-- 14.8% 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 June 30,
2018 (“Q4 FY 2018”).
Q4 FY 2018 Highlights
- Net revenue increased 13.3% to $8.2
million from $7.3 million during the three months ended June 30,
2017 (“Q4 FY 2017”). Net revenue for the prior year comparable
period included a favorable impact of $703,000 from a one-time item
related to a settlement agreement with Centers for Medicare and
Medicaid Services.
- Gross profit rose 12.2% to $6.7 million
from $6.0 million in Q4 FY 2017.
- Operating income grew 5.1% to $1.6
million from $1.5 million in Q4 FY 2017.
- Net income expanded 18.2% to $1.1
million, or $0.13 per diluted share, from $946,000, or $0.11 per
diluted share, in Q4 FY 2017.
- Cash flow from operating activities
increased 48.1% to $570,000 from $385,000 in Q4 FY 2017.
- Field sales employees grew to 50 at the
end of Q4 FY 2018 from 40 at the end of Q4 FY 2017.
Kathleen Skarvan, President and Chief Executive Officer of
Electromed, commented, “In the fourth quarter of fiscal 2018, we
delivered strong top and bottom-line growth, driven by a 14.8%
year-over-year increase in home care revenue. We benefitted from
investments made earlier in the year to expand our sales force,
improve our reimbursement skills and processes, and advance
physician awareness and education surrounding the benefits of high
frequency chest wall oscillation therapy (“HFCWO”) with our
SmartVest® device. As a result, this quarter we achieved a greater
number of referrals, of significantly higher quality, translating
into exceptional growth in approvals.”
Ms. Skarvan continued, “The incremental investments initiated in
fiscal 2018 position Electromed for double-digit revenue and
earnings growth over the next few years. Looking ahead, we remain
focused on improving sales force productivity, enhancing our
reimbursement processes, increasing HFCWO awareness and education
among physicians and patients, promulgating evidence-based studies
that differentiate SmartVest, developing innovative device
features, and expanding our covered lives.
“Last month, we announced the first independent study suggesting
that HFCWO therapy with SmartVest significantly reduces severe
exacerbations and hospitalizations, and may meaningfully slow the
otherwise normal progression of non-cystic fibrosis bronchiectasis.
A growing body of evidence, including this study, reinforces our
optimism for expanding the market for HFCWO and gaining share in
the large, underpenetrated bronchiectasis market. As always, our
underlying mission is to improve quality-of-life and outcomes for a
greater number of patients with compromised pulmonary function,
while reducing overall healthcare utilization through SmartVest
airway clearance therapy.”
Q4 FY 2018 Review
Net revenue increased 13.3% to $8.2 million in Q4 FY 2018 from
$7.3 million in Q4 FY 2017, primarily driven by higher home care
revenue. Home care revenue rose 14.8% to $7.7 million in Q4 FY 2018
from $6.7 million in Q4 FY 2017, primarily due to growth in
approvals as a result of continued improvements in our
reimbursement operations that led to a greater referral to approval
percentage and a higher average selling price per device. Net
revenue for the prior year comparable period included a favorable
impact of $703,000 from a one-time item related to a settlement
agreement with Centers for Medicare and Medicaid Services.
Gross profit increased 12.2% to $6.7 million, or 81.7% of net
revenue, in Q4 FY 2018 from $6.0 million, or 82.5% of net revenue,
in Q4 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”) as well as research and development
(“R&D”) expenses, totaled $5.1 million, or 62.4% of revenue, in
Q4 FY 2018 compared with $4.5 million, or 61.7% of revenue, in the
same period of the prior year. SG&A expenses increased 14.4% to
$5.1 million in Q4 FY 2018 from $4.4 million in Q4 FY 2017,
primarily due to higher payroll and compensation-related expenses
and increased travel, meals and entertainment expenses which were
driven by the expansion of our sales force. These increased costs
were partially offset by a $406,000 refund of medical device excise
taxes that was recognized during Q4 FY 2018. R&D expenses
totaled $81,000 in Q4 FY 2018 compared to $65,000 in Q4 FY
2017.
Operating income increased 5.1% to $1.6 million in Q4 FY 2018
from $1.5 million in Q4 FY 2017, primarily due to increased gross
profit driven by higher revenue and a refund of medical device
excise taxes, which were partially offset by costs related to the
expansion of our sales force.
Net income before income tax expense rose 7.6% to $1.6 million
in Q4 FY 2018 from $1.5 million in Q4 FY 2017.
Net income increased 18.2% to $1.1 million, or $0.13 per diluted
share, in Q4 FY 2018, from $946,000, or $0.11 per diluted share, in
Q4 FY 2017. In Q4 FY 2018, income tax expense totaled $500,000,
compared to $559,000 in the same period of the prior year.
Full Year FY 2018
Summary
For the twelve months ended June 30, 2018, revenue grew 11.0% to
$28.7 million from $25.9 million in fiscal 2017, driven by a 13.8%
increase in home care revenue. Gross margins were 79.6%, compared
to 79.5% in the prior fiscal year, while net income was $1.9
million, or $0.22 per diluted share, compared to $2.2 million, or
$0.26 per diluted share in fiscal 2017.
Financial Condition
Electromed’s balance sheet at June 30, 2018 included cash of
$7.5 million, long-term debt including current maturities of $1.1
million, working capital of $17.5 million, and shareholders’ equity
of $21.9 million.
Conference Call
Management will host a conference call on September 26, 2018 at
8:00 am CT (9:00 am ET) to discuss Q4 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/37302.
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://investors.smartvest.com/.
