Full Press Release Details
Chief Executive Officer
ELECTROMED, INC. REPORTS FISCAL YEAR 2014 FIRST QUARTER
New Prague, Minnesota - November 12, 2013 - Electromed,
Inc. (NYSE MKT: ELMD) today announced financial results for the three-month period ended September 30, 2013. Net revenues in the
first quarter of fiscal 2014 were approximately $3.4 million, a 15% decrease compared to the same period of fiscal 2013. The Company
reported a net loss of approximately $335,000, or $0.04 cents per basic and diluted share, for the first quarter of fiscal 2014,
compared to a net loss of approximately $71,000, or one cent per basic and diluted share, for the same period last year.
The decline in total revenues in the first quarter of fiscal 2014 was attributable
to lower prices received from health care insurers on the Company's products due to an increased focus on controlling health
care costs as well as more rigorous scrutiny by insurers of reimbursement requests for a wide range of medical devices and
other health care products. The decline in homecare revenue of approximately $0.7 million in the first quarter was partially offset
by an increase in international and government/institutional revenue of $100,000 compared to the same period of fiscal 2013.
The larger net loss in the first quarter was primarily due to the lower
reported revenue. Gross margins in the first quarter declined slightly to 69% as compared to the same period in the prior
year. Operating expenses were essentially flat but rose as a percentage of sales due to the lower revenues in the first quarter
of fiscal 2014 as compared to the first quarter of the prior year. The Company had positive operating cash flow of approximately
$740,000 and increased its cash by approximately $500,000 during the quarter.
Commenting on the Company's first quarter results, Electromed 's Chief
Executive Officer, Kathleen Skarvan said, "The pressure on our revenue persisted in the first quarter of fiscal 2014. We
believe uncertainty surrounding health care reform and the Affordable Care Act and ongoing efforts by health insurers to control
costs reduced the adoption of therapy devices like ours during the quarter. However, I am pleased with our team's ability to manage
expenses and generate significant cash flow via strong collections during a challenging period. We have developed and are committed
to executing on our strategies to increase revenue from the homecare market while continuing to support growth in institutional
and international markets."
About Electromed, Inc.
Electromed, Inc. 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.
Results for the Three-Months Ended September 30, 2013
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 beliefs regarding the impact of industry trends and legislation on revenue and the Company's revenue growth
and cost control strategies. 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 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 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:
Results for the Three-Months Ended September 30, 2013
Electromed, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
| September 30, 2013 | June 30, 2013 | |||||||
| Assets | (Unaudited) | |||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 1,077,382 | $ | 503,564 | ||||
| Accounts receivable (net of allowances for doubtful accounts of $45,000) | 7,989,355 | 9,014,043 | ||||||
| Inventories | 1,432,222 | 1,379,594 | ||||||
| Prepaid expenses and other current assets | 460,914 | 428,843 | ||||||
| Income taxes receivable | 779,644 | 538,285 | ||||||
| Deferred income taxes | 557,000 | 557,000 | ||||||
| Total current assets | 12,296,517 | 12,421,329 | ||||||
| Property and equipment, net | 3,761,298 | 3,743,675 | ||||||
| Finite-life intangible assets, net | 1,049,115 | 1,080,734 | ||||||
| Other assets | 304,605 | 310,089 | ||||||
| Total assets | $ | 17,411,535 | $ | 17,555,827 | ||||
| Liabilities and Equity | ||||||||
| Current Liabilities | ||||||||
| Current maturities of long-term debt | 52,662 | 57,540 | ||||||
| Accounts payable | 950,152 | 643,681 | ||||||
| Accrued compensation | 334,553 | 565,023 | ||||||
| Warranty reserve | 680,000 | 680,000 | ||||||
| Other accrued liabilities | 342,169 | 247,267 | ||||||
| Total current liabilities | 2,359,536 | 2,193,511 | ||||||
| Long-term debt, less current maturities | 1,318,083 | 1,332,455 | ||||||
| Deferred income taxes | 103,000 | 103,000 | ||||||
| Total liabilities | 3,780,619 | 3,628,966 | ||||||
| Commitments and Contingencies | ||||||||
| Equity | ||||||||
| Common stock, $0.01 par value; authorized: 13,000,000; shares issued and outstanding: 8,114,252 | 81,143 | 81,143 | ||||||
| Additional paid-in capital | 13,174,398 | 13,134,938 | ||||||
| Retained earnings | 375,375 | 710,780 | ||||||
| Total equity | 13,630,916 | 13,926,861 | ||||||
| Total liabilities and equity | $ | 17,411,535 | $ | 17,555,827 |
Results for the Three-Months Ended September 30, 2013
Electromed, Inc. and Subsidiary
Condensed Consolidated Statements of Income
| (Unaudited) | For the Three Months Ended September 30, | |||||||
| 2013 | 2012 | |||||||
| Net revenues | $ | 3,418,178 | $ | 4,031,286 | ||||
| Cost of revenues | 1,062,346 | 1,210,452 | ||||||
| Gross profit | 2,355,832 | 2,820,834 | ||||||
| Operating expenses | ||||||||
| Selling, general and administrative | 2,723,927 | 2,816,015 | ||||||
| Research and development | 209,108 | 101,189 | ||||||
| Total operating expenses | 2,933,035 | 2,917,204 | ||||||
| Operating income (loss) | (577,203 | ) | (96,370 | ) | ||||
| Interest expense, net of interest income of $7,398 and $4,348 respectively | 15,202 | 36,738 | ||||||
| Net income (loss) before income taxes | (592,405 | ) | (133,108 | ) | ||||
| Income tax benefit | 257,000 | 62,000 | ||||||
| Net loss | $ | (335,405 | ) | $ | (71,108 | ) | ||
| Loss per share: | ||||||||
| Basic and diluted | $ | (0.04 | ) | $ | (0.01 | ) | ||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 8,114,252 | 8,114,252 | ||||||
| Diluted | 8,114,252 | 8,114,252 |
Results for the Three-Months Ended September 30, 2013
Electromed, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
| (Unaudited) | For the Three Months Ended September 30, | |||||||
| 2013 | 2012 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income (loss) | $ | (335,405 | ) | $ | (71,108 | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | 122,923 | 114,979 | ||||||
| Amortization of finite-life intangible assets | 31,619 | 33,969 | ||||||
| Amortization of debt issuance costs | 2,314 | 3,363 | ||||||
| Share-based compensation expense | 39,460 | 41,317 | ||||||
| Loss on disposal of property and equipment | 18,134 | 3,915 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 1,024,688 | 435,371 | ||||||
| Inventories | (52,628 | ) | 87,140 | |||||
| Prepaid expenses and other assets | (270,260 | ) | (187,706 | ) | ||||
| Accounts payable and accrued liabilities | 161,138 | (347,226 | ) | |||||
| Net cash provided by (used in) operating activities | 741,983 | 114,014 | ||||||
| Cash Flows From Investing Activities | ||||||||
| Expenditures for property and equipment | (148,915 | ) | (197,020 | ) | ||||
| Expenditures for finite-life intangible assets | - | (27,073 | ) | |||||
| Net cash used in investing activities | (148,915 | ) | (224,093 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Principal payments on long-term debt including capital lease obligations | (19,250 | ) | (109,801 | ) | ||||
| Net cash used in financing activities | (19,250 | ) | (109,801 | ) | ||||
| Net decrease in cash and cash equivalents | 573,818 | (219,880 | ) | |||||
| Cash and cash equivalents | ||||||||
| Beginning of period | 503,564 | 1,702,435 | ||||||
| End of period | $ | 1,077,382 | $ | 1,482,555 |