Electromed, Inc. Announces Fiscal 2021 Second Quarter Financial Results -- 11.1% Net Revenue Growth, Driven by a 16.1% Increase in Home Care Revenue -- New Prague, Minnesota

Inc. Announces Fiscal 2021 Second Quarter Financial Results

11.1% Net Revenue Growth, Driven by a 16.1% Increase in Home Care Revenue --

Prague, Minnesota - February 9, 2021 - 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 December 31, 2020 ("Q2 FY 2021").

Kathleen Skarvan, President and Chief Executive Officer of Electromed, commented, "In the second quarter we continued to adapt successfully to healthcare system disruption caused by the COVID-19 pandemic. Our strong execution of a hybrid virtual and face-to-face selling approach combined with the ability for prescribers to more easily provide care via the provisional CMS waiver drove a 16.1% increase in home care revenue compared to the prior year period. The home care success more than offset the ongoing challenges to the other markets of our business negatively impacted by the pandemic, most clearly seen in the year over year decline in the institutional market. However, compared to the first quarter of our current fiscal year our business benefited from increased face-to-face interaction between patients and physicians and improved access to clinics for our sales staff."

Skarvan concluded, "We are encouraged by this quarter's strong financial results and pleased with our sales team's

execution and ability to adapt to ever changing conditions in the market due to the COVID-19 pandemic. While we continue to operate

within the constraints of a pandemic, we are cautiously optimistic about our prospects for continued revenue growth in the second

half of fiscal 2021. Against this backdrop, we continue to fund strategic investments for our long-term growth, including research

and development on our next generation device for HFCWO therapy and expanding our direct-to-patient marketing to increase awareness

of bronchiectasis and SmartVest as an effective treatment. During this pandemic, our priority continues to be the health,

safety and well-being of our teammates, clinicians and patients, while executing on our strategy to gain greater share of the

large, underpenetrated bronchiectasis market. We are well positioned to succeed given our strong balance sheet, excellent cash

flow profile and differentiated SmartVest Airway Clearance System."

revenue in Q2 FY 2021 increased 11.1% to $9.5 million, from $8.5 million in Q2 FY 2020. Home care revenue increased 16.1% to $8.9

million in Q2 FY 2021 from $7.7 million in Q2 FY 2020. Field sales employees totaled 45, of which 38 were direct sales, at the

end of Q2 FY 2021, compared to 40 at the end of Q2 FY 2020, of which 34 were direct sales. Institutional revenue decreased 37.4%

to $309,000 from $494,000 in Q2 FY 2020, primarily due to a decrease in the volume of devices and disposable wraps sold due to

COVID-19's continued impact on hospital purchasing activity. Home care distributor revenue increased 13.7% to $149,000 from

$131,000 in Q2 FY 2020. International revenue decreased 46.6% to $135,000 from $253,000 in Q2 FY 2020.

Gross profit in Q2 FY 2021 totaled $7.5 million, or 79.2% of net revenue, compared to $6.7 million, or 78.1% of net revenue, in Q2 FY 2020. The increase in gross profit percentage was primarily due to a higher mix of home care revenue and a favorable mix of Medicare within home care.

general and administrative ("SG&A") expenses in Q2 FY 2021 increased 9.5% to $5.4 million from $5.0 million in

Q2 FY 2020. The increase in SG&A spending was primarily due to increased payroll and compensation-related expenses associated

with higher incentive payments on stronger home care revenue and higher average sales and marketing headcount, as well as increased

direct-to-consumer marketing expenses, partially offset by lower travel, meals and entertainment expenses. As a percentage of

revenue, SG&A expenses were 57.2%, compared to 58.1% in Q2 FY 2020. Research and development expenses increased to $507,000

from $143,000 in Q2 FY 2020, primarily due to the development of a next generation platform. As a percentage of revenue, R&D

expenses were 5.3% compared to 1.7% in Q2 FY 2020.

income before income taxes totaled $1.6 million in Q2 FY 2021, compared to $1.6 million in Q2 FY 2020, and reflects increased

strategic investments in both R&D and SG&A.

income was $1.2 million, or $0.13 per diluted share, compared to $1.2 million, or $0.14 per diluted share, in Q2 FY 2020. In Q2

FY 2021, income tax expense totaled $389,000, compared to an income tax expense of $419,000 in the same period of the prior year.

the six months ended December 31, 2020, net revenue grew 3.9% to $17.5 million, from $16.8 million in the same period of fiscal

2020. The revenue increase was primarily due to growth in our home care market, partially offset by lower institutional revenue.

Gross profit percentage was 78.1%, compared to 77.3% in the prior fiscal year period. The gross margin percentage increase was

primarily due to a higher mix of home care revenue and a favorable mix of Medicare within home care. Net income was

approximately $1.7 million, or $0.19 per diluted share, compared to approximately $2.2 million, or $0.25 per diluted share, in

the first six months of fiscal 2020. The net income decrease was primarily due to increased strategic investments in R&D and

Company's balance sheet at December 31, 2020 included cash of $11.7 million, accounts receivable of $15.4 million, no debt,

working capital of $27.4 million, and shareholders' equity of $32.3 million.

will host a conference call on Tuesday, February 9, 2021 at 4:00 pm CT (5:00 pm ET) to discuss Q2 FY 2021 financial results and

parties may participate in the call by dialing:

conference call also will 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

the Company's web site at: http://investors.smartvest.com/

Inc. manufactures, makes, 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 the Company can be found at www.smartvest.com.

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 "believe," "intend,"

"may," "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 Home Care 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 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 press release. We undertake no obligation to update them in light of new

information or future events.

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