Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 7, 2023

ELECTROMED, INC.

(Exact Name of Registrant as Specified in Its Charter)

Minnesota

001-34839

41-1732920

(State or Other Jurisdiction of

Incorporation)

(Commission File Number)

(I.R.S. Employer Identification

Number)

500 Sixth Avenue NW

New Prague, MN 56071

(Address of Principal Executive Offices) (Zip Code)

(952) 758-9299

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $0.01 par value		ELMD		NYSE American LLC
(Title of each class)		(Trading Symbol)		(Name of each exchange on which registered)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02

Results of Operations and Financial Condition.

On November 7, 2023, Electromed, Inc., a Minnesota corporation (the "Company"), issued a press release announcing its financial results for the fiscal quarter ended September 30, 2023. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference into this Item 2.02.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits:

Exhibit Number		Description

99.1		Press Release dated November 7, 2023

104		Cover Page Interactive Data File (embedded in the cover page and formatted in inline XBRL)

The information contained in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ELECTROMED, INC.

Date: November 7, 2023	By: /s/ Bradley M. Nagel
	Name:	Bradley M. Nagel
	Title:	Chief Financial Officer

Exhibit 99.1

Electromed, Inc. Announces Fiscal 2024 First Quarter Financial Results

NEW PRAGUE, Minn.--(BUSINESS WIRE)-- 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, 2023 (“Q1 FY 2024”).

Q1 FY 2024 Financial Highlights

●

Net revenue increased 16% to $12.3 million in Q1 FY 2024, from $10.7 million in the first quarter of the prior fiscal year.

●

Operating income was $142,000, compared with $44,000 in the first quarter of the prior fiscal year.

●

Net income was $155,000 for the quarter, or $0.02 per diluted share, compared to $81,000, or $0.01 per diluted share in the first quarter of the prior fiscal year.

“The first quarter of our fiscal year ending June 30, 2024 was another strong quarter for Electromed, as our team performed at a high level in pursuit of our multiple strategic growth initiatives, including continued expansion of our sales team and ongoing launch of the new Clearway system,” said Jim Cunniff, President and Chief Executive Officer. “We generated strong revenue growth versus the prior year across all three revenue categories, homecare, hospital and international. The team seamlessly executed the reorganization of the reimbursement team for improved efficiency, more meaningful service metrics and service improvements for a frictionless clinical experience. We also launched an improved way of gathering, tracking and reporting patient quality of life feedback documentation to physicians. I am proud of the team for an impressive start to fiscal year 2024 and look forward to building on this momentum in the remainder of the fiscal year.”

Q1 FY 2024 Results

Net revenue for Q1 FY 2024 grew 16% over the first quarter of our fiscal year ended June 30, 2023 (“fiscal 2023”) to $12.3 million, from $10.7 million in the same period in fiscal 2023. The increase was primarily due to an increase in referrals, approvals and reimbursement rates.

Revenue in our direct homecare business increased year-over-year by 15.8% to $11.2 million, from $9.6 million in the same period in fiscal 2023.The increase in referrals was due to an increase in direct sales representatives. Field sales force employees totaled 59 at quarter end, 51 of which were direct sales representatives. The annualized homecare revenue per weighted average direct sales representative in Q1 was $876,000, within Electromed’s annual target range of $850,000 to $950,000.

Gross profit increased to $9,498,000, or 77.1% of net revenues for Q1 FY 2024, from $8,331,000 or 78.2% of net revenues, in the same period in fiscal 2023. The increase in gross profit dollars in fiscal 2024 was primarily due to increased revenue. Gross margin rate decreased year over year as a result of increased material and labor costs.

Selling, general and administrative (“SG&A”) expenses were $9,150,000 for Q1 FY 2024, representing an increase of $1,161,000 or 14.5%, compared to the same period in fiscal 2023. The increase in SG&A expense was primarily due to increased payroll and compensation expense related to the higher average number of sales, sales support, marketing, and reimbursement personnel to process higher patient referrals.

Operating income for the quarter was $142,000, compared to $44,000 for the same period in the prior fiscal year. The increase in operating income was driven primarily by increased revenue.

Net income for Q1 FY 2024 was $155,000, or $0.02 per diluted share, compared to $81,000, or $0.01 per diluted share, for the same period in the prior fiscal year.

As of September 30, 2023, Electromed had $7.0 million in cash, $23.5 million in accounts receivable and no debt, achieving a working capital of $30.4 million and an increase in total shareholders’ equity of $0.6 million to $38.2 million. The cash balance reflects a decrease of $0.4 million compared to a decrease in cash of $2.2 million in the same period in the prior fiscal year. The decrease primarily resulted from payment of annual incentive compensation which is not expected to occur in the remaining quarters.

Conference Call and Webcast Information

The conference call with members of Electromed management will be held at 5:00 p.m. Eastern Time on Tuesday, November 7, 2023.

Interested parties may participate in the call by dialing (844) 826-3033 (Domestic) or (412) 317-5185 (International).

