--Record Annual Revenue--
-- Fourth Quarter Revenue Increased 21%
Year-Over-Year; Full Year Revenue Increased 15% --
Electromed, Inc. (“Electromed” or the “Company”) (NYSE American:
ELMD), a leader in innovative airway clearance technologies, today
announced financial results for the three months (“Q4 FY 2023”) and
full year (“FY 2023”) ended June 30, 2023.
Q4 FY 2023 Financial Highlights
- Net revenue increased 21% to a record $13.6 million in Q4 FY
2023, from $11.3 million in Q4 of the prior year.
- Operating income totaled $1.5 million in Q4 FY 2023, compared
to $0.5 million in Q4 FY 2022.
- Net income was $1.0 million for the quarter, or $0.12 per
diluted share, compared to $0.4 million, or $0.04 per diluted
share, in Q4 FY 2022.
- Cash as of June 30, 2023, was $7.4 million.
FY 2023 Financial Highlights
- Net revenue increased 15% year over year to $48.1 million, from
$41.7 million, during the fiscal year ended June 30, 2023 (“FY
2023”).
- Operating income totaled $4.0 million, a 35% increase compared
to $3.0 million in FY 2022.
- Net income totaled $3.2 million, or $0.36 per diluted share,
compared to $2.3 million, or $0.26 per diluted share, in FY
2022.
“Fiscal year 2023 was pivotal for Electromed,” said Jim Cunniff,
President and Chief Executive Officer. “The team delivered
exceptional results, including record revenues of $13.6 million in
the fourth quarter, a 21% year-over-year growth rate and over $48
million for the fiscal year, despite facing headwinds from the
expiration of the CMS waiver and macro supply chain disruptions.
The team made strides on our key strategic milestones, most
importantly launching the next generation SmartVest Clearway
device, a sleeker, lighter-weight, user-friendly device, and the
first new HFCWO technology to be introduced to the market in years.
We continue to invest in our commercial organization and
direct-to-consumer marketing efforts as we march toward greater
market penetration and adoption. The operating leverage generated
by these investments is clear in our annual results.”
Fiscal 2024 Strategic Priorities
Mr. Cunniff continued, “As I step into the role of President and
Chief Executive Officer, I am grateful for the solid foundation
created by Kathleen Skarvan, former President and Chief Executive
Officer, and current Board Chair. Looking into Fiscal Year 2024, we
will continue to execute against Electromed’s four strategic
pillars: continued thoughtful sales force expansion; direct to
consumer and direct to physician marketing; infrastructure to
support anticipated sales growth which includes operational and
manufacturing excellence; and finally, we will continue to add to
the body of clinical evidence to further support HFCWO therapy as
an efficacious therapy for bronchiectasis. We believe that
bronchiectasis is under-recognized and under-diagnosed, but we
believe this is changing and we are poised to capture increased
diagnoses and subsequent prescriptions. I am confident that our
continued attention to these strategic pillars will accelerate
topline growth, improve our operating margin, and in turn increase
shareholder value.”
Q4 FY 2023 Review
Net revenue in the fourth quarter of the Company’s fiscal year
ending June 30, 2023 (“fiscal 2023”) increased 20.8% to $13.6
million, from $11.3 million in the fourth quarter of the Company’s
fiscal year ended June 30, 2022 (“fiscal 2022”), primarily driven
by 22.8% growth in the home care business which benefitted from an
increase in direct sales representatives, increased sales
representative productivity driven by increased clinic access and
patient flow and our sales team refining their selling process and
clinic targeting methodology. Field sales employees totaled 55, of
which 46 were direct sales, at the end of the fourth quarter of
fiscal 2023, compared to 52 at the end of the fourth quarter of
fiscal 2022, of which 43 were direct sales. Sales force
productivity continued to improve during the quarter allowing us to
achieve home care revenue per direct sales rep of $945,000 for FY
2023, on the high end of the target of $850,000 to $950,000.
Distributor revenue decreased 41.2% to $0.2 million in the
fourth quarter of fiscal 2023 from $0.4 million in the same period
in fiscal 2022, primarily due to the timing of purchases of one of
our key distribution partners. Institutional revenue increased
29.0% to $0.6 million in the fourth quarter of fiscal 2023, and
international revenue increased 30.2% to $0.1 million in the fourth
quarter of fiscal 2023.
