Full Press Release Details
Chairman and Chief Executive Officer
Director of Strategic Marketing
The Event Group, Incorporated
ELECTROMED, INC. REPORTS 2011 FOURTH QUARTER
AND YEAR-END RESULTS
36.7% Increase in Fourth Quarter Net Revenue Compared to Prior Year
$19 Million in Net Revenue for the 2011 Fiscal Year
New Prague, Minnesota - September 12, 2011 -
Electromed, Inc. (NASDAQ: ELMD) today announced financial results for the three months and fiscal year ended June 30, 2011. Net
revenues for the three months ended June 30, 2011 were approximately $4,954,000, a 36.7% increase compared to net revenues of approximately
$3,624,000 for the same period last year. Net revenues for the fiscal year ended June 30, 2011 were approximately $19,004,000,
a 32.9% increase compared to net revenues of approximately $14,304,000 for the same period last year.
The Company also announced net income of approximately $165,000,
or $0.02 per basic and diluted share, for the three months ended June 30, 2011, compared to net income of approximately $71,000,
or $0.01 per basic and diluted share, for the same three-month period last year. For the fiscal year ended June 30, 2011, net income
was $1,056,000, or $0.14 per basic and $0.13 per diluted share, compared to net income of approximately $916,000, or $0.15 per
basic and diluted share, for the same period last year. Net revenues increased primarily due to an expansion of the sales force.
Net income results were attributable to higher net revenues, offset by expenses related to increases in sales force, support and
production personnel, and an expansion of marketing and research and development activities. In addition, earnings per share were
affected by an increase to the number of outstanding shares of Company common stock as compared to the prior-year periods, which
was attributable to the Company's completion of its initial public offering in August 2010. Including the underwriter's
over-allotment option, a total of 1,900,000 shares of Company common stock were registered and sold in the initial public offering.
Three and Twelve-Month Results as of June 30, 2011
Robert Hansen, Chairman and CEO, commented on the Company, saying,
"Electromed, Inc. is a rapidly growing company.
It is using a portion of the capital received from its IPO to grow its sales force and support its infrastructure. We believe
these actions are essential investments in driving longer-term profitable results. We have also continued to make important
investments in research and development. We believe that new innovations are the surest path to sustainable growth and higher
profits. We have pursued these investments while maintaining solid profitability and a strong balance sheet."
Gross profit increased to approximately $3,600,000, or 72.7% of
net revenues, for the three months ended June 30, 2011, and $13,778,000, or 72.5% of net revenues, for the fiscal year ended June
30, 2011. For the three months and fiscal year ended June 30, 2010, gross profit was approximately $2,698,000, or 74.4% of net
revenues, and $10,378,000, or 72.6% of net revenues, respectively. The increase in gross profit dollars resulted primarily from
the increase in sales volume. Gross profit percentage was consistent for the year ended 2011 from 2010. The slight decrease in
gross profit percentage for the three-month period ended June 30, 2011 primarily resulted from lower reimbursement from the mix
of referrals as compared to the three-month period ended June 30, 2010. Factors such as diagnoses that are not assured of reimbursement,
along with insurance programs which present lower allowable reimbursement amounts (for example, state Medicaid programs) affect
average reimbursement received on a short-term basis and tend to fluctuate margins slightly on a quarterly basis.
Operating expenses, which consist of selling, general, and administrative
expenses and research and development expenses, were approximately $3,192,000 and $11,908,000, respectively, for the three months
and fiscal year ended June 30, 2011, an increase of approximately 29.9% over total operating expenses for the three-month period
last year and an increase of approximately 38.8% over total operating expenses for the 2010 fiscal year. These planned increases
resulted from higher payroll and marketing expenses related to increasing the size of the sales team, patient training costs related
to a higher sales volume, increased expenses relating to being a newly public company, and increased research and development expenses.