The live conference call webcast will be accessible in the Investor Relations section of Electromed’s web site and directly via the following link: https://viavid.webcasts.com/starthere.jsp?ei=1638052&tp_key=fe01719b63

For those who cannot listen to the live broadcast, a replay will be available by dialing (844) 512-2921 (Domestic) or (412) 317-6671 (International) and referencing the replay pin number 10183240. Additionally, an online replay will be available in the Investor Relations section of Electromed’s web site at: Events & Presentations | SmartVest

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. It 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 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, 2023		June 30, 2023
	(Unaudited)		(Audited)
Assets
Current Assets
Cash and cash equivalents	$	7,024,000	$	7,372,000
Accounts receivable (net of allowances for doubtful accounts of $45,000)		23,455,000		24,130,000
Contract assets		544,000		487,000
Inventories		4,480,000		4,221,000
Prepaid expenses and other current assets		692,000		1,577,000
Total current assets		36,195,000		37,787,000
Property and equipment, net		5,534,000		5,672,000
Finite-life intangible assets, net		613,000		605,000
Other assets		143,000		161,000
Deferred income taxes		1,581,000		1,581,000
Total assets	$	44,066,000	$	45,806,000

Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable		1,057,000		1,372,000
Accrued compensation		1,844,000		3,018,000
Income tax payable		110,000		336,000
Warranty reserve		1,424,000		1,378,000
Other accrued liabilities		1,341,000		1,949,000
Total current liabilities		5,776,000		8,053,000
Other long-term liabilities		68,000		86,000
Total liabilities		5,844,000		8,139,000

Commitments and Contingencies

Shareholders’ Equity
Common stock, $0.01 par value per share, 13,000,000 shares authorized; 8,579,050 and 8,555,238 shares issued and outstanding, as of September 30, 2023 and June 30, 2023, respectively		86,000		86,000
Additional paid-in capital		19,188,000		18,788,000
Retained earnings		18,948,000		18,793,000
Total shareholders’ equity		38,222,000		37,667,000
Total liabilities and shareholders’ equity	$	44,066,000	$	45,806,000

Electromed, Inc.

Condensed Statements of Operations

	Three Months Ended September 30
	2023		2022
	(Unaudited)		(Unaudited)
Net revenues	$	12,324,000	$	10,658,000
Cost of revenues		2,826,000		2,327,000
Gross profit		9,498,000		8,331,000

Operating expenses
Selling, general and administrative		9,150,000		7,989,000
Research and development		206,000		298,000
Total operating expenses		9,356,000		8,287,000
Operating income		142,000		44,000
Interest income, net		77,000		4,000
Net income before income taxes		219,000		48,000

Income tax expense (benefit)		64,000		(33,000	)

Net income	$	155,000	$	81,000

Income per share:
Basic	$	0.02	$	0.01

Diluted	$	0.02	$	0.01

Weighted-average common shares outstanding:
Basic		8,537,388		8,445,893
Diluted		8,782,824		8,689,377

Electromed, Inc.

Condensed Statements of Cash Flows

	Three Months Ended September 30,
	2023			2022
	(Unaudited)			(Unaudited)
Cash Flows From Operating Activities
Net income	$	155,000		$	81,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation		202,000			134,000
Amortization of finite-life intangible assets		12,000			20,000
Share-based compensation expense		371,000			95,000
Deferred income taxes		-			6,000
Changes in operating assets and liabilities:
Accounts receivable		675,000			95,000
Contract assets		(57,000	)		(167,000	)
Inventories		(240,000	)		(500,000	)
Prepaid expenses and other current assets		901,000			(125,000	)
Income tax payable, net		(226,000	)		(175,000	)
Accounts payable and accrued liabilities		(863,000	)		(26,000	)
Accrued compensation		(1,174,000	)		(1,132,000	)
Net cash used in operating activities		(244,000	)		(1,694,000	)

Cash Flows From Investing Activities
Expenditures for property and equipment		(109,000	)		(241,000	)
Expenditures for finite-life intangible assets		(24,000	)		(15,000	)
Net cash used in investing activities		(133,000	)		(256,000	)

Cash Flows From Financing Activities
Issuance of common stock upon exercise of options		29,000			-
Taxes paid on net share settlement of stock option exercises		-			(60,000	)
Repurchase of common stock		-			(145,000	)
Net cash provided by (used in) financing activities		29,000			(205,000	)
Net decrease in cash		(348,000	)		(2,155,000	)

Cash And Cash Equivalents
Beginning of period		7,372,000			8,153,000
End of period	$	7,024,000		$	5,998,000

Brad Nagel, Chief Financial Officer
(952) 758-9299
investorrelations@electromed.com

Mike Cavanaugh, Investor Relations
ICR Westwicke
(617) 877-9641
mike.cavanaugh@westwicke.com

Source: Electromed, Inc.

Cover	Nov. 07, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 07, 2023
Entity File Number	001-34839
Entity Registrant Name	ELECTROMED, INC.
Entity Central Index Key	0001488917
Entity Tax Identification Number	41-1732920
Entity Incorporation, State or Country Code	MN
Entity Address, Address Line One	500 Sixth Avenue NW
Entity Address, City or Town	New Prague
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	56071
City Area Code	(952)
Local Phone Number	758-9299
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	ELMD
Security Exchange Name	NYSEAMER
Entity Emerging Growth Company	false
Entity Information, Former Legal or Registered Name	Not Applicable