-- Record profitability: diluted EPS of $0.47
in fiscal 2020 versus $0.23 in fiscal 2019 --
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,
2020 (“Q4 FY 2020”).
Q4 FY 2020 Highlights
- Net revenue decreased 20.1% to $6.9 million, from $8.6 million
for the three months ended June 30, 2019 (“Q4 FY 2019”), primarily
due to industrywide disruption from the COVID-19 pandemic.
- Operating income, which included $0.9 million of government
stimulus income from the Provider Relief Fund established under the
Coronavirus Aid, Relief, and Economic Security Act (the “CARES
Act”), totaled $1.3 million, compared to $1.5 million in Q4 FY
2019.
- Net income was $1.3 million, or $0.15 per diluted share,
compared to $1.1 million, or $0.13 per diluted share, in Q4 FY
2019.
- Cash as of June 30, 2020 was $10.5 million benefiting from $1.3
million in operating cash flow in Q4 FY 2020.
FY 2020 Highlights
- Net revenue increased 3.7% to $32.5 million from $31.3 million
during the fiscal year ended June 30, 2019 (“FY 2019”).
- Operating income grew 80.9% to $5.1 million, from $2.8 million
in FY 2019.
- Net income rose 110.1% to $4.2 million, or $0.47 per diluted
share, from $2.0 million, or $0.23 per diluted share, in FY
2019.
- Cash increased by $2.7 million during fiscal 2020, benefitting
from $4.2 million in operating cash flow.
Kathleen Skarvan, President and Chief Executive Officer of
Electromed, commented, “In fiscal 2020 we delivered revenue growth
and record profitability, despite a challenging fourth quarter
during which the COVID-19 pandemic significantly impacted our
operating and financial results. Encouragingly, our home care
referrals approached pre-COVID-19 levels as we exited the fourth
quarter, in tandem with an uptick in the reopening of physician
offices and related activities. I commend our entire Electromed
team for their unwavering commitment to ensuring seamless
manufacturing and delivery of SmartVest® Airway Clearance during
these challenging times.”
Ms. Skarvan continued, “We expect continued uncertainty
surrounding COVID-19 through fiscal 2021 that will continue to
impact our financial and operational results. We believe we have a
strong balance sheet and an extremely dedicated team, which will
enable us to withstand this pandemic and pursue a greater share of
the large, underpenetrated bronchiectasis market. Our priority
continues to be the health, safety and wellbeing of our teammates,
clinicians and patients, while executing on our organic growth
strategy. With this in mind, we plan to continue investing in our
business, serving patients by balancing virtual and in-person
visits, and providing best-in-class customer service and delivering
our differentiated SmartVest® Airway Clearance devices to drive
long-term profitable growth.”
Q4 FY 2020 Review
Net revenue in Q4 FY 2020 decreased 20.1% to $6.9 million, from
$8.6 million in Q4 FY 2019, primarily driven by lower home care
revenue. Home care revenue declined 21.3% to $6.3 million from $8.0
million in Q4 FY 2019, primarily due to lower referrals driven by
the COVID-19 pandemic. Field sales employees totaled 44, of which
37 were direct sales, at the end of Q4 FY 2020, compared to 40 at
the end of Q4 FY 2019, of which 34 were direct sales. Annualized
home care revenue was $678,000 per direct field sales employee,
below our target productivity range of $750,000 - $850,000 due to
the revenue decline associated with the COVID-19 pandemic.
Institutional revenue decreased 25.9% to $273,000 from $368,000 in
Q4 FY 2019, primarily due to a decrease in volume of devices and
garments sold.
Gross profit in Q4 FY 2020 decreased 16.2% to $5.6 million, or
81.3% of net revenue, from $6.7 million, or 77.5% of net revenue,
in Q4 FY 2019. The decrease in gross profit dollars was primarily
due to the decrease in home care revenue driven by the COVID-19
pandemic. The increase in gross profit percentage was due to a
higher mix of Medicare patients, in-sourcing of patient training
activity and reduced warranty costs.
