Full Press Release Details
Electromed, Inc. Announces Fiscal 2023
First Quarter Results
Continued Momentum on Key Growth Initiatives
NEW PRAGUE, Minn.--(BUSINESS WIRE)-- 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 September 30, 2022 ("Q1 FY 2023").
Q1 FY 2023 Financial Highlights
of the Electromed team's performance during the quarter, attaining 7% year-over-year revenue growth while managing a challenging
macroeconomic environment," said Kathleen Skarvan, President and Chief Executive Officer of Electromed. "We have continued
to deliver for our patients and shareholders, despite supply chain and inflationary headwinds that weighed on operating performance
during the quarter. We will continue to execute on our commercial strategy, while managing our other expenses, to accelerate growth
and anticipate positive operating cash flow over the course of this fiscal year."
"We remain encouraged by the success of our investments
in the sales organization, achieving overall referral growth and referrals per direct sales representative compared to the prior
fiscal quarter. We have submitted our next generation 510(k) to the FDA and we are ready to launch our limited market release in
fiscal Q2 assuming notification of clearance is received by mid-December. We look forward to building on our momentum in the fiscal
Fiscal First Quarter Results
Net revenues for Q1 FY 2023 increased 7% year over year to $10.7
million, from $10.0 million in Q1 FY 2022, driven by increased referrals and approvals as a result of an expanded sales force and
reimbursement team. Field sales employees totaled 53 at the end of Q1 FY 2023, 44 of which were direct sales representatives, compared
to 51 field sales employee and 41 direct sales representatives at the end of Q1 FY 2022. Sales force productivity remained within
our expected range during the quarter, with annualized home care revenue per direct sales representative at $890,000, within the
Company's target range of $850,000 to $950,000.
Home care revenue increased by $348,000, or 4%, to $9.6 million
for Q1 FY 2023 compared to Q1 FY 2022. Home care distributor revenue increased by $398,000, or 255%, for Q1 FY 2023 compared to
Q1 FY 2022. The revenue increase was due to increased demand from one of our primary home care distribution partners. Institutional
revenue decreased by $58,000, or 13%, for Q1 FY 2023 compared to Q1 FY 2022. International revenue decreased by $31,000, or 28%,
for Q1 FY 2023 compared to Q1 FY 2022.
Gross profit increased to $8,331,000, or 78% of net revenues,
for Q1 FY 2023, from $7,701,000, or 77% of net revenues, in Q1 FY 2022. The increase was primarily due to increased revenue and
operating efficiencies related to shipping costs in the quarter.
Selling, general and
administrative ("SG&A") expenses were $7,989,000 for Q1 FY 2023, representing an increase of $1,202,000 or 17.7%,
compared to Q1 FY 2022. Approximately half of this increase included increased legal fees and annual sales meeting expenses that
are not expected to occur in the remaining quarters. The remaining SG&A increase includes additional headcount in our sales
and reimbursement departments representing our investments in growth.
Operating income totaled
$44,000 in Q1 FY 2023, compared to $538,000 in Q1 FY 2022. The decrease in operating income was driven by supply chain factors,
higher payroll and compensation expenses as well as legal fees of approximately $400,000 and travel, meals, and entertainment expenses
Net income for Q1 FY 2023 was $81,000 compared to $439,000 for
2022, Electromed had $6.0 million in cash, $21.0 million in accounts receivable, working capital of $27.3 million, and total shareholders'
equity of $34.1 million. The cash balance reflects a decrease of $2.2 million from June 30, 2022, primarily resulting from payment
of annual incentive compensation and annual insurance premiums and the increased SG&A expenses described above, none of which
are expected to occur in the remaining quarters.
Conference Call and Webcast Information
Interested parties may participate in the call by dialing (844)
826-3033(Domestic) or (412) 317-5185 (International) and using pin number 10172207.
The live conference call webcast will be accessible in the
Investor Relations section of Electromed's web site and directly via the following link here.
For those who cannot listen to the live broadcast, a replay
will be available by dialing (844) 512-2921 (Domestic) or (412) 317-6671 (International) and referencing the replay pin number
10172207. Additionally, an online replay will be available in the Investor Relations section of Electromed's website at: http://investors.smartvest.com/.
About Electromed, Inc.
