Full Press Release Details
Electromed, Inc. Announces Fiscal 2017
Third Quarter Financial Results
-- 13.5% year-over-year increase in home care
New Prague, Minnesota - May 15, 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 March 31, 2017 ("Q3 FY 2017").
Kathleen Skarvan, President and Chief
Executive Officer of Electromed, commented, "In our fiscal third quarter we reported strengthening revenue and net income
growth, driven by a 13.5% year-over-year increase in home care sales, reflecting solid performance by our sales and reimbursement
teams. We are pleased with our team's progress as well as the ongoing execution of our growth strategies. We expanded our
sales staff, increased payer coverage, won market share, boosted awareness of clinical evidence of bronchiectasis patient outcomes
with our solution and advanced product innovations. We are particularly encouraged by the overwhelmingly positive feedback we received
from clinicians participating in our SmartVest Connect wireless connectivity beta testing program this quarter. Finally, we
were thrilled to announce our agreement with Monaghan Medical Corporation in February to distribute and sell the Aerobika
Oscillating Positive Expiratory Pressure (OPEP) Device in the U.S. homecare market. With Aerobika OPEP and SmartVest devices, Electromed
now offers a continuum of airway clearance therapies for patients to use in their home."
Ms. Skarvan continued, "We look
forward to the commercial launch of our SmartVest Connect wireless connectivity solution this summer and believe its ease
of use will appeal to both clinicians and patients, fostering improved therapy adherence and better patient outcomes. In addition
to launching this important connectivity and reporting feature, we intend to continue to invest in the growth of our business by
expanding our sales force in the coming quarters, while focusing on sales productivity improvements among current staff. We remain
excited about the significant, underpenetrated bronchiectasis market opportunity and dedicated to improving our patients'
quality of life with SmartVest Airway Clearance while reducing overall healthcare utilization."
Net revenue increased 10.5% to $6.7 million
in Q3 FY 2017 from $6.0 million in Q3 FY 2016, driven by higher home care revenue. Home care revenue rose 13.5% to $6.1 million
in Q3 FY 2017 from $5.4 million in Q3 FY 2016, primarily due to an increase in approvals and referrals, driven by a higher number
of field sales employees.
Gross profit increased 14.8% to $5.3 million,
or 79.7% of net revenue, in Q3 FY 2017 from $4.6 million, or 76.7% of net revenue, in Q3 FY 2016. The increase in gross profit
resulted from increases in domestic home care revenues and a decrease in our manufacturing costs of the SmartVest SQL as compared
to the prior fiscal year.
Operating expenses, which include selling,
general and administrative ("SG&A") as well as research and development ("R&D") expenses, totaled
$4.3 million, or 64.1% of revenue, in Q3 FY 2017 compared with $3.9 million, or 64.5% of revenue, in the same period of the prior
year. SG&A expenses increased 10.2% to $4.2 million in Q3 FY 2017 from $3.8 million in Q3 FY 2016, primarily due to higher
payroll and compensation-related expenses and increased travel, meals and entertainment expenses. R&D expenses totaled $81,000
in Q3 FY 2017 compared to $84,000 in Q3 FY 2016.
Operating income increased 40.9% to $1.0
million in Q3 FY 2017 from $736,000 in Q3 FY 2016, primarily due to increased gross profit, which was partially offset by higher
payroll and compensation expenses in sales and administrative positions.
Net income before income tax expense rose
42.3% to $1.0 million in Q3 FY 2017 from $723,000 in Q3 FY 2016.
Net income increased 38.9% to $648,000,
or $0.08 per basic and diluted share, in Q3 FY 2017, from $467,000, or $0.06 per basic and diluted share, in Q3 FY 2016. In Q3
FY 2017, income tax expense totaled $380,000, compared to $256,000 in the same period of the prior year.
Year-to-Date FY 2017 Summary
For the nine months ended March 31, 2017,
revenue increased 7.4% to $18.6 million from $17.3 million in the same period of fiscal 2017. Gross margins were 78.4%, compared
to 77.4% in the same period of the prior year, while net income was $1.3 million, or $0.15 per diluted share, compared to $1.9
million, or $0.23 per diluted share in the same period of the prior year.
Electromed's balance sheet at March
31, 2017 included cash of $5.4 million, long-term debt including current maturities of $1.2 million, working capital of $14.6 million,
and shareholders' equity of $18.0 million.
Management will host a conference call on May
16, 2017 at 8:00 am CT (9:00 am ET) to discuss Q3 FY 2017 financial results and other matters.
Interested parties may participate in the call
The conference call will also be accessible
via the following link:
For 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/.
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 Electromed can be found at www.smartvest.com.