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 can generally be
identified by words such as “believe,” “estimate,” “expect,” “may,”
“plan” “potential,” “should,” “will,” and similar expressions,
including the negative of these terms, but they are not the
exclusive means of identifying such statements. Forward-looking
statements cannot be guaranteed and actual results may vary
materially due to the uncertainties and risks, known or unknown
associated with such statements. Examples of risks and
uncertainties for the Company include, but are not limited to: the
competitive nature of our market; risks associated with expansion
into international markets; changes to Medicare, Medicaid, or
private insurance reimbursement policies; new drug or
pharmaceutical discoveries; changes to health care laws; changes
affecting the medical device industry; our need to maintain
regulatory compliance and to gain future regulatory approvals and
clearances; our ability to protect and expand our intellectual
property portfolio; our ability to renew our line of credit or
obtain additional credit as necessary; our ability to develop new
sales channels for our product; and general economic and business
conditions, as well as other factors described from time to time in
our 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.
Financial Tables Follow:
Electromed, Inc. Condensed Balance
Sheets June 30, 2018 June 30, 2017
Assets Current Assets Cash $ 7,455,844 $ 5,573,709 Accounts
receivable (net of allowances for doubtful accounts of $45,000)
11,563,208 9,949,759 Inventories 2,360,693 2,559,485 Prepaid
expenses and other current assets 832,202 393,319
Total current assets 22,211,947 18,476,272 Property and
equipment, net 3,091,242 3,303,233 Finite-life intangible assets,
net 649,103 721,276 Other assets 91,912 99,868 Deferred income
taxes 594,000 460,000
Total assets $
26,638,204 $ 23,060,649
Liabilities and Shareholders’
Equity Current Liabilities Current maturities of long-term debt
$ 1,101,043 $ 50,703 Accounts payable 810,644 663,376 Accrued
compensation 1,209,738 946,623 Income taxes payable 397,390 156,524
Warranty reserve 760,000 640,000 Other accrued liabilities
464,357 438,748
Total current liabilities 4,743,172
2,895,974 Long-term debt, less current maturities and net of debt
issuance costs - 1,097,125
Total liabilities
4,743,172 3,993,099 Commitments and
Contingencies Shareholders' Equity
Common stock, $0.01 par value; authorized:
13,000,000 shares; 8,288,659 and 8,230,167 issuedand outstanding at
June 30, 2018 and June 30, 2017, respectively
82,887 82,302 Additional paid-in capital 14,953,103 14,028,602
Retained earnings 6,859,042 4,956,646
Total
shareholders’ equity 21,895,032 19,067,550
Total liabilities and shareholders’ equity $ 26,638,204 $
23,060,649
Electromed, Inc. Condensed
Statements of Operations
For the Three Months Ended June
30,
For the Twelve Months Ended June
30,
2018 2017 2018 2017 Net revenues $
8,240,564 $ 7,273,901 $ 28,697,622 $ 25,861,144 Cost of revenues
1,507,159 1,272,100 5,841,601 5,292,715
Gross profit 6,733,405 6,001,801
22,856,021 20,568,429 Operating expenses Selling,
general and administrative 5,061,167 4,422,953 19,596,053
16,402,214 Research and development 81,320 64,621
251,443 596,876
Total operating expenses
5,142,487 4,487,574 19,847,496
16,999,090
Operating income 1,590,918 1,514,227 3,008,525
3,569,339 Interest income (expense), net 28,296
(8,733) 19,871 (49,867)
Net income before
income taxes 1,619,214 1,505,494 3,028,396 3,519,472
Income tax expense 500,000 559,000 1,126,000
1,290,000
Net income $ 1,119,214 $ 946,494 $
1,902,396 $ 2,229,472 Income per share: Basic $ 0.14 $ 0.12
$ 0.23 $ 0.27 Diluted $ 0.13 $ 0.11 $ 0.22 $ 0.26
Weighted-average common shares outstanding: Basic 8,221,437
8,171,319 8,207,365 8,168,152 Diluted
8,578,295 8,493,619 8,620,102 8,461,120
Electromed, Inc. Condensed
Statements of Cash Flows Twelve Months Ended June
30, 2018 2017 Cash Flows From Operating
Activities Net income $ 1,902,396 $ 2,229,472 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation 676,426 636,709 Amortization of finite-life intangible
assets 113,601 118,418 Amortization of debt issuance costs 6,351
13,067 Share-based compensation expense 862,674 479,482 Deferred
taxes (134,000) (117,000) Loss on disposal of property and
equipment 25,990 3,302 Loss on disposal of intangible assets 4,122
132,724 Changes in operating assets and liabilities: Accounts
receivable (1,613,449) (2,338,322) Inventories 234,594 (28,334)
Prepaid expenses and other assets (433,363) 49,864 Income tax
receivable - 192,685 Income tax payable 240,866 156,524 Accounts
payable and accrued liabilities 555,992 (337,470)
Net cash provided by operating activities 2,442,200
1,191,121 Cash Flows From Investing Activities
Expenditures for property and equipment (526,227) (618,763)
Expenditures for finite-life intangible assets (45,550)
(68,385)
Net cash used in investing activities
(571,777) (687,148) Cash Flows From Financing
Activities Principal payments on long-term debt including capital
lease obligations (50,700) (48,747) Issuance of common stock upon
exercise of options 62,412 - Payments of deferred financing fees
- (4,872)
Net cash provided by (used in) financing
activities 11,712 (53,619)
Net increase in
cash 1,882,135 450,354 Cash Beginning of period
5,573,709 5,123,355 End of period $ 7,455,844 $ 5,573,709
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180925006120/en/
Electromed, Inc.Jeremy Brock, 952-758-9299Chief Financial
Officerinvestorrelations@electromed.comorThe Equity Group
Inc.Kalle Ahl, CFA, 212-836-9614kahl@equityny.comDevin
Sullivan, 212-836-9608dsullivan@equityny.com
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