-- Record quarterly revenue of $10.0 million,
25.0% growth vs. prior year driven by strong growth in home care
and institutional markets --
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 September
30, 2021 (“Q1 FY 2022”).
Q1 FY 2022 Highlights
- Net revenue increased 25.0% to $10.0 million, from $8.0 million
for the three months ended September 30, 2020 (“Q1 FY 2021”),
driven by 24.4% home care revenue growth and 61.5% institutional
revenue growth.
- Gross profit percentage increased to 77.0% of net revenue, from
76.8% of net revenue in Q1 FY 2021. The increase in gross profit
percentage in Q1 FY 2022 was primarily due to favorable revenue
mix, partially offset by increased raw material and shipping
costs.
- Operating income totaled $538,000, compared to $663,000 in Q1
FY 2021. The decrease in operating income was due to increased
strategic investments in SG&A and costs related to shareholder
activism, partially offset by stronger revenue performance.
- Net income equaled $439,000, or $0.05 per diluted share,
compared to $535,000, or $0.06 per diluted share, in Q1 FY
2021.
- Cash totaled $11.0 million as of September 30, 2021.
Kathleen Skarvan, President and Chief Executive Officer of
Electromed, commented, “In the first quarter of fiscal 2022, we
achieved record quarterly net revenue of $10.0 million, with
exceptional year-over-year growth in both our home care and
institutional businesses. Our results were driven by strong
execution across the Company and from the benefits of our key
strategic growth investments, primarily in commercial team
expansion and direct-to-consumer and digital marketing. In our home
care business, our sales team continued to execute admirably
through a hybrid virtual and face-to-face selling approach,
maintaining a high level of productivity despite somewhat dampened
clinician access after the onset of the COVID-19 Delta variant. On
the institutional side of our business, we were pleased to see
hospitals increasingly resume utilization of high frequency chest
wall oscillation protocols during the quarter, after reducing
utilization early in the COVID-19 pandemic."
Ms. Skarvan continued, “I believe that the strategic investments
we are making in commercial expansion and digital marketing,
product development, clinical research studies, and system
infrastructure improvements position Electromed for enhanced
long-term revenue growth, increased operating leverage, and durable
shareholder value creation. In the remainder of fiscal 2022, we
will focus on completing the final phases of development of our
next generation airway clearance device, enrolling additional
patients in our multi-center prospective clinical outcomes study,
prudently building our sales and marketing team with an eye on
maintaining high productivity, and diligently executing our
direct-to-patient marketing program to increase awareness of
SmartVest® as an effective device for the treatment of
bronchiectasis.”
Q1 FY 2022 Review
Net revenue in Q1 FY 2022 increased 25.0% to $10.0 million, from
$8.0 million in Q1 FY 2021, primarily driven by growth in home care
revenue and institutional revenue. Home care revenue expanded 24.4%
to $9.3 million in Q1 FY 2022, from $7.5 million in Q1 FY 2021,
primarily due to an increase in referrals and approvals. The
increase in referrals was due to increased productivity from
existing sales representatives, an increase in direct sales
representatives, benefits of the waiver by the Centers for Medicare
& Medicaid Services on the non-commercial Medicare portion of
our home care revenue, and the sales team adapting to a hybrid
virtual and face-to-face selling model implemented to combat clinic
access limitations due to the COVID-19 pandemic. Field sales
employees totaled 51 at the end of Q1 FY 2022, 41 of which were
direct sales representatives, compared to 42 field sales employees
and 35 direct sales representatives at the end of Q1 FY 2021. Sales
force productivity achieved record performance during the quarter,
with annualized home care revenue per direct sales representative
at $955,000, above the Company’s targeted range of $750,000 to
$850,000.
Institutional revenue increased 61.5% to $449,000 in Q1 FY 2022,
from $278,000 in Q1 FY 2021, primarily due to increased capital
purchases and stronger disposable volumes as hospitals resumed
utilization of high frequency chest wall oscillation protocols.
