Full Press Release Details
Inc. Announces Fiscal 2017 Fourth Quarter Financial Results
29.5% year-over-year increase in home care revenue --
Prague, Minnesota - September 5, 2017 - Electromed, Inc. ("Electromed" or the "Company")
(NYSE MKT: ELMD), a leader in innovative airway clearance technologies, today announced financial results for the three months
ended June 30, 2017 ("Q4 FY 2017").
Skarvan, President and Chief Executive Officer of Electromed, commented, "We capped off fiscal 2017 with strong fourth quarter
financial results, including robust top- and bottom-line growth driven by a 29.5% year-over-year increase in home care revenue.
Our strengthening home care revenue directly reflects the progress we are making in our organic growth strategy. This quarter,
we continued to invest in our sales and reimbursement teams, expanded our covered lives, increased sales team productivity with
a focus on adult pulmonology, promulgated evidence-based studies that differentiate SmartVest , and advanced innovation
in airway clearance therapy. We are particularly pleased with the fourth quarter launch of SmartVest Connect , our wireless
connectivity and patient monitoring solution, which users have lauded for its ease of use and intuitive design. We have rolled
out SmartVest Connect to patients in the pediatric and cystic fibrosis categories and plan to make it available to patients at
select adult pulmonology clinics later in Fiscal 2018."
Skarvan continued, "Reflecting our increasingly optimistic view of the significant, underpenetrated bronchiectasis market
opportunity in front of us, we intend to step up our level of investment in the business in fiscal 2018. A higher level of investment
should contribute to increased SG&A expense beginning in the first quarter of fiscal 2018 and drive enhanced revenue growth
as we proceed through the back half of the year. We will be expanding our sales force, building on our preeminent reimbursement
platform and customer care group, investing in innovative device features and services, and launching additional marketing initiatives
to increase physician and patient awareness to drive a higher number of quality referrals. While our management team and Board
have agreed to emphasize revenue growth activities in the near term, we remain committed to profitability. We believe this strategy
will enhance shareholder value as we strive to improve quality of life for a greater number of patients with compromised pulmonary
function and reduce overall healthcare utilization through SmartVest airway clearance therapy."
revenue increased 27.8% to $7.3 million in Q4 FY 2017 from $5.7 million in Q4 FY 2016, driven by higher home care revenue. Home
care revenue rose 29.5% to $6.7 million in Q4 FY 2017 from $5.2 million in Q4 FY 2016. This increase was primarily due to an increase
in approvals and referrals, driven by a higher number of field sales employees and a settlement agreement with the Centers for
Medicare and Medicaid Services ("CMS"). The settlement related to approximately 700 Medicare fee-for-service claims
submitted between calendar years 2012 through 2015, resulting in approximately $703,000 of net recognized revenue during the quarter.
profit increased 33.6% to $6.0 million, or 82.5% of net revenue, in Q4 FY 2017 from $4.5 million, or 78.9% of net revenue, in
Q4 FY 2016. The increase in gross profit resulted from an increase in home care revenue, the settlement with CMS and a decrease
in manufacturing cost of the SmartVest SQL as compared to Q4 FY 2016.
expenses, which include selling, general and administrative ("SG&A") as well as research and development ("R&D")
expenses, totaled $4.5 million, or 61.7% of revenue, in Q4 FY 2017 compared with $4.0 million, or 69.4% of revenue, in the same
period of the prior year. SG&A expenses increased 17.8% to $4.4 million in Q4 FY 2017 from $3.8 million in Q4 FY 2016, primarily
due to higher payroll and compensation-related expenses, increased recruiting fees driven by expansion of our sales employees
and increased travel, meals and entertainment expenses. R&D expenses totaled $64,000 in Q4 FY 2017 compared to $197,000 in
income increased 181.0% to $1.5 million in Q4 FY 2017 from $539,000 in Q4 FY 2016, primarily due to increased gross profit driven
by higher revenue, which was partially offset by higher payroll and compensation expenses in sales and administrative positions.
income before income tax expense rose 187.7% to $1.5 million in Q4 FY 2017 from $523,000 in Q4 FY 2016.