Total cash was approximately $4,092,000 as of June 30, 2011. For
the fiscal year ended June 30, 2011, cash provided by financing activities was approximately $6,007,000, consisting of approximately
$6,364,000 net proceeds received in August and September 2010 in connection with the Company's initial public offering, $26,000
from exercise of warrants, and $60,000 in proceeds from subscription notes receivable. This was offset by principal payments on
long-term debt of approximately $436,000. An aggregate of $1,111,000 was used for investing activities during the 2011 fiscal year,
including $659,000 in payments for patent and trademark costs, primarily relating to defense of the SmartVest trademark,
and $452,000 in net expenditures for property and equipment. The Company's receivable position increased 45.9% to approximately
$9,593,000, reflecting the significant sales growth over the past fiscal year.
Three and Twelve-Month Results as of June 30, 2011
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. The forward-looking statements in this release include those relating to the Company's business
strategy and intent to maximize long-term growth and profits. Forward-looking statements and the Company's expectations regarding
gross margins, and can generally otherwise be identified by the words "believe," "expect," "anticipate"
or "intend" or similar words. 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, the success of our research and development activities, 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
Financial Tables Follow:
Electromed, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
| June 30 2011 | June 30 2010 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 4,091,739 | $ | 610,727 | ||||
| Accounts receivable (net of allowances for doubtful accounts of $45,000) | 9,593,105 | 6,577,002 | ||||||
| Inventories | 1,855,957 | 1,470,775 | ||||||
| Prepaid expenses and other current assets | 371,257 | 269,193 | ||||||
| Deferred income taxes | 722,000 | 514,000 | ||||||
| Total current assets | 16,634,058 | 9,441,697 | ||||||
| Property and equipment, net | 2,807,082 | 2,688,941 | ||||||
| Finite-life intangible assets, net | 1,235,828 | 1,055,776 | ||||||
| Deferred common stock offering costs | - | 828,034 | ||||||
| Other assets assets | 191,964 | 128,789 | ||||||
| Total assets | $ | 20,868,932 | $ | 14,143,237 | ||||
| Liabilities and Equity | ||||||||
| Current Liabilities | ||||||||
| Revolving line of credit | $ | 1,768,128 | $ | 1,768,128 | ||||
| Current maturities of long-term debt | 438,267 | 397,886 | ||||||
| Accounts payable | 733,621 | 1,239,827 | ||||||
| Accrued compensation | 868,229 | 665,083 | ||||||
| Warranty reserve | 444,096 | 363,277 | ||||||
| Other accrued liabilities | 161,166 | 68,097 | ||||||
| Total current liabilities | 4,413,507 | 4,502,298 | ||||||
| Long-term debt, less current maturities | 1,582,102 | 2,033,325 | ||||||
| Deferred income taxes | 167,000 | 145,000 | ||||||
| Total liabilities | 6,162,609 | 6,680,623 | ||||||
| Commitments and Contingencies | ||||||||
| Equity | ||||||||
| Electromed, Inc. equity: | ||||||||
| Common stock, $0.01 par value; authorized: 13,000,000 shares; issued and outstanding: 8,100,485 and 6,187,885 shares, respectively | 81,005 | 61,879 | ||||||
| Additional paid-in capital | 12,794,368 | 6,685,362 | ||||||
| Retained earnings | 1,853,450 | 797,873 | ||||||
| Common stock subscriptions receivable for shares outstanding of 15,000 and 48,500 respectively | (22,500 | ) | (82,500 | ) | ||||
| Total equity | 14,706,323 | 7,462,614 | ||||||
| Total liabilities and equity | $ | 20,868,932 | $ | 14,143,237 |
Electromed, Inc. and Subsidiary
Condensed Consolidated Statements of Income
| For the Three Months Ended June 30, | For the Fiscal Year Ended June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Net revenues | $ | 4,953,851 | $ | 3,624,168 | $ | 19,003,507 | $ | 14,303,848 | ||||||||
| Cost of revenues | 1,353,463 | 926,439 | 5,226,001 | 3,925,557 | ||||||||||||
