Full Press Release Details
James J. Cassidy, Ph.D.
Interim Chief Executive Officer
Director of Strategic Marketing
The Event Group, Incorporated
ELECTROMED, INC. REPORTS 2012 THIRD QUARTER
New Prague, Minnesota -
May 14, 2012 - Electromed, Inc. (NYSE Amex: ELMD) today announced financial results for the three-month period ended
March 31, 2012. Management indicated that, while the Company's Sales Team provided an increase in the number of prescriptions
for the SmartVest System versus the prior year quarter, actual revenue has been negatively impacted by certain reimbursement
factors. Among these factors are diagnoses that are not assured of reimbursement and insurance programs with lower allowable reimbursement
Net Revenues for the three months ended March 31, 2012,
were approximately $4,774,000, an 8.2% decrease compared to Net Revenues of approximately $5,199,000 for the same period last year.
The Company also announced Net Income of approximately $95,000, or $0.01 per basic and diluted share, for the three months ended
March 31, 2012, compared to Net Income of approximately $487,000, or $0.06 per basic and diluted share, for the same period last
year. Management continues to believe that planned increases in the Company's sales force and reimbursement staff, coupled
with the expansion of marketing and research and development efforts, will provide strong impetus for continued annual sales growth.
Jim Cassidy, Interim CEO, commented on the Company, saying,
"This past quarter's revenue
was adversely impacted by referral source and payer mix. We are encouraged by the effectiveness of our high quality tenured sales
representatives and by the early performance of our newly hired representatives."
Gross Profit decreased to approximately $3,369,000, or 70.6%
of Net Revenues, for the three months ended March 31, 2012, compared to $3,703,000, or 71.2% of Net Revenue, for the same period
in Fiscal 2011. The decrease in gross profit percentage was primarily the result of a change in average reimbursement from the
mix of referrals during the three month period. Factors such as diagnoses that are not assured of reimbursement and insurance programs
with lower allowable reimbursement amounts (for example, state Medicaid programs) affect average reimbursement received on a short-term
basis. These factors tend to fluctuate on a quarterly basis. However, management does not believe the results of the quarter ended
March 31, 2012, are indicative of a long-term trend in decreasing margins.
Results for the Three-Months Ended March 31, 2012
Operating Expenses, which consist of Selling, General, and
Administrative Expenses and Research and Development expenses, were approximately $3,143,000 for the three months ended March 31,
2012, an increase of approximately 3.7% over Operating Expenses for the same period last year. This increase primarily resulted
from a 14.3% increase in employees in our reimbursement, sales, administrative, and patient services departments.
Total cash and cash equivalents was approximately
$1,393,000 as of March 31, 2012. For the three months ended March 31, 2012, cash used in financing activities was
approximately $86,000, consisting of payments of long-term debt, capital lease obligations, and deferred financing fees. An
aggregate of $120,000 was used for investing activities during the three months ended March 31, 2012, for purchases of
property and equipment. The Company used approximately $146,000 in operating activities composed primarily of an increase in
the Company's accounts receivable, inventory, and other assets. Accounts receivable increased to approximately
$11,092,000, or 3.6% compared to December 31, 2011. In addition to existing cash and cash equivalents the Company had unused
availability of $3,435,000 under its line of credit as of March 31, 2012.
About Electromed, Inc.
Electromed, Inc., founded in 1992 and headquartered in New
Prague, Minnesota, manufactures, markets, and sells products that provide airway clearance therapy, including the SmartVest
Airway Clearance System and related products, to patients with compromised pulmonary function. Further information about the Company
can be found at www.electromed.com.
Cautionary Statements
Certain statements found in this
release may constitute forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking
statements reflect the speaker's 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
"believe," "expect," "anticipate" or "intend" or similar words.
Forward-looking statements made in this release include the Company's plans and expectations
regarding sales growth, long-term trends involving margins, planned increases in sales force, reimbursement and production personnel,
and expansion of marketing and research and development. 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 Electromed include, but are not limited to, the impact of emerging and existing competitors, the effectiveness of our sales
and marketing initiatives, changes to reimbursement programs, as well as other factors described
from time to time in our reports to the Securities and Exchange Commission (including our Annual Report on Form 10-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.