Selling, general and administrative (“SG&A”) expenses in Q4
FY 2020 decreased by $277,000 to $4.8 million from $5.1 million in
Q4 FY 2019. The decline in SG&A spending was primarily due to
lower incentive payments driven by lower home care revenue and
reductions in travel expenses related to the COVID-19 pandemic. As
a percentage of revenue, SG&A expenses were 69.7% compared to
59.0% in the same period in the prior year. Research and
development expenses increased to $415,000 from $107,000 in Q4 FY
2019, in connection with the development of a next generation
device. As a partial offset to our core operating expenses, we
received and recognized $0.9 million of government stimulus from
the Provider Relief Fund established under the CARES Act which is
intended to offset losses in revenue and expenses Medicare
fee-for-service providers incurred due to the impacts of the
COVID-19 pandemic.
Operating income totaled $1.3 million, compared to $1.5 million
in Q4 FY 2019.
Net income before income taxes totaled $1.3 million compared to
$1.5 million in Q4 FY 2019.
Net income was $1.3 million, or $0.15 per diluted share,
compared to $1.1 million, or $0.13 per diluted share, in Q4 FY
2019. In Q4 FY 2020, income tax benefit totaled $9,000, compared to
an income tax expense of $432,000 in the same period of the prior
year. During Q4 FY 2020, a discrete tax benefit of $343,000 was
recognized as a result of the exercise of outstanding stock
options.
FY 2020 Summary
For the fiscal year ended June 30, 2020, revenue grew 3.7% to
$32.5 million, from $31.3 million in fiscal 2019, driven by
$430,000 of incremental distributor revenue, a 24.7% increase in
institutional revenue, and a 1.3% increase in home care revenue.
Gross margins were 77.6%, compared to 76.2% in the prior fiscal
year, while net income was $4.2 million, or $0.47 per diluted
share, compared to $2.0 million, or $0.23 per diluted share, in
fiscal 2019. The Company’s cash increased by $2.7 million, driven
by $4.2 million of operating cash flow.
Financial Condition
The Company’s balance sheet at June 30, 2020 included cash of
$10.5 million, accounts receivable of $12.9 million, no debt,
working capital of $25.0 million, and shareholders’ equity of $30.2
million.
Conference Call
Management will host a conference call on Tuesday, August 25,
2020 at 4:00 pm CT (5:00 pm ET) to discuss Q4 FY 2020 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 also will be accessible via the following
link:
https://78449.themediaframe.com/dataconf/productusers/elctr/mediaframe/40248/indexl.html
For those who cannot listen to the live broadcast, an online
webcast replay will be available in the Investor Relations section
of the Company’s web site at: http://investors.smartvest.com/
About Electromed, Inc.
Electromed, Inc. manufactures, makes, 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 the Company can be found
at www.smartvest.com.
Cautionary Statements
Certain statements in this press 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
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “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
duration, extent and severity of the COVID-19 pandemic, including
its effects on our business, operations and employees as well as
its impact on our customers and distribution channels and on
economies and markets more generally; the competitive nature of our
market; changes to Medicare, Medicaid, or private insurance
reimbursement policies; changes to state and federal health care
laws; changes affecting the medical device industry; our ability to
develop new sales channels for our products such as the homecare
distributor channel; our need to maintain regulatory compliance and
to gain future regulatory approvals and clearances; new drug or
pharmaceutical discoveries; general economic and business
conditions; our ability to renew our line of credit or obtain
additional credit as necessary; our ability to protect and expand
our intellectual property portfolio; the risks associated with
expansion into international markets, as well as other factors we
may describe from time to time in the Company’s reports filed with
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 Quarterly Reports on Form 10-Q and Current
Reports on 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 press release. We undertake no obligation to
update them in light of new information or future events.
Electromed, Inc.
Condensed Balance
Sheets
June 30, 2020 June 30, 2019 Assets
(unaudited) Current Assets Cash
$
10,479,150
$
7,807,928
Accounts receivable (net of allowances for doubtful accounts of
$45,000)
12,940,677
12,760,042
Contract assets
902,619
995,847
Inventories, net
3,084,620
2,622,000
Prepaid expenses and other current assets
353,318
353,214
Income taxes receivable
262,155
-
Total current assets
28,022,539
24,539,031
Property and equipment, net
3,788,469
3,604,744
Finite-life intangible assets, net
598,389
581,413
Other assets
80,166
45,044
Deferred income taxes
755,000
629,000
Total assets
$
33,244,563
$
29,399,232
Liabilities and Shareholders’ Equity Current
Liabilities Current maturities of other long-term liabilities
$
72,328
$
30,320
Accounts payable
555,510
586,575
Accrued compensation
1,404,497
1,404,662
Income taxes payable
-
288,511
Warranty reserve
740,000
810,000
Other accrued liabilities
214,045
530,453
Total current liabilities
2,986,380
3,650,521
Other long-term liabilities
8,868
14,737
Total liabilities
2,995,248
3,665,258
Commitments and Contingencies Shareholders' Equity
Common stock, $0.01 par value; authorized: 13,000,000 shares;
8,567,834 and 8,408,351 issued and outstanding at June 30, 2020 and
June 30, 2019, respectively
85,678
84,084
Additional paid-in capital
16,480,134
16,127,826
Retained earnings
13,683,503
9,522,064
Total shareholders’ equity
30,249,315
25,733,974
Total liabilities and shareholders’ equity
$
33,244,563
$
29,399,232
Electromed, Inc.
