Full Press Release Details
Inc. Announces Fiscal 2018 Fourth Quarter Financial Results
14.8% year-over-year increase in home care revenue --
Prague, Minnesota - September 25, 2018 - 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 June 30, 2018 ("Q4 FY 2018").
Skarvan, President and Chief Executive Officer of Electromed, commented, "In the fourth quarter of fiscal 2018, we delivered
strong top and bottom-line growth, driven by a 14.8% year-over-year increase in home care revenue. We benefitted from investments
made earlier in the year to expand our sales force, improve our reimbursement skills and processes, and advance physician awareness
and education surrounding the benefits of high frequency chest wall oscillation therapy ("HFCWO") with our SmartVest
device. As a result, this quarter we achieved a greater number of referrals, of significantly higher quality, translating into
exceptional growth in approvals."
Skarvan continued, "The incremental investments initiated in fiscal 2018 position Electromed for double-digit
revenue and earnings growth over the next few years. Looking ahead, we remain focused on improving sales force productivity, enhancing
our reimbursement processes, increasing HFCWO awareness and education among physicians and patients, promulgating evidence-based
studies that differentiate SmartVest, developing innovative device features, and expanding our covered lives.
month, we announced the first independent study suggesting that HFCWO therapy with SmartVest significantly reduces severe exacerbations
and hospitalizations, and may meaningfully slow the otherwise normal progression of non-cystic fibrosis bronchiectasis. A growing
body of evidence, including this study, reinforces our optimism for expanding the market for HFCWO and gaining share in the large,
underpenetrated bronchiectasis market. As always, our underlying mission is to improve quality-of-life and outcomes for a greater
number of patients with compromised pulmonary function, while reducing overall healthcare utilization through SmartVest airway
revenue increased 13.3% to $8.2 million in Q4 FY 2018 from $7.3 million in Q4 FY 2017, primarily driven by higher home care revenue.
Home care revenue rose 14.8% to $7.7 million in Q4 FY 2018 from $6.7 million in Q4 FY 2017, primarily due to growth in approvals
as a result of continued improvements in our reimbursement operations that led to a greater referral to approval percentage and
a higher average selling price per device. Net revenue for the prior year comparable period included a favorable impact of $703,000
from a one-time item related to a settlement agreement with Centers for Medicare and Medicaid Services.
profit increased 12.2% to $6.7 million, or 81.7% of net revenue, in Q4 FY 2018 from $6.0 million, or 82.5% of net revenue, in
Q4 FY 2017. The increase in gross profit resulted primarily from an increase in home care revenue.
expenses, which include selling, general and administrative ("SG&A") as well as research and development ("R&D")
expenses, totaled $5.1 million, or 62.4% of revenue, in Q4 FY 2018 compared with $4.5 million, or 61.7% of revenue, in the same
period of the prior year. SG&A expenses increased 14.4% to $5.1 million in Q4 FY 2018 from $4.4 million in Q4 FY 2017, primarily
due to higher payroll and compensation-related expenses and increased travel, meals and entertainment expenses which were driven
by the expansion of our sales force. These increased costs were partially offset by a $406,000 refund of medical device excise
taxes that was recognized during Q4 FY 2018. R&D expenses totaled $81,000 in Q4 FY 2018 compared to $65,000 in Q4 FY 2017.
income increased 5.1% to $1.6 million in Q4 FY 2018 from $1.5 million in Q4 FY 2017, primarily due to increased gross profit driven
by higher revenue and a refund of medical device excise taxes, which were partially offset by costs related to the expansion of
income before income tax expense rose 7.6% to $1.6 million in Q4 FY 2018 from $1.5 million in Q4 FY 2017.
income increased 18.2% to $1.1 million, or $0.13 per diluted share, in Q4 FY 2018, from $946,000, or $0.11 per diluted share,
in Q4 FY 2017. In Q4 FY 2018, income tax expense totaled $500,000, compared to $559,000 in the same period of the prior year.
Year FY 2018 Summary
the twelve months ended June 30, 2018, revenue grew 11.0% to $28.7 million from $25.9 million in fiscal 2017, driven by a 13.8%
increase in home care revenue. Gross margins were 79.6%, compared to 79.5% in the prior fiscal year, while net income was $1.9
million, or $0.22 per diluted share, compared to $2.2 million, or $0.26 per diluted share in fiscal 2017.
balance sheet at June 30, 2018 included cash of $7.5 million, long-term debt including current maturities of $1.1 million, working
capital of $17.5 million, and shareholders' equity of $21.9 million.
will host a conference call on September 26, 2018 at 8:00 am CT (9:00 am ET) to discuss Q4 FY 2018 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://investors.smartvest.com/.
