Full Press Release Details
Inc. Announces Fiscal 2018 Third Quarter Financial Results
Prague, Minnesota - May 8, 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 March 31, 2018 ("Q3 FY 2018").
Skarvan, President and Chief Executive Officer of Electromed, commented, "While homecare growth moderated this quarter due
to lower sales productivity, we took decisive action and achieved a meaningful uptick in sales productivity and referrals in March,
which continued into April. In our institutional business, we resumed positive sales growth in Q3 FY 2018, reflecting new sales
leadership and a strategic plan that positions the segment for continued growth heading into fiscal 2019. We remain as enthusiastic
as ever about the underpenetrated, growing bronchiectasis market and expect improved homecare growth in fiscal 2019 as our expanded
sales force matures and becomes more productive."
continued, "In March 2018, we published a longitudinal outcomes-based study in Respiratory Therapy magazine that builds
on previously published evidence and demonstrates that improved outcomes for bronchiectasis patients can be sustained 2.5 years
after starting SmartVest treatment. We believe our evidence-based sales approach resonates well with pulmonologists and other
key decision makers, distinguishing us in the marketplace. SmartVest's patient therapy monitoring features, ease-of-use
and comfort, as well as our dedication to customer service, underpin our confidence as we strive to improve quality of life and
outcomes for patients with compromised pulmonary function."
revenue increased 6.3% to $7.1 million in Q3 FY 2018 from $6.7 million in Q3 FY 2017, driven by higher home care and institutional
revenue. Home care revenue rose 6.4% to $6.5 million in Q3 FY 2018 from $6.1 million in Q3 FY 2017. This increase was primarily
due to a higher average selling price per device, which was partially offset by a lower level of referrals and approvals as compared
profit increased 5.4% to $5.6 million, or 79.0% of net revenue, in Q3 FY 2018 from $5.3 million, or 79.7% of net revenue, in Q3
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") expenses as well as research and development
("R&D") expenses, totaled $5.1 million, or 72.1% of net revenue, in Q3 FY 2018 compared with $4.3 million, or
64.1% of net revenue, in the same period of the prior year. SG&A expenses increased 20.9% to $5.1 million in Q3 FY 2018 from
$4.2 million in Q3 FY 2017, primarily due to additional employees in sales, annual salary increases, higher share-based equity
compensation expense, additional sales incentives on higher revenue accruals, and increased professional fees. R&D expenses
totaled $43,000 in Q3 FY 2018 compared to $81,000 in Q3 FY 2017.
income decreased to $485,000 in Q3 FY 2018 from $1.0 million in Q3 FY 2017, primarily reflecting higher SG&A expense.
income before income tax expense totaled $486,000 in Q3 FY 2018, compared to $1.0 million in Q3 FY 2017.
income equaled $313,000, or $0.04 per diluted share, in Q3 FY 2018, compared to $648,000, or $0.08 per diluted share, in Q3 FY
2017. In Q3 FY 2018, income tax expense totaled $173,000, compared to $380,000 in the same period of the prior year. Income tax
expense during Q3 FY 2018 benefitted from a reduced statutory corporate federal tax rate of 21%, compared to 34% in the prior
year period, due to the Tax Act that was enacted by the U.S. Government on December 22, 2017, which became effective on January
the nine months ended March 31, 2018, revenue grew 10.1% to $20.5 million from $18.6 million in the same period of fiscal 2017,
driven by a 13.4% increase in home care revenue. Gross margins were 78.8%, compared to 78.4% in the first nine months of fiscal
2017, while net income was approximately $783,000, or $0.09 per diluted share, compared to approximately $1.3 million, or $0.15
per diluted share, in the prior year comparable period
balance sheet at March 31, 2018 included cash of $7.1 million, current maturities of long-term debt of $1.1 million, working capital
of $16.2 million, and shareholders' equity of $20.5 million.
will host a conference call on May 9, 2018 at 8:00 am CT (9:00 am ET) to discuss Q3 FY 2018 financial results and other matters.