Gross profit in the fourth quarter of fiscal 2023 increased to
$10.5 million, or 76.8% of net revenues, from $8.1 million, or
72.0% of net revenues, in the fourth quarter of fiscal 2022, as
rising raw material and shipping costs were offset by higher
Medicare allowable pricing, increased operational efficiencies and
fixed cost leverage on higher revenue.
Operating income totaled $1.5 million in the fourth quarter of
fiscal 2023, compared to $0.5 million in the fourth quarter of
fiscal 2022. The higher operating income was driven by increased
revenue in the fourth quarter of fiscal 2023.
Net income for the fourth quarter of fiscal 2023 was $1.0
million, or $0.12 per diluted share, compared to $0.4 million, or
$0.04 per diluted share, in the fourth quarter of fiscal 2022.
FY 2023 Summary
Net revenue for the full year was $48.1 million led by Homecare
revenue which increased by $5.9 million or 15.6%, to $44.0 million
in fiscal 2023 compared to fiscal 2022. The revenue increase
compared to fiscal 2022 was primarily due to increases in referrals
and approvals. The increase in referrals was primarily due to an
increase in direct sales representatives, increased sales
representative productivity driven by increased clinic access and
patient flow, our sales team refining their selling process and
clinic targeting methodology, and benefits of the CMS waiver on the
non-commercial Medicare portion of our home care revenue.
Additionally, we benefitted from a Medicare allowable rate increase
that took effect on January 1, 2023. Annual Medicare rate increases
for our device are linked closely to changes in the Urban Consumer
Price Index.
The CMS waiver benefited the non-commercial Medicare portion of
our home care revenue by increasing the number of referrals and the
approval percentage for previously non-covered diagnoses. We
believe that our ongoing sales team execution, along with the
expected return to pre-COVID-19 levels of patient face-to-face
engagement with physicians and clinic access for our sales team
mitigated the Q4 homecare revenue impact of the CMS waiver
expiration on May 11, 2023.
Institutional revenue increased by $0.4 million, or 25.3%, in
fiscal 2023 compared to fiscal 2022. Institutional revenue includes
sales to hospitals and rental companies. The revenue increase was
due to increased capital purchases and stronger consumable volumes
compared to fiscal 2022, as hospitals resumed utilization of HFCWO
protocols after reducing utilization early in the COVID-19
pandemic.
Home care distributor revenue increased by $0.1 million, or
9.8%, in fiscal 2023 compared to fiscal 2022. The revenue increase
in fiscal 2023 was due to increased demand from one of our primary
home care distribution partners. We began selling to a limited
number of home medical equipment distributors during our fiscal
year ended June 30, 2020, who in turn sell our SmartVest System in
the U.S. home care market.
International revenue decreased by $0.1 million, or 18.6%, in
fiscal 2023 compared to fiscal 2022. International revenue growth
is not currently a primary focus for us, and our corporate
resources are focused on supporting and maintaining our current
distributors.
Gross profit increased to $36.5 million in fiscal 2023, or 76.0%
of net revenues, from $31.4 million or 75.5% of net revenues, in
fiscal 2022. The increase in gross profit was primarily related to
increases in domestic home care revenue including the Medicare
allowable rate increase that took effect in January 2022.
Selling, general and administrative (“SG&A”) expenses were
$31.6 million in fiscal 2023, representing an increase of $4.5
million or 16.5% from $27.1 million in fiscal 2022. The increase in
SG&A expenses was primarily related to increased payroll and
other compensation related expenses as a result of increased
headcount.
R&D expenses decreased by $0.4 million, or 32.4%, to $0.9
million in fiscal 2023 compared to $1.3 million in fiscal 2022. The
decrease in the current year was primarily due to reduced
professional consulting costs associated with our next generation
platform development activities.
Net income for fiscal 2023 was $3.2 million, or $0.36 per
diluted share, compared to net income of $2.3 million, or $0.26 per
diluted share, in fiscal 2022. The increase in current year net
income was primarily due to stronger home care and distributor
revenue growth.
