Full Press Release Details
Chief Financial Officer
Inc. Reports Higher First Quarter Revenues and Operating Income
Income Increased 47%
Prague, Minnesota - November 10, 2015 - Electromed, Inc. (NYSE MKT: ELMD) today announced financial results for its
first quarter ended September 30, 2015.
revenues for the first quarter of fiscal 2016 were $5.0 million, a 4.8% increase compared to the first quarter of fiscal 2015.
Growth in total net revenues was attributable to strong results in the home care market where revenue increased by approximately
12.3%, or $0.5 million, compared to the same period of fiscal 2015. Home care sales increased due to a higher number of approvals
and higher average selling price from third party payers, such as insurance companies, Medicare and Medicaid, for the Company's
Company reported net income of $341,000, or $0.04 cents per basic and diluted share, for the first quarter of fiscal 2016, compared
to $378,000, or $0.05 per basic and diluted share, for the same period of fiscal 2015. The decrease in net income was primarily
the result of recording current tax expense in fiscal 2016, mostly offset by increased revenue and reductions in cost of goods
sold expenses year over year. The first quarter of fiscal 2015 benefitted from the Company's use of its tax loss carryforwards,
combined with a valuation allowance on net deferred tax assets, which eliminated income tax expense. In the first quarter of fiscal
2016, the Company reported income tax expense of $224,000. Net income before income tax expense rose $187,000 or 49.6%, compared
to the first quarter of the prior fiscal year.
margins in the first quarter of fiscal 2016 were 77.2%, up from 69.1% in the first quarter of fiscal 2015. The increase in gross
profit percentage resulted primarily from the increase in domestic home care revenue The increase in gross profit dollars resulted
from the increase in domestic home care revenue at higher average selling price and greater referral to approval percentage, as
compared with the prior year, along with lower manufacturing costs due to the decrease in our manufacturing costs of the Smartvest
SQL. Operating expenses, which include selling, general and administrative as well as research and development expenses, in the
first quarter of fiscal 2016, were $3.3 million or 65.5% of revenue compared with $2.9 million or 60.7% of revenue in the same
period of the prior year. The increase was due to a combination of additional employees in our sales and sales support departments,
consulting fees associated with information technology improvements and outsourcing certain IT services.
on the first quarter results, Kathleen Skarvan, President and Chief Executive Officer of the Company said, "The Company
continues to make steady gains and I'm particularly pleased with margin performance and pretax income growth. While showing
positive trends, revenue growth as compared to the prior quarter was affected by the timing of some referrals and approvals from
third party payers. We estimate continued revenue growth in fiscal 2016 as the addition of sales resources provides a larger and
more diverse base of sales opportunities. Quarterly revenues may fluctuate though based on the referral mix of payers. I am very
pleased with the improvement in gross margin we reported as it reflects higher average selling price from third party payers in
our home care and the progress we have made in lowering the manufacturing cost of our newest generation device, Smartvest SQL.
Sales and marketing expenses grew as planned. Overall, it was a solid quarter that continues momentum we have worked hard to create
and we will look to build on that momentum as fiscal 2016 progresses."
for the Three Months Ended September 30, 2015
About Electromed, Inc.
Inc. develops, manufactures, markets, and sells innovative products that provide airway clearance therapy, including the Smartvest
Airway Clearance System and related products, to patients with compromised pulmonary function with a commitment to excellence
and compassionate service. Further information about the Company can be found at www.electromed.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 planned expenses. 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 our industry and business,
the effectiveness of our sales and marketing and cost control 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 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.
