18.2% year-over-year increase in home care
revenue
Electromed, Inc. (“Electromed” or the “Company”) (NYSE
American:ELMD), a leader in innovative airway clearance
technologies, today announced financial results for the three
months ended December 31, 2017 (“Q2 FY 2018”).
Q2 FY 2018 Highlights
- Net revenue increased 9.6% to $7.0
million from $6.4 million during the three months ended December
31, 2016 (“Q2 FY 2017”), driven by an 18.2% year-over-year increase
in home care revenue.
- Gross profit rose 13.4% to $5.6 million
from $4.9 million in Q2 FY 2017.
- Selling, general and administrative
expenses increased 16.2% to $4.8 million, from $4.1 million in Q2
FY 2017, primarily reflecting the hiring of new employees to
support revenue growth initiatives.
- Operating income grew 5.6% to $770,000,
from $729,000 in Q2 FY 2017.
- Net income equaled $349,000, or $0.04
per diluted share, compared to $444,000, or $0.05 per diluted
share, in Q2 FY 2017.
- Net income for Q2 FY 2018 included a
non-recurring discrete deferred tax expense of $160,000 related to
the Tax Cuts and Jobs Act (“the Tax Act”). On a go-forward basis,
the Tax Act reduces the statutory corporate federal tax rate from
34% to 21%, effective January 1, 2018, and is estimated to benefit
the Company’s after-tax net income by approximately 13% beginning
in fiscal 2018, as well as positively impact earnings per share and
cash flow.
- Cash flow from operations totaled $1.2
million, compared to $1.3 million in Q2 FY 2017.
- Field sales employees grew to 43 at the
end of Q2 FY 2018 from 35 at the end of Q2 FY 2017.
Kathleen Skarvan, President and Chief Executive Officer of
Electromed, commented, “We grew home care revenue by 18.2%
year-over-year while increasing investments in marketing and sales
initiatives to address the large and underpenetrated bronchiectasis
market. We also significantly grew the footprint of clinics using
our innovative SmartVest Connect™ wireless connectivity solution
and continue to receive positive feedback from physicians and
patients on its intuitive design. SmartVest’s® patient therapy
monitoring, ease-of-use and comfort, combined with our dedication
to customer service, underpin Electromed’s continued progress this
quarter.”
Ms. Skarvan continued, “Having completed most of our direct
sales expansion for the fiscal year, with the number of field sales
employees up more than 20% compared to the end of Q2 FY 2017, our
near-term growth strategies are focused on improving sales force
productivity, amplifying our direct-to-patient marketing and
expanding the body of clinical evidence supporting SmartVest®
benefits for bronchiectasis patients. We continue to manage the
business for long-term growth, while remaining focused on
profitability and positive cash flow short term. Year-over-year
revenue growth in the second half of fiscal 2018 is estimated to be
in line with fiscal 2017 growth levels. We remain confident in the
growth opportunity for SmartVest® and excited about our direction,
as we strive to improve quality of life and outcomes for an
expanding number of patients with compromised pulmonary
function.”
Q2 FY 2018 Review
Net revenue increased 9.6% to $7.0 million in Q2 FY 2018 from
$6.4 million in Q2 FY 2017, driven by higher home care revenue.
Home care revenue rose 18.2% to $6.5 million in Q2 FY 2018 from
$5.5 million in Q2 FY 2017. This increase was primarily due to
growth in approvals as a result of continued improvements in the
Company’s reimbursement operations, which led to a greater referral
to approval percentage as compared to the prior year.
Gross profit increased 13.4% to $5.6 million, or 80.0% of net
revenue, in Q2 FY 2018 from $4.9 million, or 77.3% of net revenue,
in Q2 FY 2017. The increase in gross profit resulted primarily from
an increase in home care revenue.
Operating expenses, which include selling, general and
administrative (“SG&A”) expenses as well as research and
development (“R&D”) expenses, totaled $4.8 million, or 69.0% of
net revenue, in Q2 FY 2018 compared with $4.2 million, or 65.9% of
net revenue, in the same period of the prior year. SG&A
expenses increased 16.2% to $4.8 million in Q2 FY 2018 from $4.1
million in Q2 FY 2017, primarily due to additional employees in
sales, annual salary increases, higher share-based equity
compensation expense, and additional sales incentives on higher
revenue accruals. R&D expenses totaled $57,000 in Q2 FY 2018
compared to $101,000 in Q2 FY 2017.