Distributor revenue decreased 12.4% to $156,000 in Q1 FY 2022,
compared to $178,000 in Q1 FY 2021. International revenue increased
33.3% to $112,000 in Q1 FY 2022, from $84,000 in Q1 FY 2021.
Gross profit dollars in Q1 FY 2022 increased to $7.7 million, or
77.0% of net revenue, from $6.1 million, or 76.8% of net revenue,
in Q1 FY 2021. The increase in gross profit dollars in Q1 FY 2022
was primarily due to stronger home care revenue. The increase in
gross profit percentage in Q1 FY 2022 was primarily due to
favorable revenue mix, partially offset by increased raw material
and shipping costs.
Selling, general and administrative (“SG&A”) expenses
increased to $6.8 million in Q1 FY 2022, from $5.0 million in Q1 FY
2021, primarily due to increased payroll and compensation-related
expenses, higher professional fees, and greater travel, meals and
entertainment expenses. Higher payroll and compensation-related
expenses were primarily due to a larger average number of employees
in sales and marketing roles, increased commissions on higher home
care revenue, merit-based increases and higher health insurance
costs. Higher professional fees were primarily due to increased
costs related to shareholder activism, which concluded with a
cooperation agreement which became effective in September 2021.
Higher travel, meals and entertainment expenses were primarily due
to an increase in travel by sales representatives compared to the
heavily COVID-19 driven travel restrictions in the prior-year
period, and a national sales meeting that was held in the current
fiscal quarter but was not held in the prior-year period due to
COVID-19. In Q1 FY 2022, the Company also continued to invest in
its systems infrastructure, including an ERP system, enhancements
to the existing customer relationship management system and further
optimization of the revenue cycle management system that was
implemented in June 2021. As a percentage of revenue, SG&A
expenses were 67.9% compared to 62.5% in Q1 FY 2021.
Research and development (“R&D”) expenses in Q1 FY 2022
totaled $376,000, compared to $481,000 in Q1 FY 2021. The Company
continued to invest in its next generation device during Q1 FY 2022
and expects to launch the product in the first half of its fiscal
year ending June 30, 2023 following 510(k) clearance by the U.S.
Food and Drug Administration. As a percentage of revenue, R&D
expenses were 3.8% compared to 6.0% in Q1 FY 2021.
Operating income in Q1 FY 2022 totaled $538,000, compared to
$663,000 in Q1 FY 2021. The year-over-year decline in operating
income for Q1 FY 2022 was primarily driven by increased strategic
investments in SG&A and costs related to shareholder activism,
partially offset by stronger revenue performance.
Net interest income was approximately $9,000 in both Q1 FY 2022
and Q1 FY 2021.
Income tax expense totaled $108,000 in Q1 FY 2022, compared to
$137,000 in the same period of the prior year. During Q1 FY 2022, a
discrete tax benefit of $20,000 was recognized as a result of the
exercise of stock options.
Net income in Q1 FY 2022 was $439,000, or $0.05 per diluted
share, compared to $535,000, or $0.06 per diluted share, in Q1 FY
2021.
Financial Condition
The Company’s balance sheet at September 30, 2021 included cash
of $11.0 million, accounts receivable of $18.4 million, no debt,
working capital of $27.6 million and shareholders’ equity of $33.0
million.
Conference Call
Management will host a conference call on Tuesday, November 9,
2021 at 4:00 pm CT (5:00 pm ET) to discuss Q1 FY 2022 financial
results and other matters.