Cautionary Statements
Certain 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 |
Financial Tables Follow:
| March 31, 2017 | June 30, 2016 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 5,401,943 | $ | 5,123,355 | ||||
| Accounts receivable (net of allowances for doubtful accounts of $45,000) | 8,933,426 | 7,611,437 | ||||||
| Inventories | 2,587,635 | 2,480,443 | ||||||
| Prepaid expenses and other current assets | 491,968 | 419,616 | ||||||
| Income tax receivable | - | 192,685 | ||||||
| Total current assets | 17,414,972 | 15,827,536 | ||||||
| Property and equipment, net | 3,288,480 | 3,375,189 | ||||||
| Finite-life intangible assets, net | 762,853 | 904,033 | ||||||
| Other assets | 101,441 | 127,759 | ||||||
| Deferred income taxes | 330,000 | 343,000 | ||||||
| Total assets | $ | 21,897,746 | $ | 20,577,517 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Current maturities of long-term debt | $ | 50,203 | $ | 46,309 | ||||
| Accounts payable | 593,806 | 589,225 | ||||||
| Accrued compensation | 917,742 | 1,489,798 | ||||||
| Income taxes payable | 17,024 | - | ||||||
| Warranty reserve | 670,000 | 660,000 | ||||||
| Other accrued liabilities | 524,564 | 287,194 | ||||||
| Total current liabilities | 2,773,339 | 3,072,526 | ||||||
| Long-term debt, less current maturities and net of debt issuance costs | 1,108,921 | 1,146,395 | ||||||
| Total liabilities | 3,882,260 | 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 March 31, 2017 and June 30, 2016, respectively | 82,302 | 81,871 | ||||||
| Additional paid-in capital | 13,923,033 | 13,549,551 | ||||||
| Retained earnings | 4,010,151 | 2,727,174 | ||||||
| Total shareholders' equity | 18,015,486 | 16,358,596 | ||||||
| Total liabilities and shareholders' equity | $ | 21,897,746 | $ | 20,577,517 |
Statements of Operations (Unaudited)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net revenues | $ | 6,669,638 | $ | 6,035,700 | $ | 18,587,243 | $ | 17,298,995 | ||||||||
| Cost of revenues | 1,357,093 | 1,408,716 | 4,020,615 | 3,913,984 | ||||||||||||
| Gross profit | 5,312,545 | 4,626,984 | 14,566,628 | 13,385,011 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | 4,195,156 | 3,806,885 | 11,979,261 | 10,631,539 | ||||||||||||
| Research and development | 80,613 | 84,410 | 532,255 | 183,043 | ||||||||||||
| Total operating expenses | 4,275,769 | 3,891,295 | 12,511,516 | 10,814,582 | ||||||||||||
| Operating income | 1,036,776 | 735,689 | 2,055,112 | 2,570,429 | ||||||||||||
| Interest expense, net of interest income of $4,956, $4,978, $11,925 and $8,525 respectively | 8,831 | 13,064 | 41,135 | 51,150 | ||||||||||||
| Net income before income taxes | 1,027,945 | 722,625 | 2,013,977 | 2,519,279 | ||||||||||||
| Income tax expense | (380,000 | ) | (256,000 | ) | (731,000 | ) | (644,000 | ) | ||||||||
| Net income | $ | 647,945 | $ | 466,625 | $ | 1,282,977 | $ | 1,875,279 | ||||||||
| Income per share: | ||||||||||||||||
| Basic | $ | 0.08 | $ | 0.06 | $ | 0.16 | $ | 0.23 | ||||||||
| Diluted | $ | 0.08 | $ | 0.06 | $ | 0.15 | $ | 0.23 | ||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||
| Basic | 8,167,112 | 8,133,857 | 8,167,112 | 8,133,857 | ||||||||||||
| Diluted | 8,452,942 | 8,287,237 | 8,449,201 | 8,215,472 |
Condensed Statements of Cash Flows (Unaudited)
| Nine Months Ended March 31, | ||||||||
| 2017 | 2016 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | 1,282,977 | $ | 1,875,279 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 473,813 | 458,850 | ||||||
| Amortization of finite-life intangible assets | 89,813 | 91,815 | ||||||
| Amortization of debt issuance costs | 10,871 | 13,672 | ||||||
| Share-based compensation expense | 373,913 | 153,465 | ||||||
| Deferred taxes | 13,000 | (337,000 | ) | |||||
| Loss on disposal of property and equipment | 520 | 38,667 | ||||||
| Loss on disposal of intangible assets | 111,498 | 7,848 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,321,989 | ) | (791,915 | ) | ||||
| Inventories | (65,630 | ) | (220,417 | ) | ||||
| Prepaid expenses and other assets | (49,140 | ) | (22,711 | ) | ||||
| Income tax receivable | 192,685 | (180,785 | ) | |||||
| Income tax payable | 17,024 | (122,657 | ) | |||||
| Accounts payable and accrued liabilities | (323,453 | ) | 706,236 | |||||
| Net cash provided by operating activities | 805,902 | 1,670,347 | ||||||
| Cash Flows From Investing Activities | ||||||||
| Expenditures for property and equipment | (425,838 | ) | (256,806 | ) | ||||
| Expenditures for finite-life intangible assets | (60,131 | ) | (27,752 | ) | ||||
| Net cash used in investing activities | (485,969 | ) | (284,558 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Principal payments on long-term debt including capital lease obligations | (36,473 | ) | (36,397 | ) | ||||
| Payment of deferred financing fees | (4,872 | ) | (13,520 | ) | ||||
| Net cash used in financing activities | (41,345 | ) | (49,917 | ) | ||||
| Net increase in cash | 278,588 | 1,335,872 | ||||||
| Cash | ||||||||
| Beginning of period | 5,123,355 | 3,598,240 | ||||||
| End of period | $ | 5,401,943 | $ | 4,934,112 |