Full Press Release Details
Inc. Announces Third Quarter Financial Results
revenue growth while continuing to execute key strategic initiatives
also announces Chief Financial Officer transition
NEW PRAGUE, Minn. --
May 10, 2022 -- (BUSINESS WIRE) -- Electromed, Inc. ("Electromed" or the "Company") (NYSE American: ELMD),
a leader in innovative airway clearance technologies, today announced financial results for its fiscal 2022 third quarter ended
March 31, 2022. Management will host a conference call at 5:00 p.m. Eastern Time today to discuss the results.
Fiscal Third Quarter
to report that in the third quarter of fiscal 2022, Electromed generated 15.4% year-over-year revenue growth while managing through
a challenging operating environment," said Kathleen Skarvan, Electromed's President and Chief Executive Officer. "We
continued to achieve key milestones in the execution of our strategic initiatives including the expansion of our sales force, maintaining
our next generation development schedule consistent with an expected launch during the first half of fiscal 2023, building the
system infrastructure necessary to support future growth, and hiring a Chief Commercial Officer to lead the execution of our growth
initiatives. We ended the quarter with positive momentum, our direct sales force at near full staffing and recording the highest
home care monthly referrals in company history; we are excited to continue that momentum into the fourth quarter of fiscal 2022."
Chief Financial Officer
The Company also announced
that the Chief Financial Officer, Michael MacCourt, will resign effective July 1, 2022. Mr. MacCourt plans to pursue a new opportunity
outside of corporate finance. Michelle C. Wirtz, the Company's Corporate Controller, will be appointed to the position of
Interim Chief Financial Officer on June 1, 2022 prior to Mr. MacCourt exiting the company. Mr. MacCourt is expected to remain an
employee through July 1, 2022 to ensure a smooth transition. The Company plans to explore options for a permanent appointment.
thank Mike for the valuable contributions he has made since joining Electromed in May of 2020," said Ms. Skarvan. "His
leadership and expertise have strengthened our corporate finance function during his tenure and he has been a trusted advisor to
me. I wish him well in his future endeavors."
Ms. Skarvan added, "I
am delighted to announce Michelle's appointment. She possesses a strong corporate finance, accounting and external reporting
background, healthcare experience, and is intimately familiar with Electromed's business model," said Ms. Skarvan.
"We can't think of a better candidate to assume the role as we explore our options for a permanent appointment."
currently serves as Corporate Controller at Electromed and brings over 15 years of experience in accounting, financial analysis, SEC
reporting, and M & A transaction support. Prior to joining Electromed, Ms. Wirtz served as Corporate Controller for Icario,
Inc., a national health-tech company providing member engagement solutions to U.S. health insurers, from
June 2018 to December 2021. Prior to joining Icario, Ms. Wirtz served as a Senior Consultant, Finance and Accounting, for Salo,
Inc., and held positions of increasing responsibility at global CPA firms Ernst & Young and RSM McGladrey. Ms. Wirtz holds an
active CPA license in the state of Minnesota.
Fiscal Third Quarter
third quarter of the Company's fiscal year ending June 30, 2022 ("fiscal 2022") increased 15.4% year-over-year
to $10.1 million, from $8.8 million in the third quarter of the Company's fiscal year ended June 30, 2021 ("fiscal
2021"), driven largely by 10.7% growth in the home care business which benefitted from a growth in referrals due to increased
direct sales representative productivity. Field sales employees totaled 51 at the end of the third quarter of fiscal 2022, 42 of
which were direct sales representatives, compared to 48 field sales employees and 39 direct sales representatives at the end of
the third quarter of fiscal 2021. Sales force productivity remained strong during the quarter, with annualized home care revenue
per direct sales representative at $943,000, above the Company's targeted range of $800,000 to $900,000.
Institutional revenue
declined 11.5% to $0.4 million in the third quarter of fiscal 2022, primarily due to lower capital sales compared to the same period
in fiscal 2021. Distributor revenue increased 395.2% to $0.5 million in the third quarter of fiscal 2022 from $0.1 million in the
same period a year ago, primarily due to increased demand from one of our key distribution partners. International revenue increased
157.9% to $0.2 million in the third quarter of fiscal 2022.
third quarter of fiscal 2022 increased to $7.7 million, or 76.4% of net revenues, from $6.7 million, or 76.3% of net revenues,
in the third quarter of fiscal 2021, as rising raw material and shipping costs were offset by higher Medicare allowable pricing,
increased operational efficiencies and operating leverage on higher revenue.
income totaled $0.9 million in the third quarter of fiscal 2022, compared to $0.2 million in the third quarter of fiscal 2021.
The higher operating income was driven by 15.4% revenue growth compared to prior year, partially offset by increased strategic
investment in sales, general and administrative costs.
Net income for the third
quarter of fiscal 2022 was $0.6 million, or $0.07 per diluted share, compared to $0.2 million, or $0.03 per diluted share, in the
third quarter of fiscal 2021.
As of March 31, 2022,
Electromed had $9.8 million in cash, $19.6 million in accounts receivable, working capital of $28.0 million and total shareholders'
equity of $34.0 million
Webcast and Conference
Electromed will host
a conference call at 5:00 p.m. Eastern Time today, May 10, 2022. Interested parties may participate in the call by dialing (877)
407-0789 (Domestic) or (201) 689-8562 (International), and using pin number 13729193.
will be webcast live and will be available for replay in the Investor Relations section of Electromed's web site at 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 the Company 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," "believe," "estimate,"
"expect," "future," "intend," "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 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 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; the risks associated with cyberattacks, data breaches,
computer viruses and other similar security threats, 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 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.