Interested parties may participate in the call by dialing:
- (888) 428-7458 (Domestic)
- (862) 298-0702 (International)
The conference call also will be accessible via the following
link:
https://78449.themediaframe.com/dataconf/productusers/elctr/mediaframe/47078/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, 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 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 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
September 30,
2021
June 30,
2021
(Unaudited)
Assets
Current Assets
Cash
$
10,980,000
$
11,889,000
Accounts receivable (net of
allowances for doubtful accounts of $45,000)
18,363,000
17,032,000
Contract assets
319,000
393,000
Inventories
2,023,000
2,114,000
Prepaid expenses and other
current assets
531,000
276,000
Income tax receivable
210,000
-
Total current assets
32,426,000
31,704,000
Property and equipment, net
3,717,000
3,605,000
Finite-life intangible assets,
net
621,000
663,000
Other assets
119,000
88,000
Deferred income taxes
1,017,000
1,049,000
Total assets
$
37,900,000
$
37,109,000
Liabilities and Shareholders’
Equity
Current Liabilities
Current maturities of other
long-term liabilities
$
69,000
$
33,000
Accounts payable
1,261,000
685,000
Accrued compensation
2,019,000
2,474,000
Income tax payable
-
288,000
Warranty reserve
930,000
940,000
Other accrued liabilities
530,000
219,000
Total current
liabilities
4,809,000
4,639,000
Other long-term liabilities
50,000
54,000
Total liabilities
4,859,000
4,693,000
Commitments and Contingencies
Shareholders’ Equity
Common stock, $0.01 par value per
share, 13,000,000 shares authorized;
8,569,639 and 8,533,209 shares
issued and outstanding, as of September 30, 2021 and June 30, 2021,
respectively
86,000
85,000
Additional paid-in capital
17,594,000
17,409,000
Retained earnings
15,361,000
14,922,000
Total shareholders’
equity
33,041,000
32,416,000
Total liabilities and
shareholders’ equity
$
37,900,000
$
37,109,000
Electromed, Inc.
Condensed Statements of
Operations (Unaudited)
Three Months Ended
September 30,
2021
2020
Net revenues
$
10,001,000
$
8,004,000
Cost of revenues
2,300,000
1,856,000
Gross profit
7,701,000
6,148,000
Operating expenses
Selling, general and
administrative
6,787,000
5,004,000
Research and development
376,000
481,000
Total operating
expenses
7,163,000
5,485,000
Operating income
538,000
663,000
Interest income, net
9,000
9,000
Net income before income
taxes
547,000
672,000
Income tax expense
108,000
137,000
Net income
$
439,000
$
535,000
Income per share:
Basic
$
0.05
$
0.06
Diluted
$
0.05
$
0.06
Weighted-average common shares
outstanding:
Basic
8,559,219
8,550,524
Diluted
8,884,493
8,964,937
Electromed, Inc.
Condensed Statements of Cash
Flows (Unaudited)
Three
Months Ended September 30,
2021
2020
Cash Flows From Operating
Activities
Net income
$
439,000
$
535,000
Adjustments to reconcile net
income to net cash provided by (used in) operating activities:
Depreciation
106,000
132,000
Amortization of finite-life
intangible assets
52,000
32,000
Share-based compensation
expense
249,000
191,000
Deferred income taxes
32,000
55,000
Changes in operating assets and
liabilities:
Accounts receivable
(1,331,000
)
(684,000
)
Contract assets
74,000
103,000
Inventories
91,000
27,000
Prepaid expenses and other assets
…
(186,000
)
(114,000
)
Income tax receivable
(498,000
)
44,000
Accounts payable and accrued
liabilities …
396,000
501,000
Net cash (used in) provided by
operating activities
(576,000
)
822,000
Cash Flows From Investing
Activities
Investment in property and
equipment
(225,000
)
(16,000
)
Investment in finite-life
intangible assets
(45,000
)
(66,000
)
Net cash used in investing
activities
(270,000
)
(82,000
)
Cash Flows From Financing
Activities
Issuance of common stock upon
exercise of options
1,000
-
Taxes paid on net share
settlement of stock option exercises
(64,000
)
(76,000
)
Net cash used in financing
activities
(63,000
)
(76,000
)
Net (decrease) increase in
cash
(909,000
)
664,000
Cash
Beginning of period
11,889,000
10,479,000
End of period
$
10,980,000
$
11,143,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211109006403/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
Electromed (AMEX:ELMD)
Historical Stock Chart
From Sep 2024 to Oct 2024
Electromed (AMEX:ELMD)
Historical Stock Chart
From Oct 2023 to Oct 2024