Inc. manufactures, markets, and sells products that provide airway clearance therapy, including the SmartVest
Airway Clearance System, to patients with compromised pulmonary function. It 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 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 "anticipate," "assume," "believe," "expect," "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, supply chain, 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 homecare 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
Wirtz, Interim Chief Financial Officer
Cavanaugh, Investor Relations
Financial Tables Follow:
Condensed Balance Sheets
| September 30, 2022 | June 30, 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 5,998,000 | $ | 8,153,000 | ||||
| Accounts receivable (net of allowances for doubtful accounts of $45,000) | 20,957,000 | 21,052,000 | ||||||
| Contract assets | 453,000 | 286,000 | ||||||
| Inventories | 3,673,000 | 3,178,000 | ||||||
| Prepaid expenses and other current assets | 2,015,000 | 1,870,000 | ||||||
| Income tax receivable | 124,000 | - | ||||||
| Total current assets | 33,220,000 | 34,539,000 | ||||||
| Property and equipment, net | 4,682,000 | 4,568,000 | ||||||
| Finite-life intangible assets, net | 600,000 | 599,000 | ||||||
| Other assets | 100,000 | 120,000 | ||||||
| Deferred income taxes | 1,532,000 | 1,538,000 | ||||||
| Total assets | $ | 40,134,000 | $ | 41,364,000 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | 1,265,000 | 1,261,000 | ||||||
| Accrued compensation | 1,610,000 | 2,742,000 | ||||||
| Income tax payable | - | 51,000 | ||||||
| Warranty reserve | 1,354,000 | 1,256,000 | ||||||
| Other accrued liabilities | 1,724,000 | 1,840,000 | ||||||
| Total current liabilities | 5,953,000 | 7,150,000 | ||||||
| Other long-term liabilities | 37,000 | 41,000 | ||||||
| Total liabilities | 5,990,000 | 7,191,000 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity | ||||||||
| Common stock, $0.01 par value per share, 13,000,000 shares authorized; 8,485,864 and 8,475,438 shares issued and outstanding, as of September 30, 2022 and June 30, 2022, respectively | 85,000 | 85,000 | ||||||
| Additional paid-in capital | 18,343,000 | 18,308,000 | ||||||
| Retained earnings | 15,716,000 | 15,780,000 | ||||||
| Total shareholders' equity | 34,144,000 | 34,173,000 | ||||||
| Total liabilities and shareholders' equity | $ | 40,134,000 | $ | 41,364,000 |
Condensed Statements of Operations
| Three Months Ended September 30 | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Net revenues | $ | 10,658,000 | $ | 10,001,000 | ||||
| Cost of revenues | 2,327,000 | 2,300,000 | ||||||
| Gross profit | 8,331,000 | 7,701,000 | ||||||
| Operating expenses | ||||||||
| Selling, general and administrative | 7,989,000 | 6,787,000 | ||||||
| Research and development | 298,000 | 376,000 | ||||||
| Total operating expenses | 8,287,000 | 7,163,000 | ||||||
| Operating income | 44,000 | 538,000 | ||||||
| Interest income , net | 4,000 | 9,000 | ||||||
| Net income before income taxes | 48,000 | 547,000 | ||||||
| Income tax (benefit) expense | (33,000 | ) | 108,000 | |||||
| Net income | $ | 81,000 | $ | 439,000 | ||||
| Income per share: | ||||||||
| Basic | $ | 0.01 | $ | 0.05 | ||||
| Diluted | $ | 0.01 | $ | 0.05 | ||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 8,445,893 | 8,559,219 | ||||||
| Diluted | 8,689,377 | 8,884,493 |
Condensed Statements of Cash Flows
| Three Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | 81,000 | $ | 439,000 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation | 134,000 | 106,000 | ||||||
| Amortization of finite-life intangible assets | 20,000 | 52,000 | ||||||
| Share-based compensation expense | 95,000 | 249,000 | ||||||
| Deferred income taxes | 6,000 | 32,000 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 95,000 | (1,331,000 | ) | |||||
| Contract assets | (167,000 | ) | 74,000 | |||||
| Inventories | (500,000 | ) | 91,000 | |||||
| Prepaid expenses and other current assets | (125,000 | ) | (186,000 | ) | ||||
| Income tax payable, net | (175,000 | ) | (498,000 | ) | ||||
| Accounts payable and accrued liabilities | (26,000 | ) | 851,000 | |||||
| Accrued compensation | (1,132,000 | ) | (455,000 | ) | ||||
| Net cash used in operating activities | (1,694,000 | ) | (576,000 | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Expenditures for property and equipment | (241,000 | ) | (225,000 | ) | ||||
| Expenditures for finite-life intangible assets | (15,000 | ) | (45,000 | ) | ||||
| Net cash used in investing activities | (256,000 | ) | (270,000 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Issuance of common stock upon exercise of options | - | 1,000 | ||||||
| Taxes paid on net share settlement of stock option exercises | (60,000 | ) | (64,000 | ) | ||||
| Repurchase of common stock | (145,000 | ) | - | |||||
| Net cash used in financing activities | (205,000 | ) | (63,000 | ) | ||||
| Net decrease in cash | (2,155,000 | ) | (909,000 | ) | ||||
| Cash And Cash Equivalents | ||||||||
| Beginning of period | 8,153,000 | 11,889,000 | ||||||
| End of period | $ | 5,998,000 | $ | 10,980,000 |