15.4% revenue growth while continuing to
execute key strategic initiatives
Company also announces Chief Financial Officer
transition
Electromed, Inc. (“Electromed” or the “Company”) (NYSE American:
ELMD), a leader in innovative airway clearance technologies, today
announced financial results for its fiscal 2022 third quarter ended
March 31, 2022. Management will host a conference call at 5:00 p.m.
Eastern Time today to discuss the results.
Fiscal Third Quarter 2022 Highlights
- Recorded net revenues of $10.1 million in the quarter, a
year-over-year increase of 15.4% driven by home care revenues of
$9.0 million.
- Gross Profit was 76.4% of net revenues, compared with 76.3% of
net revenues in the same period a year ago, as rising raw material
and shipping costs were offset by higher Medicare allowable
pricing, increased operational efficiencies and operating leverage
on higher revenue
- Net Income was $0.6 million, or $0.07 per diluted share,
compared with $0.2 million, or $0.03 per diluted share, in the same
period a year ago.
- $9.8 million cash on hand at the end of the quarter,
benefitting from $0.2 million in operating cash flow during the
quarter. Operating cash flow was negatively impacted compared to
the prior year quarter due to increased advance purchases of raw
materials to ensure key component supply and mitigate future cost
increases.
- Repurchased 24,551 shares of common stock at a total cost of
$299,000.
- Appointed Christopher Holland as Chief Commercial Officer, a
strategic hire who will help drive Electromed’s key strategic
growth initiatives.
“I am pleased to report that in the third quarter of fiscal
2022, Electromed generated 15.4% year-over-year revenue growth
while managing through a challenging operating environment,” said
Kathleen Skarvan, Electromed’s President and Chief Executive
Officer. “We continued to achieve key milestones in the execution
of our strategic initiatives including the expansion of our sales
force, maintaining our next generation development schedule
consistent with an expected launch during the first half of fiscal
2023, building the system infrastructure necessary to support
future growth, and hiring a Chief Commercial Officer to lead the
execution of our growth initiatives. We ended the quarter with
positive momentum, our direct sales force at near full staffing and
recording the highest home care monthly referrals in company
history; we are excited to continue that momentum into the fourth
quarter of fiscal 2022.”
Chief Financial Officer Transition
The Company also announced that the Chief Financial Officer,
Michael MacCourt, will resign effective July 1, 2022. Mr. MacCourt
plans to pursue a new opportunity outside of corporate finance.
Michelle C. Wirtz, the Company’s Corporate Controller, will be
appointed to the position of Interim Chief Financial Officer on
June 1, 2022 prior to Mr. MacCourt exiting the company. Mr.
MacCourt is expected to remain an employee through July 1, 2022 to
ensure a smooth transition. The Company plans to explore options
for a permanent appointment.
“I would like to thank Mike for the valuable contributions he
has made since joining Electromed in May of 2020,” said Ms.
Skarvan. “His leadership and expertise have strengthened our
corporate finance function during his tenure and he has been a
trusted advisor to me. I wish him well in his future
endeavors.”
Ms. Skarvan added, “I am delighted to announce Michelle’s
appointment. She possesses a strong corporate finance, accounting
and external reporting background, healthcare experience, and is
intimately familiar with Electromed’s business model,” said Ms.
Skarvan. “We can’t think of a better candidate to assume the role
as we explore our options for a permanent appointment.”
Ms. Wirtz currently serves as Corporate Controller at Electromed
and brings over 15 years of experience in accounting, financial
analysis, SEC reporting, and M & A transaction support. Prior
to joining Electromed, Ms. Wirtz served as Corporate Controller for
Icario, Inc., a national health-tech company providing member
engagement solutions to U.S. health insurers, from June 2018 to
December 2021. Prior to joining Icario, Ms. Wirtz served as a
Senior Consultant, Finance and Accounting, for Salo, Inc., and held
positions of increasing responsibility at global CPA firms Ernst
& Young and RMS McGladrey. Ms. Wirtz holds an active CPA
license in the state of Minnesota.
Fiscal Third Quarter 2022 Results
Net revenues in the third quarter of the Company’s fiscal year
ending June 30, 2022 (“fiscal 2022”) increased 15.4% year-over-year
to $10.1 million, from $8.8 million in the third quarter of the
Company’s fiscal year ended June 30, 2021 (“fiscal 2021”), driven
largely by 10.7% growth in the home care business which benefitted
from a growth in referrals due to increased direct sales
representative productivity. Field sales employees totaled 51 at
the end of the third quarter of fiscal 2022, 42 of which were
direct sales representatives, compared to 48 field sales employees
and 39 direct sales representatives at the end of the third quarter
of fiscal 2021. Sales force productivity remained strong during the
quarter, with annualized home care revenue per direct sales
representative at $943,000, above the Company’s targeted range of
$800,000 to $900,000.
Institutional revenue declined 11.5% to $0.4 million in the
third quarter of fiscal 2022, primarily due to lower capital sales
compared to the same period in fiscal 2021. Distributor revenue
increased 395.2% to $0.5 million in the third quarter of fiscal
2022 from $0.1 million in the same period a year ago, primarily due
to increased demand from one of our key distribution partners.
International revenue increased 157.9% to $0.2 million in the third
quarter of fiscal 2022.
Gross profit in the third quarter of fiscal 2022 increased to
$7.7 million, or 76.4% of net revenues, from $6.7 million, or 76.3%
of net revenues, in the third quarter of fiscal 2021, as rising raw
material and shipping costs were offset by higher Medicare
allowable pricing, increased operational efficiencies and operating
leverage on higher revenue.