Financial Tables Follow:
Electromed, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
| March 31, | June 30, | |||||||
| 2012 | 2011 | |||||||
| Assets | (Unaudited) | |||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 1,392,935 | $ | 4,091,739 | ||||
| Accounts receivable (net of allowances for doubtful accounts of $45,000) | 11,091,562 | 9,593,105 | ||||||
| Inventories | 2,411,937 | 1,855,957 | ||||||
| Prepaid expenses and other current assets | 515,021 | 371,257 | ||||||
| Deferred income taxes | 722,000 | 722,000 | ||||||
| Total current assets | 16,133,455 | 16,634,058 | ||||||
| Property and equipment, net | 3,252,940 | 2,807,082 | ||||||
| Finite-life intangible assets, net | 1,169,942 | 1,235,828 | ||||||
| Other assets | 264,761 | 191,964 | ||||||
| Total assets | $ | 20,821,098 | $ | 20,868,932 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Revolving line of credit | $ | 1,768,128 | $ | 1,768,128 | ||||
| Current maturities of long-term debt | 351,477 | 438,267 | ||||||
| Accounts payable | 724,505 | 733,621 | ||||||
| Accrued compensation | 632,870 | 868,229 | ||||||
| Warranty reserve | 464,559 | 444,096 | ||||||
| Other accrued liabilities | 88,980 | 161,166 | ||||||
| Total current liabilities | 4,030,519 | 4,413,507 | ||||||
| Long-term debt, less current maturities | 1,403,220 | 1,582,102 | ||||||
| Deferred income taxes | 167,000 | 167,000 | ||||||
| Total liabilities | 5,600,739 | 6,162,609 | ||||||
| Commitments and Contingencies (Note 8) | ||||||||
| Shareholders' Equity | ||||||||
| Common stock, $0.01 par value; authorized: 13,000,000; shares issued and outstanding: 8,114,252 and 8,100,485 shares, respectively | 81,143 | 81,005 | ||||||
| Additional paid-in capital | 12,920,575 | 12,794,368 | ||||||
| Retained earnings | 2,218,641 | 1,853,450 | ||||||
| Common stock subscriptions receivable for 15,000 shares outstanding as of June 30, 2011 | - | (22,500 | ) | |||||
| Total shareholders' equity | 15,220,359 | 14,706,323 | ||||||
| Total liabilities and shareholders' equity | $ | 20,821,098 | $ | 20,868,932 |
Electromed, Inc. and Subsidiary
Condensed Consolidated Statements of Income (Unaudited)
| For the Three Months Ended March 31, | For the Nine Months Ended March 31, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net revenues | $ | 4,774,347 | $ | 5,198,828 | $ | 14,943,612 | $ | 14,049,803 | ||||||||
| Cost of revenues | 1,405,804 | 1,495,509 | 4,024,577 | 3,872,565 | ||||||||||||
| Gross profit | 3,368,543 | 3,703,319 | 10,919,035 | 10,177,238 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | 2,904,534 | 2,759,543 | 9,434,995 | 8,025,578 | ||||||||||||
| Research and development | 238,230 | 272,270 | 705,655 | 689,360 | ||||||||||||
| Total operating expenses | 3,142,764 | 3,031,813 | 10,140,650 | 8,714,938 | ||||||||||||
| Operating income | 225,779 | 671,506 | 778,385 | 1,462,300 | ||||||||||||
| Interest expense, net of interest income | 42,684 | 38,077 | 130,194 | 150,929 | ||||||||||||
| Net income before income taxes | 183,095 | 633,429 | 648,191 | 1,311,371 | ||||||||||||
| Income tax expense | (88,000 | (146,000 | ) | (283,000 | ) | (420,000 | ||||||||||
| Net income | $ | 95,095 | $ | 487,429 | $ | 365,191 | $ | 891,371 | ||||||||
| Earnings per share attributable to Electromed, Inc. common shareholders: | ||||||||||||||||
| Basic | $ | 0.01 | $ | 0.06 | $ | 0.05 | $ | 0.12 | ||||||||
| Diluted | $ | 0.01 | $ | 0.06 | $ | 0.04 | $ | 0.12 | ||||||||
| Weighted-average Electromed, Inc. common shares outstanding: | ||||||||||||||||
| Basic | 8,114,120 | 8,099,752 | 8,105,562 | 7,722,075 | ||||||||||||
| Diluted | 8,116,759 | 8,112,696 | 8,116,977 | 7,750,956 |
Electromed, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows (Unaudited)
| For the Nine Months Ended March 31, | ||||||||
| 2012 | 2011 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | 365,191 | $ | 891,371 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation | 300,248 | 246,426 | ||||||
| Amortization of finite-life intangible assets | 91,032 | 83,848 | ||||||
| Amortization of debt issuance costs. | 9,461 | 27,778 | ||||||
| Share-based compensation expense | 97,044 | 129,396 | ||||||
| Loss on disposal of property and equipment | 23,009 | 15,758 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,498,457 | ) | (2,655,542 | ) | ||||
| Inventories | (555,980 | ) | (194,190 | ) | ||||
| Prepaid expenses and other assets | (214,709 | ) | (149,566 | ) | ||||
| Accounts payable and accrued liabilities | (296,198 | ) | 329,215 | |||||
| Net cash used in operating activities | (1,679,359 | ) | (1,275,506 | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Expenditures for property and equipment | (736,197 | ) | (315,456 | ) | ||||
| Expenditures for finite-life intangible assets | (25,146 | ) | (648,616 | ) | ||||
| Net cash used in investing activities | (761,343 | ) | (964,072 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Net payments on revolving line of credit | - | (500,000 | ) | |||||
| Principal payments on long-term debt including capital lease obligations | (298,590 | ) | (327,113 | ) | ||||
| Payments of deferred financing fees | (11,313 | ) | (6,717 | ) | ||||
| Proceeds from warrant exercises | 29,301 | 24,000 | ||||||
| Proceeds from sales of 1,900,000 shares of common stock, net of offering costs of $1,236,287 | - | 6,363,713 | ||||||
| Proceeds from subscription notes receivable | 22,500 | 27,000 | ||||||
| Net cash provided by (used in) financing activities | (258,102 | ) | 5,580,883 | |||||
| Net increase (decrease) in cash and cash equivalents | (2,698,804 | ) | 3,341,305 | |||||
| Cash and cash equivalents | ||||||||
| Beginning of period. | 4,091,739 | 610,727 | ||||||
| End of period | $ | 1,392,935 | $ | 3,952,032 |