income increased 180.7% to $946,000, or $0.11 per diluted share, in Q4 FY 2017, from $337,000, or $0.04 per diluted share, in
Q4 FY 2016. In Q4 FY 2017, income tax expense totaled $559,000, compared to $186,000 in the same period of the
Year FY 2017 Summary
the twelve months ended June 30, 2017, revenue grew 12.5% to $25.9 million from $23.0 million in fiscal 2016, driven by a 14.1%
increase in home care revenue. Gross margins were 79.5%, compared to 77.7% in the prior fiscal year, while net income was $2.2
million, or $0.26 per diluted share, compared to $2.2 million, or $0.27 per diluted share in fiscal 2016.
balance sheet at June 30, 2017 included cash of $5.6 million, long-term debt including current maturities of $1.1 million, working
capital of $15.6 million, and shareholders' equity of $19.1 million.
will host a conference call on September 6, 2017 at 8:00 am CT (9:00 am ET) to discuss Q4 FY 2017 financial results and other
parties may participate in the call by dialing:
conference call will also be accessible via the following link:
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://www.smartvest.com/electromed/investor-relations/.
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.
statements in this release constitute forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act
of 1995. Forward-looking statements reflect current views with respect to future events and financial performance and include
any statement that does not directly relate to a current or historical fact. Forward-looking statements can generally be identified
by the words "anticipate," "believe," "estimate," "expect," "will"
and similar words. Forward-looking statements in this release include estimated revenue trends, changes in sales opportunities
and our sales force, product and service innovations, referral quality and processing, financial performance, profitability and
market trends. Forward-looking statements cannot be guaranteed and actual results may vary materially due to the uncertainties
and risks, known and unknown, associated with such statements. Examples of risks and uncertainties for the Company include, but
are not limited to, the impact of emerging and existing competitors, the effect of new legislation on the Company's industry
and business, the effectiveness of the Company's sales and marketing and cost control initiatives, changes to reimbursement
programs, as well as other factors described from time to time in the Company's 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.
| Contacts: | ||
| Electromed, Inc. | The Equity Group Inc. | |
| Jeremy Brock, Chief Financial Officer | Kalle Ahl, CFA | |
| (952) 758-9299 | (212) 836-9614 | |
| investorrelations@electromed.com | kahl@equityny.com | |
| Devin Sullivan | ||
| (212) 836-9608 | ||
| dsullivan@equityny.com |
Condensed Balance Sheets
| June 30, 2017 | June 30, 2016 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 5,573,709 | $ | 5,123,355 | ||||
| Accounts receivable (net of allowances for doubtful accounts of $45,000) | 9,949,759 | 7,611,437 | ||||||
| Inventories | 2,559,485 | 2,480,443 | ||||||
| Prepaid expenses and other current assets | 393,319 | 419,616 | ||||||
| Income tax receivable | - | 192,685 | ||||||
| Total current assets | 18,476,272 | 15,827,536 | ||||||
| Property and equipment, net | 3,303,233 | 3,375,189 | ||||||
| Finite-life intangible assets, net | 721,276 | 904,033 | ||||||
| Other assets | 99,868 | 127,759 | ||||||
| Deferred income taxes | 460,000 | 343,000 | ||||||
| Total assets | $ | 23,060,649 | $ | 20,577,517 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Current maturities of long-term debt | $ | 50,703 | $ | 46,309 | ||||
| Accounts payable | 663,376 | 589,225 | ||||||
| Accrued compensation | 946,623 | 1,489,798 | ||||||
| Income taxes payable | 156,524 | - | ||||||
| Warranty reserve | 640,000 | 660,000 | ||||||
| Other accrued liabilities | 438,748 | 287,194 | ||||||
| Total current liabilities | 2,895,974 | 3,072,526 | ||||||