Condensed Statements of
Operations
For the Three Months EndedJune 30, For the Twelve
Months EndedJune 30,
2020
2019
2020
2019
(unaudited)
(unaudited)
(unaudited)
Net revenues
$
6,877,351
$
8,603,602
$
32,470,688
$
31,299,750
Cost of revenues
1,288,711
1,935,289
7,270,642
7,451,806
Gross profit
5,588,640
6,668,313
25,200,046
23,847,944
Operating expenses (income) Selling, general and
administrative
4,796,507
5,073,421
19,944,851
20,435,010
Research and development
415,236
106,526
1,049,612
583,311
Government stimulus income
(913,108
)
-
(913,108
)
-
Total operating expenses
4,298,635
5,179,947
20,081,355
21,018,321
Operating income
1,290,005
1,488,366
5,118,691
2,829,623
Interest income, net
9,547
33,359
120,748
90,707
Net income before income taxes
1,299,552
1,521,725
5,239,439
2,920,330
Income tax expense (benefit)
(9,000
)
432,000
1,078,000
940,000
Net income
$
1,308,552
$
1,089,725
$
4,161,439
$
1,980,330
Income per share: Basic
$
0.15
$
0.13
$
0.50
$
0.24
Diluted
$
0.15
$
0.13
$
0.47
$
0.23
Weighted-average common shares outstanding:
Basic
8,443,954
8,341,684
8,403,220
8,306,338
Diluted
8,968,800
8,615,207
8,826,418
8,631,469
Electromed, Inc.
Condensed Statements of Cash
Flows
Twelve Months Ended June 30,
2020
2019
Cash Flows From Operating Activities (unaudited) Net income
$
4,161,439
$
1,980,330
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation
616,468
804,587
Amortization of finite-life intangible assets
121,762
120,640
Amortization of debt issuance costs
-
1,958
Share-based compensation expense
901,932
924,071
Deferred taxes
(126,000
)
(265,000
)
Loss on disposal of property and equipment
2,622
11,186
Loss on disposal of intangible assets
-
4,840
Changes in operating assets and liabilities: Accounts receivable
(180,635
)
(948,734
)
Contract assets
93,228
(219,509
)
Inventories
(449,335
)
(106,174
)
Prepaid expenses and other assets
78,222
591,457
Income tax receivable
(262,155
)
-
Income tax payable
(288,511
)
(108,879
)
Accounts payable and accrued liabilities
(472,589
)
(200,899
)
Net cash provided by operating activities
4,196,448
2,589,874
Cash Flows From Investing Activities Expenditures for
property and equipment
(844,226
)
(1,330,598
)
Proceeds from sales of equipment
-
1,750
Expenditures for finite-life intangible assets
(132,970
)
(57,790
)
Net cash used in investing activities
(977,196
)
(1,386,638
)
Cash Flows From Financing Activities Principal payments on
long-term debt including capital lease obligations
-
(1,103,001
)
Issuance of common stock upon exercise of options
80,369
251,849
Taxes paid on stock options exercised on a net basis
(628,399
)
-
Net cash used in financing activities
(548,030
)
(851,152
)
Net increase in cash
2,671,222
352,084
Cash Beginning of period
7,807,928
7,455,844
End of period
$
10,479,150
$
7,807,928
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200825005829/en/
Electromed, Inc. Mike MacCourt, Chief Financial Officer
(952) 758-9299 investorrelations@electromed.com
The Equity Group Inc. Kalle Ahl, CFA (212) 836-9614
kahl@equityny.com
Devin Sullivan (212) 836-9608 dsullivan@equityny.com
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