Mike MacCourt, Chief Financial Officer
Mike Cavanaugh, Investor
Condensed Balance Sheets
| March 31, 2022 | June 30, 2021 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 9,844,000 | $ | 11,889,000 | ||||
| Accounts receivable (net of allowances for doubtful accounts of $45,000) | 19,614,000 | 17,032,000 | ||||||
| Contract assets | 295,000 | 393,000 | ||||||
| Inventories | 2,089,000 | 2,114,000 | ||||||
| Prepaid expenses and other current assets | 991,000 | 276,000 | ||||||
| Income tax receivable | 155,000 | - | ||||||
| Total current assets | 32,988,000 | 31,704,000 | ||||||
| Property and equipment, net | 4,309,000 | 3,605,000 | ||||||
| Finite-life intangible assets, net | 611,000 | 663,000 | ||||||
| Other assets | 77,000 | 88,000 | ||||||
| Deferred income taxes | 1,034,000 | 1,049,000 | ||||||
| Total assets | $ | 39,019,000 | $ | 37,109,000 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | 1,163,000 | 685,000 | ||||||
| Accrued compensation | 2,301,000 | 2,474,000 | ||||||
| Income tax payable | - | 288,000 | ||||||
| Warranty reserve | 938,000 | 940,000 | ||||||
| Other accrued liabilities | 564,000 | 252,000 | ||||||
| Total current liabilities | 4,966,000 | 4,639,000 | ||||||
| Other long-term liabilities | 43,000 | 54,000 | ||||||
| Total liabilities | 5,009,000 | 4,693,000 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity | ||||||||
| Common stock, $0.01 par value per share, 13,000,000 shares authorized; 8,508,788 and 8,533,209 shares issued and outstanding, respectively | 85,000 | 85,000 | ||||||
| Additional paid-in capital | 18,042,000 | 17,409,000 | ||||||
| Retained earnings | 15,883,000 | 14,922,000 | ||||||
| Total shareholders' equity | 34,010,000 | 32,416,000 | ||||||
| Total liabilities and shareholders' equity | $ | 39,019,000 | $ | 37,109,000 |
Condensed Statements of Operations
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net revenues | $ | 10,141,000 | $ | 8,787,000 | $ | 30,390,000 | $ | 26,287,000 | ||||||||
| Cost of revenues | 2,398,000 | 2,086,000 | 7,066,000 | 5,913,000 | ||||||||||||
| Gross profit | 7,743,000 | 6,701,000 | 23,324,000 | 20,374,000 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | 6,544,000 | 6,051,000 | 19,806,000 | 16,490,000 | ||||||||||||
| Research and development | 336,000 | 407,000 | 1,041,000 | 1,396,000 | ||||||||||||
| Total operating expenses | 6,880,000 | 6,458,000 | 20,847,000 | 17,886,000 | ||||||||||||
| Operating income | 863,000 | 243,000 | 2,477,000 | 2,488,000 | ||||||||||||
| Interest income, net | 6,000 | 10,000 | 21,000 | 29,000 | ||||||||||||
| Net income before income taxes | 869,000 | 253,000 | 2,498,000 | 2,517,000 | ||||||||||||
| Income tax expense | 224,000 | 29,000 | 576,000 | 555,000 | ||||||||||||
| Net income | $ | 645,000 | $ | 224,000 | $ | 1,922,000 | $ | 1,962,000 | ||||||||
| Income per share: | ||||||||||||||||
| Basic | $ | 0.08 | $ | 0.03 | $ | 0.23 | $ | 0.23 | ||||||||
| Diluted | $ | 0.07 | $ | 0.03 | $ | 0.22 | $ | 0.22 | ||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||
| Basic | 8,454,504 | 8,576,523 | 8,485,856 | 8,565,839 | ||||||||||||
| Diluted | 8,744,535 | 8,907,045 | 8,762,963 | 8,921,494 |
Condensed Statements of Cash
| Nine months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | 1,922,000 | $ | 1,962,000 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 368,000 | 359,000 | ||||||
| Amortization of finite-life intangible assets | 105,000 | 99,000 | ||||||
| Share-based compensation expense | 703,000 | 756,000 | ||||||
| Deferred income taxes | 15,000 | 102,000 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (2,582,000 | ) | (3,296,000 | ) | ||||
| Contract assets | 98,000 | 345,000 | ||||||
| Inventories | 9,000 | 839,000 | ||||||
| Prepaid expenses and other current assets | (519,000 | ) | (69,000 | ) | ||||
| Income tax receivable | (443,000 | ) | 8,000 | |||||
| Accounts payable and accrued liabilities | 550,000 | 350,000 | ||||||
| Accrued compensation | (173,000 | ) | 869,000 | |||||
| Net cash provided by operating activities | 53,000 | 2,324,000 | ||||||
| Cash Flows From Investing Activities | ||||||||
| Investment in property and equipment | (980,000 | ) | (105,000 | ) | ||||
| Investment in finite-life intangible assets | (86,000 | ) | (103,000 | ) | ||||
| Net cash used in investing activities | (1,066,000 | ) | (208,000 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Issuance of common stock upon exercise of options | - | 46,000 | ||||||
| Taxes paid on stock options exercised on a net basis | (70,000 | ) | (141,000 | ) | ||||
| Repurchase of common stock | (962,000 | ) | - | |||||
| Net cash used in financing activities | (1,032,000 | ) | (95,000 | ) | ||||
| Net (decrease) increase in cash | (2,045,000 | ) | 2,021,000 | |||||
| Cash And Cash Equivalents | ||||||||
| Beginning of period | 11,889,000 | 10,479,000 | ||||||
| End of period | $ | 9,844,000 | $ | 12,500,000 |