| Gross profit | 3,600,388 | 2,697,729 | 13,777,506 | 10,378,291 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | 2,847,420 | 2,301,805 | 10,873,904 | 7,981,338 | ||||||||||||
| Research and development | 344,333 | 155,522 | 1,033,693 | 600,986 | ||||||||||||
| Total operating expenses | 3,191,753 | 2,457,327 | 11,907,597 | 8,582,324 | ||||||||||||
| Operating income | 408,635 | 240,402 | 1,869,909 | 1,795,967 | ||||||||||||
| Interest expense, net of interest income of $2,112, $1,441, $10,923, and $6,417 respectively | 40,403 | 57,754 | 191,332 | 263,431 | ||||||||||||
| Net income before income taxes | 368,232 | 182,648 | 1,678,577 | 1,532,536 | ||||||||||||
| Income tax expense | (203,000 | ) | (112,000 | ) | (623,000 | ) | (599,000 | ) | ||||||||
| Net income | 165,232 | 70,648 | 1,055,577 | 933,536 | ||||||||||||
| Less: Net income attributable to non-controlling interest | - | - | - | (17,198 | ) | |||||||||||
| Net income attributable to Electromed, Inc. | $ | 165,232 | $ | 70,648 | $ | 1,055,577 | $ | 916,338 | ||||||||
| Earnings per share attributable to Electromed, Inc. common shareholders: | ||||||||||||||||
| Basic | $ | 0.02 | $ | 0.01 | $ | 0.14 | $ | 0.15 | ||||||||
| Diluted | $ | 0.02 | $ | 0.01 | $ | 0.13 | $ | 0.15 | ||||||||
| Weighted-average Electromed, Inc. common shares outstanding: | ||||||||||||||||
| Basic | 8,100,281 | 6,107,445 | 7,816,367 | 6,081,030 | ||||||||||||
| Diluted | 8,117,883 | 6,145,076 | 7,841,006 | 6,114,919 |
Electromed, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
| For the Fiscal Year Ended June 30, | ||||||||
| 2011 | 2010 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | 1,055,577 | $ | 933,536 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | 335,620 | 298,928 | ||||||
| Amortization of finite-life intangible assets | 113,850 | 52,820 | ||||||
| Amortization of debt issuance costs | 31,463 | 53,404 | ||||||
| Share-based compensation expense | 156,169 | 168,895 | ||||||
| Deferred income taxes | (186,000 | ) | (149,000 | ) | ||||
| Loss on disposal of property and equipment | 26,225 | 4,258 | ||||||
| Issuance of common stock for payment of services | - | 22,500 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (3,016,103 | ) | (228,856 | ) | ||||
| Inventories | (385,182 | ) | (292,086 | ) | ||||
| Prepaid expenses and other assets | (193,342 | ) | (111,345 | ) | ||||
| Accounts payable and accrued liabilities | 646,619 | (145,117 | ) | |||||
| Net cash provided by (used in) operating activities | (1,415,104 | ) | 607,937 | |||||
| Cash Flows From Investing Activities | ||||||||
| Expenditures for property and equipment | (466,315 | ) | (269,616 | ) | ||||
| Purchase of noncontrolling interest in Electromed Financial, LLC | - | (125,000 | ) | |||||
| Expenditures for finite-life intangible assets | (659,210 | ) | (514,505 | ) | ||||
| Proceeds on the sale of fixed assets | 14,812 | - | ||||||
| Net cash used in investing activities | (1,110,713 | ) | (909,121 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Net borrowings (payments) on revolving line of credit | - | 1,768,128 | ||||||
| Principal payments on long-term debt including capital lease obligations | (435,968 | ) | (3,648,744 | ) | ||||
| Proceeds from long-term debt | - | 2,520,000 | ||||||
| Noncontrolling interest distributions paid | - | (18,417 | ) | |||||
| Payments of deferred financing fees | (6,716 | ) | (75,780 | ) | ||||
| Proceeds from warrant exercises | 25,800 | 390,832 | ||||||
| Proceeds from sales of 1.9 million shares of common stock, net of offering costs of $1,236,287 | 6,363,713 | - | ||||||
| Payments of deferred offering costs | - | (417,550 | ) | |||||
| Proceeds from subscription notes receivable | 60,000 | 9,000 | ||||||
| Income tax benefit related to exercise of stock warrants | - | 22,526 | ||||||
| Net cash provided by (used in) financing activities | 6,006,829 | 549,995 | ||||||
| Net increase in cash and cash equivalents | 3,481,012 | 248,811 | ||||||
| Cash and cash equivalents | ||||||||
| Beginning of period | 610,727 | 361,916 | ||||||
| End of period | $ | 4,091,739 | $ | 610,727 |