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 words such as "believe," "estimate," "expect,"
"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 competitive nature of our market; risks associated with expansion into international markets; changes to
Medicare, Medicaid, or private insurance reimbursement policies; new drug or pharmaceutical discoveries; changes to health
care laws; changes affecting the medical device industry; our need to maintain regulatory compliance and to gain future
regulatory approvals and clearances; our ability to protect and expand our intellectual property portfolio; our ability to
renew our line of credit or obtain additional credit as necessary; our ability to develop new sales channels for our product;
and general economic and business conditions, as well as other factors described from time to time in our 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 |
| June 30, 2018 | June 30, 2017 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 7,455,844 | $ | 5,573,709 | ||||
| Accounts receivable (net of allowances for doubtful accounts of $45,000) | 11,563,208 | 9,949,759 | ||||||
| Inventories | 2,360,693 | 2,559,485 | ||||||
| Prepaid expenses and other current assets | 832,202 | 393,319 | ||||||
| Total current assets | 22,211,947 | 18,476,272 | ||||||
| Property and equipment, net | 3,091,242 | 3,303,233 | ||||||
| Finite-life intangible assets, net | 649,103 | 721,276 | ||||||
| Other assets | 91,912 | 99,868 | ||||||
| Deferred income taxes | 594,000 | 460,000 | ||||||
| Total assets | $ | 26,638,204 | $ | 23,060,649 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Current maturities of long-term debt | $ | 1,101,043 | $ | 50,703 | ||||
| Accounts payable | 810,644 | 663,376 | ||||||
| Accrued compensation | 1,209,738 | 946,623 | ||||||
| Income taxes payable | 397,390 | 156,524 | ||||||
| Warranty reserve | 760,000 | 640,000 | ||||||
| Other accrued liabilities | 464,357 | 438,748 | ||||||
| Total current liabilities | 4,743,172 | 2,895,974 | ||||||
| Long-term debt, less current maturities and net of debt issuance costs | - | 1,097,125 | ||||||
| Total liabilities | 4,743,172 | 3,993,099 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity | ||||||||
| Common stock, $0.01 par value; authorized: 13,000,000 shares; 8,288,659 and 8,230,167 issued and outstanding at June 30, 2018 and June 30, 2017, respectively | 82,887 | 82,302 | ||||||
| Additional paid-in capital | 14,953,103 | 14,028,602 | ||||||
| Retained earnings | 6,859,042 | 4,956,646 | ||||||
| Total shareholders' equity | 21,895,032 | 19,067,550 | ||||||
| Total liabilities and shareholders' equity | $ | 26,638,204 | $ | 23,060,649 |
Statements of Operations
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Net revenues | $ | 8,240,564 | $ | 7,273,901 | $ | 28,697,622 | $ | 25,861,144 | ||||||||
| Cost of revenues | 1,507,159 | 1,272,100 | 5,841,601 | 5,292,715 | ||||||||||||
| Gross profit | 6,733,405 | 6,001,801 | 22,856,021 | 20,568,429 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | 5,061,167 | 4,422,953 | 19,596,053 | 16,402,214 | ||||||||||||
| Research and development | 81,320 | 64,621 | 251,443 | 596,876 | ||||||||||||
| Total operating expenses | 5,142,487 | 4,487,574 | 19,847,496 | 16,999,090 | ||||||||||||
| Operating income | 1,590,918 | 1,514,227 | 3,008,525 | 3,569,339 | ||||||||||||
| Interest income (expense), net | 28,296 | (8,733 | ) | 19,871 | (49,867 | ) | ||||||||||
| Net income before income taxes | 1,619,214 | 1,505,494 | 3,028,396 | 3,519,472 | ||||||||||||
| Income tax expense | 500,000 | 559,000 | 1,126,000 | 1,290,000 | ||||||||||||
| Net income | $ | 1,119,214 | $ | 946,494 | $ | 1,902,396 | $ | 2,229,472 | ||||||||
| Income per share: | ||||||||||||||||
| Basic | $ | 0.14 | $ | 0.12 | $ | 0.23 | $ | 0.27 | ||||||||
| Diluted | $ | 0.13 | $ | 0.11 | $ | 0.22 | $ | 0.26 | ||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||
| Basic | 8,221,437 | 8,171,319 | 8,207,365 | 8,168,152 | ||||||||||||
| Diluted | 8,578,295 | 8,493,619 | 8,620,102 | 8,461,120 |
Statements of Cash Flows
| Twelve Months Ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | 1,902,396 | $ | 2,229,472 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 676,426 | 636,709 | ||||||
| Amortization of finite-life intangible assets | 113,601 | 118,418 | ||||||
| Amortization of debt issuance costs | 6,351 | 13,067 | ||||||
| Share-based compensation expense | 862,674 | 479,482 | ||||||
| Deferred taxes | (134,000 | ) | (117,000 | ) | ||||
| Loss on disposal of property and equipment | 25,990 | 3,302 | ||||||
| Loss on disposal of intangible assets | 4,122 | 132,724 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,613,449 | ) | (2,338,322 | ) | ||||
| Inventories | 234,594 | (28,334 | ) | |||||
| Prepaid expenses and other assets | (433,363 | ) | 49,864 | |||||
| Income tax receivable | - | 192,685 | ||||||
| Income tax payable | 240,866 | 156,524 | ||||||
| Accounts payable and accrued liabilities | 555,992 | (337,470 | ) | |||||
| Net cash provided by operating activities | 2,442,200 | 1,191,121 | ||||||
| Cash Flows From Investing Activities | ||||||||
| Expenditures for property and equipment | (526,227 | ) | (618,763 | ) | ||||
| Expenditures for finite-life intangible assets | (45,550 | ) | (68,385 | ) | ||||
| Net cash used in investing activities | (571,777 | ) | (687,148 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Principal payments on long-term debt including capital lease obligations | (50,700 | ) | (48,747 | ) | ||||
| Issuance of common stock upon exercise of options | 62,412 | - | ||||||
| Payments of deferred financing fees | - | (4,872 | ) | |||||
| Net cash provided by (used in) financing activities | 11,712 | (53,619 | ) | |||||
| Net increase in cash | 1,882,135 | 450,354 | ||||||
| Cash | ||||||||
| Beginning of period | 5,573,709 | 5,123,355 | ||||||
| End of period | $ | 7,455,844 | $ | 5,573,709 |