Operating income increased 5.6% to $770,000 in Q2 FY 2018, from
$729,000 in Q2 FY 2017, reflecting higher gross profit partially
offset by higher SG&A expense.
Net income before income tax expense totaled $765,000 in Q2 FY
2018, compared to $714,000 in Q2 FY 2017.
Net income equaled $349,000, or $0.04 per diluted share, in Q2
FY 2018, compared to $444,000, or $0.05 per diluted share, in Q2 FY
2017. In Q2 FY 2018, income tax expense totaled $416,000, compared
to $270,000 in the same period of the prior year.
Income tax expense during Q2 FY 2018 included a discrete
deferred tax expense of $160,000 as a result of re-measuring
certain deferred tax assets and liabilities based on the rates at
which they are expected to reverse in the future under the Tax Act
that was enacted by the U.S. Government on December 22, 2017. On a
go forward basis, the Act reduces the statutory corporate federal
tax rate from 34% to 21%, effective January 1, 2018, and is
estimated to benefit the Company’s after-tax net income, earnings
per share and cash flow by approximately 13% beginning in 2018.
Year-to-Date FY 2018
Summary
For the six months ended December 31, 2017, revenue grew 12.2%
to $13.4 million from $11.9 million in the same period of fiscal
2017, driven by a 17.4% increase in home care revenue. Gross
margins were 78.7%, compared to 77.7% in the prior fiscal year,
while net income was approximately $470,000, or $0.05 per diluted
share, compared to approximately $635,000, or $0.08 per diluted
share in fiscal 2017.
Financial Condition
Electromed’s balance sheet at December 31, 2017 included cash of
$6.8 million, current maturities of long-term debt of $1.1 million,
working capital of $15.5 million, and shareholders’ equity of $19.9
million.
Conference Call
Management will host a conference call on February 14, 2018 at
8:00 am CT (9:00 am ET) to discuss Q2 FY 2018 financial results and
other matters.
Interested parties may participate in the call by dialing:
- (877) 407-9753 (Domestic)
- (201) 493-6739 (International)
The conference call will also be accessible via the following
link:http://www.investorcalendar.com/event/23177.
For those who cannot listen to the live broadcast, an online
webcast replay will be available in the Investor Relations section
of Electromed’s web site at:
http://www.smartvest.com/electromed/investor-relations/.
About Electromed, Inc.
Electromed, Inc. manufactures, markets, and sells products that
provide airway clearance therapy, including the SmartVest® Airway
Clearance System, to patients with compromised pulmonary function.
The Company is headquartered in New Prague, Minnesota and was
founded in 1992. Further information about Electromed can be found
at www.smartvest.com.
Cautionary Statements
Certain statements in this release constitute forward-looking
statements as defined in the U.S. Private Securities Litigation
Reform Act of 1995. Forward-looking statements reflect 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 “anticipate,” “believe,” “estimate,”
“expect,” “will” and similar words. Forward-looking statements in
this release include estimated revenue trends, changes in sales
opportunities and our sales force, product and service innovations,
referral quality and processing, financial performance,
profitability and market trends. 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 the Company
include, but are not limited to, the impact of emerging and
existing competitors, the effect of new legislation on the
Company’s industry and business, the effectiveness of the Company’s
sales and marketing and cost control initiatives, changes to
reimbursement programs, as well as other factors described from
time to time in the Company’s reports to the Securities and
Exchange Commission (including the Company’s most recent Annual
Report on Form 10-K, as amended from time to time, and subsequent
reports on Form 10-Q and Form 8-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.