Condensed Balance Sheets
| September 30, 2015 | June 30, 2015 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 3,782,977 | $ | 3,598,240 | ||||
| Accounts receivable (net of allowances for doubtful accounts of $45,000) | 6,457,302 | 6,518,816 | ||||||
| Inventories | 2,155,305 | 2,072,108 | ||||||
| Prepaid expenses and other current assets | 501,036 | 397,833 | ||||||
| Total current assets | 12,896,620 | 12,586,997 | ||||||
| Property and equipment, net | 3,571,833 | 3,635,516 | ||||||
| Finite-life intangible assets, net | 975,149 | 999,842 | ||||||
| Other assets | 181,762 | 182,699 | ||||||
| Total assets | $ | 17,625,364 | $ | 17,405,054 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Current maturities of long-term debt | $ | 49,409 | $ | 48,749 | ||||
| Accounts payable | 522,011 | 538,518 | ||||||
| Accrued compensation | 501,135 | 700,370 | ||||||
| Income tax payable | 147,181 | 122,657 | ||||||
| Warranty reserve | 630,000 | 660,000 | ||||||
| Other accrued liabilities | 282,258 | 208,983 | ||||||
| Total current liabilities | 2,131,994 | 2,279,277 | ||||||
| Long-term debt, less current maturities | 1,189,928 | 1,202,446 | ||||||
| Total liabilities | 3,321,922 | 3,481,723 | ||||||
| Commitments and Contingencies | ||||||||
| Equity | ||||||||
| Common stock, $0.01 par value; authorized: 13,000,000 shares; 8,163,857 and 8,133,857 issued and outstanding at September 30, 2015 and June 30, 2015, respectively | 81,639 | 81,339 | ||||||
| Additional paid-in capital | 13,366,169 | 13,327,320 | ||||||
| Retained earnings | 855,634 | 514,672 | ||||||
| Total shareholders' equity | 14,303,442 | 13,923,331 | ||||||
| Total liabilities and shareholders' equity | $ | 17,625,364 | $ | 17,405,054 |
Condensed Statements of Operations (Unaudited)
| Three Months Ended September 30, | ||||||||
| 2015 | 2014 | |||||||
| Net revenues | $ | 5,001,188 | $ | 4,770,539 | ||||
| Cost of revenues | 1,141,758 | 1,475,797 | ||||||
| Gross profit | 3,859,430 | 3,294,742 | ||||||
| Operating expenses | ||||||||
| Selling, general and administrative | 3,232,719 | 2,821,495 | ||||||
| Research and development | 41,543 | 75,265 | ||||||
| Total operating expenses | 3,274,262 | 2,896,760 | ||||||
| Operating income | 585,168 | 397,982 | ||||||
| Interest expense, net of interest income of $624 and $1,212 respectively | 20,206 | 20,453 | ||||||
| Net income before income taxes | 564,962 | 377,529 | ||||||
| Income tax expense | (224,000 | ) | - | |||||
| Net income | $ | 340,962 | $ | 377,529 | ||||
| Income per share: | ||||||||
| Basic | $ | 0.04 | $ | 0.05 | ||||
| Diluted | $ | 0.04 | $ | 0.05 | ||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 8,133,857 | 8,114,252 | ||||||
| Diluted | 8,173,684 | 8,114,252 |
Condensed Statements of Cash Flows (Unaudited)
| Three Months Ended September 30, | ||||||||
| 2015 | 2014 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | 340,962 | $ | 377,529 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 154,849 | 155,341 | ||||||
| Amortization of finite-life intangible assets | 30,674 | 30,892 | ||||||
| Amortization of debt issuance costs | 4,664 | 4,942 | ||||||
| Share-based compensation expense | 39,149 | 15,089 | ||||||
| Loss on disposal of property and equipment and intangibles assets | 24,965 | 18,824 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 61,514 | 125,578 | ||||||
| Inventories | (67,144 | ) | (7,702 | ) | ||||
| Prepaid expenses and other assets | (106,930 | ) | (80,750 | ) | ||||
| Accounts payable and accrued liabilities | (171,273 | ) | 314,901 | |||||
| Net cash provided by operating activities | 311,430 | 954,644 | ||||||
| Cash Flows From Investing Activities | ||||||||
| Expenditures for property and equipment | (101,006 | ) | (156,669 | ) | ||||
| Expenditures for finite-life intangible assets | (13,829 | ) | (9,320 | ) | ||||
| Net cash used in investing activities | (114,835 | ) | (165,989 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Principal payments on long-term debt including capital lease obligations | (11,858 | ) | (11,231 | ) | ||||
| Net increase in cash | 184,737 | 777,424 | ||||||
| Cash | ||||||||
| Beginning of period | 3,598,240 | 1,502,702 | ||||||
| End of period | $ | 3,782,977 | $ | 2,280,126 |