| Long-term debt, less current maturities and net of debt issuance costs | 1,097,125 | 1,146,395 | ||||||
| Total liabilities | 3,993,099 | 4,218,921 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity | ||||||||
| Common stock, $0.01 par value; authorized: 13,000,000 shares; 8,230,167 and 8,187,112 issued and outstanding at June 30, 2017 and June 30, 2016, respectively | 82,302 | 81,871 | ||||||
| Additional paid-in capital | 14,028,602 | 13,549,551 | ||||||
| Retained earnings | 4,956,646 | 2,727,174 | ||||||
| Total shareholders' equity | 19,067,550 | 16,358,596 | ||||||
| Total liabilities and shareholders' equity | $ | 23,060,649 | $ | 20,577,517 |
Statements of Operations
| For the Three Months Ended June 30, | For the Twelve Months Ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net revenues | $ | 7,273,901 | $ | 5,693,004 | $ | 25,861,144 | $ | 22,991,999 | ||||||||
| Cost of revenues | 1,272,100 | 1,201,753 | 5,292,715 | 5,115,736 | ||||||||||||
| Gross profit | 6,001,801 | 4,491,251 | 20,568,429 | 17,876,263 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | 4,422,953 | 3,755,024 | 16,402,214 | 14,386,563 | ||||||||||||
| Research and development | 64,621 | 197,349 | 596,876 | 380,392 | ||||||||||||
| Total operating expenses | 4,487,574 | 3,952,373 | 16,999,090 | 14,766,955 | ||||||||||||
| Operating income | 1,514,227 | 538,878 | 3,569,339 | 3,109,308 | ||||||||||||
| Interest expense, net of interest income of $5,118, $4,133, $17,044 and $12,658 respectively | 8,733 | 15,656 | 49,867 | 66,806 | ||||||||||||
| Net income before income taxes | 1,505,494 | 523,222 | 3,519,472 | 3,042,502 | ||||||||||||
| Income tax expense | (559,000 | ) | (186,000 | ) | (1,290,000 | ) | (830,000 | ) | ||||||||
| Net income | $ | 946,494 | $ | 337,222 | $ | 2,229,472 | $ | 2,212,502 | ||||||||
| Income per share: | ||||||||||||||||
| Basic | $ | 0.12 | $ | 0.04 | $ | 0.27 | $ | 0.27 | ||||||||
| Diluted | $ | 0.11 | $ | 0.04 | $ | 0.26 | $ | 0.27 | ||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||
| Basic | 8,171,319 | 8,140,575 | 8,168,152 | 8,135,514 | ||||||||||||
| Diluted | 8,493,619 | 8,400,863 | 8,461,120 | 8,249,391 |
Statements of Cash Flows
| Twelve Months Ended June 30, | ||||||||
| 2017 | 2016 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | 2,229,472 | $ | 2,212,502 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 636,709 | 616,021 | ||||||
| Amortization of finite-life intangible assets | 118,418 | 122,681 | ||||||
| Amortization of debt issuance costs | 13,067 | 18,016 | ||||||
| Share-based compensation expense | 479,482 | 222,763 | ||||||
| Deferred taxes | (117,000 | ) | (343,000 | ) | ||||
| Loss on disposal of property and equipment | 3,302 | 40,456 | ||||||
| Loss on disposal of intangible assets | 132,724 | 17,706 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (2,338,322 | ) | (1,092,621 | ) | ||||
| Inventories | (28,334 | ) | (347,623 | ) | ||||
| Prepaid expenses and other assets | 49,864 | 18,917 | ||||||
| Income tax receivable | 192,685 | (192,685 | ) | |||||
| Income tax payable | 156,524 | (122,657 | ) | |||||
| Accounts payable and accrued liabilities | (337,470 | ) | 996,427 | |||||
| Net cash provided by operating activities | 1,191,121 | 2,166,903 | ||||||
| Cash Flows From Investing Activities | ||||||||
| Expenditures for property and equipment | (618,763 | ) | (534,944 | ) | ||||
| Expenditures for finite-life intangible assets | (68,385 | ) | (44,577 | ) | ||||
| Net cash used in investing activities | (687,148 | ) | (579,521 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Principal payments on long-term debt including capital lease obligations | (48,747 | ) | (48,747 | ) | ||||
| Payment of deferred financing fees | (4,872 | ) | (13,520 | ) | ||||
| Net cash used in financing activities | (53,619 | ) | (62,267 | ) | ||||
| Net increase in cash | 450,354 | 1,525,115 | ||||||
| Cash | ||||||||
| Beginning of period | 5,123,355 | 3,598,240 | ||||||
| End of period | $ | 5,573,709 | $ | 5,123,355 |