
Net increase (decrease)
in cash and cash equivalents (1,145,566) 5,405,046 Cash and
cash equivalents Beginning of period 4,091,739
610,727 End of period $ 2,946,173 $ 6,015,773
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