Operating income totaled $0.9 million in the third quarter of
fiscal 2022, compared to $0.2 million in the third quarter of
fiscal 2021. The higher operating income was driven by 15.4%
revenue growth compared to prior year, partially offset by
increased strategic investment in sales, general and administrative
costs.
Net income for the third quarter of fiscal 2022 was $0.6
million, or $0.07 per diluted share, compared to $0.2 million, or
$0.03 per diluted share, in the third quarter of fiscal 2021.
As of March 31, 2022, Electromed had $9.8 million in cash, $19.6
million in accounts receivable, working capital of $28.0 million
and total shareholders’ equity of $34.0 million
Webcast and Conference Call Information
Electromed will host a conference call at 5:00 p.m. Eastern Time
today, May 10, 2022. Interested parties may participate in the call
by dialing (877) 407-0789 (Domestic) or (201) 689-8562
(International), and using pin number 13729193.
The call will be webcast live and will be available for replay
in the Investor Relations section of Electromed’s web site at
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,” “future,” “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; the risks associated with
cyberattacks, data breaches, computer viruses and other similar
security threats, 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
March 31, 2021 June 30, 2021
(Unaudited) Assets Current Assets Cash and cash
equivalents
$
9,844,000
$
11,889,000
Accounts receivable (net of allowances for doubtful accounts of
$45,000)
19,614,000
17,032,000
Contract assets
295,000
393,000
Inventories
2,089,000
2,114,000
Prepaid expenses and other current assets
991,000
276,000
Income tax receivable
155,000
-
Total current assets
32,988,000
31,704,000
Property and equipment, net
4,309,000
3,605,000
Finite-life intangible assets, net
611,000
663,000
Other assets
77,000
88,000
Deferred income taxes
1,034,000
1,049,000
Total assets
$
39,019,000
$
37,109,000
Liabilities and Shareholders' Equity Current
Liabilities Accounts payable
1,163,000
685,000
Accrued compensation
2,301,000
2,474,000
Income tax payable
-
288,000
Warranty reserve
938,000
940,000
Other accrued liabilities
564,000
252,000
Total current liabilities
4,966,000
4,639,000
Other long-term liabilities
43,000
54,000
Total liabilities
5,009,000
4,693,000
Commitments and Contingencies Shareholders' Equity
Common stock, $0.01 par value per share, 13,000,000 shares
authorized; 8,508,788 and 8,533,209 shares issued and outstanding,
respectively
85,000
85,000
Additional paid-in capital
18,042,000
17,409,000
Retained earnings
15,883,000
14,922,000
Total shareholders' equity
34,010,000
32,416,000
Total liabilities and shareholders' equity
$
39,019,000
$
37,109,000
Electromed, Inc. Condensed
Statements of Operations (Unaudited)
Three Months Ended Nine Months Ended March
31, March 31,
2022
2021
2022
2021
Net revenues
$
10,141,000
$
8,787,000
$
30,390,000
$
26,287,000
Cost of revenues
2,398,000
2,086,000
7,066,000
5,913,000
Gross profit
7,743,000
6,701,000
23,324,000
20,374,000
Operating expenses Selling, general and administrative
6,544,000
6,051,000
19,806,000
16,490,000
Research and development
336,000
407,000
1,041,000
1,396,000
Total operating expenses
6,880,000
6,458,000
20,847,000
17,886,000
Operating income
863,000
243,000
2,477,000
2,488,000
Interest income, net
6,000
10,000
21,000
29,000
Net income before income taxes
869,000
253,000
2,498,000
2,517,000
Income tax expense
224,000
29,000
576,000
555,000
Net income
$
645,000
$
224,000
$
1,922,000
$
1,962,000
Income per share: Basic
$
0.08
$
0.03
$
0.23
$
0.23
Diluted
$
0.07
$
0.03
$
0.22
$
0.22
Weighted-average common shares outstanding: Basic
8,454,504
8,576,523
8,485,856
8,565,839
Diluted
8,744,535
8,907,045
8,762,963
8,921,494
Electromed, Inc. Condensed
Statements of Cash Flows (Unaudited)
Nine months Ended March 31,
2022
2021
Cash Flows From Operating Activities Net income
$
1,922,000
$
1,962,000
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation
368,000
359,000
Amortization of finite-life intangible assets
105,000
99,000
Share-based compensation expense
703,000
756,000
Deferred income taxes
15,000
102,000
Changes in operating assets and liabilities: Accounts receivable
(2,582,000
)
(3,296,000
)
Contract assets
98,000
345,000
Inventories
9,000
839,000
Prepaid expenses and other current assets
(519,000
)
(69,000
)
Income tax receivable
(443,000
)
8,000
Accounts payable and accrued liabilities
550,000
350,000
Accrued compensation
(173,000
)
869,000
Net cash provided by operating activities
53,000
2,324,000
Cash Flows From Investing Activities Investment in property
and equipment
(980,000
)
(105,000
)
Investment in finite-life intangible assets
(86,000
)
(103,000
)
Net cash used in investing activities
(1,066,000
)
(208,000
)
Cash Flows From Financing Activities Issuance of common
stock upon exercise of options
-
46,000
Taxes paid on stock options exercised on a net basis
(70,000
)
(141,000
)
Repurchase of common stock
(962,000
)
-
Net cash used in financing activities
(1,032,000
)
(95,000
)
Net (decrease) increase in cash
(2,045,000
)
2,021,000
Cash And Cash Equivalents Beginning of period
11,889,000
10,479,000
End of period
$
9,844,000
$
12,500,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220510005183/en/
Mike MacCourt, Chief Financial Officer (952) 758-9299
investorrelations@electromed.com Mike Cavanaugh, Investor Relations
ICR Westwicke (617) 877-9641 mike.cavanaugh@westwicke.com
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