Condensed Balance Sheets
December 31, 2017 June 30, 2017
(Unaudited) Assets Current Assets Cash $
6,840,237
$
5,573,709
Accounts receivable (net of allowances for doubtful accounts of
$45,000) 9,680,369 9,949,759 Inventories 2,393,639 2,559,485
Prepaid expenses and other current assets 379,713
393,319
Total current assets 19,293,958
18,476,272 Property and equipment, net 3,215,369 3,303,233
Finite-life intangible assets, net 674,704 721,276 Other assets
102,577 99,868 Deferred income taxes 417,000
460,000
Total assets $ 23,703,608 $ 23,060,649
Liabilities and Shareholders’ Equity Current
Liabilities Current maturities of long-term debt, net of debt
issuance costs $ 1,124,745 $ 50,703 Accounts payable 704,105
663,376 Accrued compensation 835,907 946,623 Income tax payable
84,110 156,524 Warranty reserve 670,000 640,000 Other accrued
liabilities 360,538 438,748
Total
current liabilities 3,779,405 2,895,974 Long-term debt, less
current maturities and net of debt issuance costs -
1,097,125
Total liabilities 3,779,405
3,993,099 Commitments and Contingencies
Shareholders’ Equity Common stock, $0.01 par value;
authorized: 13,000,000 shares; 8,270,167 and 8,230,167 issued and
outstanding at December 31, 2017 and June 30, 2017, respectively
82,702 82,302 Additional paid-in capital 14,414,450 14,028,602
Retained earnings 5,427,051 4,956,646
Total shareholders’ equity 19,924,203
19,067,550
Total liabilities and shareholders’ equity
$ 23,703,608 $ 23,060,649
Electromed, Inc.
Condensed Statements of
Operations
For the Three Months Ended
For the Six Months Ended
December 31,
December 31,
2017 2016 2017 2016 Net revenues $
6,984,626
$
6,372,243
$
13,366,405
$
11,917,606
Cost of revenues 1,398,001 1,445,786
2,843,286 2,663,522
Gross profit
5,586,625 4,926,457 10,523,119
9,254,084 Operating expenses Selling,
general and administrative 4,759,652 4,096,197 9,463,163 7,784,107
Research and development 56,794 100,801
127,458 451,641
Total operating
expenses 4,816,446 4,196,998
9,590,621 8,235,748
Operating income
770,179 729,459 932,498 1,018,336 Interest expense, net of interest
income of $8,888, $3,603, $18,517 and $6,969, respectively
4,894 15,598 9,093 32,304
Net income before income taxes 765,285 713,861
923,405 986,032 Income tax expense 416,000
270,000 453,000 351,000
Net income $ 349,285 $ 443,861 $ 470,405
$ 635,032 Income per share: Basic $ .04
$ .05 $ .06 $ .08 Diluted $ .04 $ .05
$ .05 $ .08 Weighted-average common
shares outstanding: Basic 8,200,167 8,167,112
8,200,167 8,167,112 Diluted
8,648,866 8,426,996 8,645,987
8,440,698
Electromed, Inc.
Condensed Statements of Cash
Flows
Six Months Ended December 31, 2017
2016 Cash Flows From Operating Activities Net income
$ 470,405 $ 635,032 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation 329,719 312,075
Amortization of finite-life intangible assets 56,610 60,963
Amortization of debt issuance costs 4,394 9,216 Share-based
compensation expense 386,248 234,634 Deferred income taxes Changes
in operating assets and liabilities: 43,000 13,000 Loss on disposal
of intangible assets Inventories Accounts receivable - 111,497
Changes in operating assets and liabilities: Accounts receivable
269,390 (673,458 ) Inventories 183,617 (53,894 ) Prepaid expenses
and other assets 8,461 7,046 Income tax receivable - 189,789 Income
tax payable (72,414 ) - Accounts payable and accrued liabilities
(149,647 ) (807,188 )
Net cash provided by
operating activities 1,529,783 38,712
Cash Flows From Investing Activities Expenditures for
property and equipment (228,176 ) (267,117 ) Expenditures for
finite-life intangible assets (10,038 ) (44,518 )
Net cash used in investing activities (238,214 )
(311,635 )
Cash Flows From Financing Activities
Principal payments on long-term debt
including capital lease obligations
(25,041 ) (24,056 ) Payment of deferred financing fees -
(4,872 )
Net cash used in financing activities
(25,041 ) (28,928 )
Net increase (decrease)
in cash 1,266,528 (301,851 ) Cash Beginning of period
5,573,709 5,123,355 End of period $ 6,840,237
$ 4,821,504
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180213006530/en/
Electromed, Inc.Jeremy Brock, 952-758-9299Chief Financial
Officerinvestorrelations@electromed.comorThe Equity Group
Inc.Kalle Ahl, CFA,
212-836-9614kahl@equityny.comorDevin
Sullivan, 212-836-9608dsullivan@equityny.com
Electromed (AMEX:ELMD)
Historical Stock Chart
From Jun 2024 to Jul 2024
Electromed (AMEX:ELMD)
Historical Stock Chart
From Jul 2023 to Jul 2024