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 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 |
| March 31, 2018 | June 30, 2017 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 7,062,822 | $ | 5,573,709 | ||||
| Accounts receivable (net of allowances for doubtful accounts of $45,000) | 10,075,211 | 9,949,759 | ||||||
| Inventories | 2,207,293 | 2,559,485 | ||||||
| Prepaid expenses and other current assets | 483,817 | 393,319 | ||||||
| Income tax receivable | 91,103 | - | ||||||
| Total current assets | 19,920,246 | 18,476,272 | ||||||
| Property and equipment, net | 3,165,539 | 3,303,233 | ||||||
| Finite-life intangible assets, net | 663,928 | 721,276 | ||||||
| Other assets | 97,066 | 99,868 | ||||||
| Deferred income taxes | 417,000 | 460,000 | ||||||
| Total assets | $ | 24,263,779 | $ | 23,060,649 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Current maturities of long-term debt | $ | 1,112,838 | $ | 50,703 | ||||
| Accounts payable | 614,866 | 663,376 | ||||||
| Accrued compensation | 935,613 | 946,623 | ||||||
| Income taxes payable | - | 156,524 | ||||||
| Warranty reserve | 680,000 | 640,000 | ||||||
| Other accrued liabilities | 403,261 | 438,748 | ||||||
| Total current liabilities | 3,746,578 | 2,895,974 | ||||||
| Long-term debt, less current maturities and net of debt issuance costs | - | 1,097,125 | ||||||
| Total liabilities | 3,746,578 | 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 March 31, 2018 and June 30, 2017, respectively | 82,887 | 82,302 | ||||||
| Additional paid-in capital | 14,694,485 | 14,028,602 | ||||||
| Retained earnings | 5,739,829 | 4,956,646 | ||||||
| Total shareholders' equity | 20,517,201 | 19,067,550 | ||||||
| Total liabilities and shareholders' equity | $ | 24,263,779 | $ | 23,060,649 |
Statements of Operations
| For the Three Months Ended March 31, | For the Nine Months Ended March 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Net revenues | $ | 7,090,654 | $ | 6,669,638 | $ | 20,457,058 | $ | 18,587,243 | ||||||||
| Cost of revenues | 1,491,156 | 1,357,093 | 4,334,441 | 4,020,615 | ||||||||||||
| Gross profit | 5,599,498 | 5,312,545 | 16,122,617 | 14,566,628 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | 5,071,724 | 4,195,156 | 14,534,886 | 11,979,261 | ||||||||||||
| Research and development | 42,665 | 80,613 | 170,123 | 532,255 | ||||||||||||
| Total operating expenses | 5,114,389 | 4,275,769 | 14,705,009 | 12,511,516 | ||||||||||||
| Operating income | 485,109 | 1,036,776 | 1,417,608 | 2,055,112 | ||||||||||||
| Interest income (expense), net | 669 | (8,831 | ) | (8,425 | ) | (41,135 | ) | |||||||||
| Net income before income taxes | 485,778 | 1,027,945 | 1,409,183 | 2,013,977 | ||||||||||||
| Income tax expense | 173,000 | 380,000 | 626,000 | 731,000 | ||||||||||||
| Net income | $ | 312,778 | $ | 647,945 | $ | 783,183 | $ | 1,282,977 | ||||||||
| Income per share: | ||||||||||||||||
| Basic | $ | 0.04 | $ | 0.08 | $ | 0.10 | $ | 0.16 | ||||||||
| Diluted | $ | 0.04 | $ | 0.08 | $ | 0.09 | $ | 0.15 | ||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||
| Basic | 8,210,695 | 8,167,112 | 8,203,599 | 8,167,112 | ||||||||||||
| Diluted | 8,613,370 | 8,452,942 | 8,634,452 | 8,449,201 |
Statements of Cash Flows
| Nine Months Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | 783,183 | $ | 1,282,977 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 495,797 | 473,813 | ||||||
| Amortization of finite-life intangible assets | 85,166 | 89,813 | ||||||
| Amortization of debt issuance costs | 5,373 | 10,871 | ||||||
| Share-based compensation expense | 604,056 | 373,913 | ||||||
| Deferred income taxes | 43,000 | 13,000 | ||||||
| Loss on disposal of property and equipment | - | 520 | ||||||
| Loss on disposal of intangible assets | - | 111,498 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (125,452 | ) | (1,321,989 | ) | ||||
| Inventories | 373,417 | (65,630 | ) | |||||
| Prepaid expenses and other assets | (90,132 | ) | (49,140 | ) | ||||
| Income tax receivable | (91,103 | ) | 192,685 | |||||
| Income tax payable | (156,524 | ) | 17,024 | |||||
| Accounts payable and accrued liabilities | (55,007 | ) | (323,453 | ) | ||||
| Net cash provided by operating activities | 1,871,774 | 805,902 | ||||||
| Cash Flows From Investing Activities | ||||||||
| Expenditures for property and equipment | (379,328 | ) | (425,838 | ) | ||||
| Expenditures for finite-life intangible assets | (27,818 | ) | (60,131 | ) | ||||
| Net cash used in investing activities | (407,146 | ) | (485,969 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Principal payments on long-term debt including capital lease obligations | (37,927 | ) | (36,473 | ) | ||||
| Payment of deferred financing fees | - | (4,872 | ) | |||||
| Proceeds from sales of common stock or warrants | 62,412 | - | ||||||
| Net cash provided by (used in) financing activities | 24,485 | (41,345 | ) | |||||
| Net increase in cash | 1,489,113 | 278,588 | ||||||
| Cash | ||||||||
| Beginning of period | 5,573,709 | 5,123,355 | ||||||
| End of period | $ | 7,062,822 | $ | 5,401,943 |