As of June 30, 2023 Electromed had $7.4 million in cash, $24.1
million in accounts receivable, and no debt, for a working capital
of $29.7 million, and shareholders’ equity of $37.7 million.
Conference Call
Company management will host a conference call on August 22 at
5:00 p.m. Eastern Time to discuss the results.
Interested parties may participate in the call by dialing (877)
407-0789 (Domestic) or (201) 689-8562 (International). The live
conference call webcast will be accessible in the Investor
Relations section of Electromed’s web site and directly via the
following link:
https://viavid.webcasts.com/starthere.jsp?ei=1625050&tp_key=e81a566324
For those who cannot listen to the live broadcast, a replay will
be available by dialing (844) 512-2921 (Domestic) or (412) 317-6671
(International) and referencing the replay pin number 13740145.
Additionally, an online replay will be available in the Investor
Relations section of Electromed’s web site at:
http://investors.smartvest.com/.
About Electromed, Inc.
Electromed, Inc. manufactures, markets, and sells products that
provide airway clearance therapy, including the SmartVest® Airway
Clearance System, to patients with compromised pulmonary function.
It is headquartered in New Prague, Minnesota, and was founded in
1992. Further information about Electromed 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,” “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, 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.
Source: Electromed, Inc.
Electromed, Inc.
Condensed Balance
Sheets
June 30, 2023
June 30, 2022
Assets
Current Assets
Cash and cash equivalents
$
7,372,000
$
8,153,000
Accounts receivable (net of allowances for
doubtful accounts of $45,000)
24,130,000
21,052,000
Contract assets
487,000
286,000
Inventories
4,221,000
3,178,000
Prepaid expenses and other current
assets
1,577,000
1,870,000
Total current assets
37,787,000
34,539,000
Property and equipment, net
5,672,000
4,568,000
Finite-life intangible assets, net
605,000
599,000
Other assets
161,000
120,000
Deferred income taxes
1,581,000
1,538,000
Total assets
$
45,806,000
$
41,364,000
Liabilities and Shareholders'
Equity
Current Liabilities
Accounts payable
$
1,372,000
$
1,261,000
Accrued compensation
3,018,000
2,742,000
Income tax payable
336,000
51,000
Warranty reserve
1,378,000
1,256,000
Other accrued liabilities
1,949,000
1,840,000
Total current liabilities
8,053,000
7,150,000
Other long-term liabilities
86,000
41,000
Total liabilities
8,139,000
7,191,000
Commitments and Contingencies
Shareholders' Equity
Common stock, $0.01 par value per share,
13,000,000 shares authorized;
8,555,238 and 8,475,438 shares issued and
outstanding, respectively
86,000
85,000
Additional paid-in capital
18,788,000
18,308,000
Retained earnings
18,793,000
15,780,000
Total shareholders' equity
37,667,000
34,173,000
Total liabilities and shareholders'
equity
$
45,806,000
$
41,364,000
Electromed, Inc.
Condensed Statement of
Operations
Three Months Ended June
30
Twelve Months Ended June
30
2023
2022
2023
2022
(Unaudited)
(Unaudited)
Net revenues
$
13,612,000
$
11,268,000
$
48,067,000
$
41,659,000
Cost of revenues
3,162,000
3,152,000
11,548,000
10,217,000
Gross profit
10,450,000
8,116,000
36,519,000
31,442,000
Operating expenses
Selling, general and administrative
8,658,000
7,309,000
31,595,000
27,114,000
Research and development
298,000
315,000
916,000
1,356,000
Total operating expenses
8,956,000
7,624,000
32,511,000
28,470,000
Operating income
1,494,000
492,000
4,008,000
2,972,000
Interest income (expense), net
41,000
5,000
78,000
25,000
Net income before income taxes
1,535,000
497,000
4,086,000
2,997,000
Income tax expense
502,000
116,000
920,000
692,000
Net income
$
1,033,000
$
381,000
$
3,166,000
$
2,305,000
Income per share:
Basic
$
0.12
$
0.05
$
0.37
$
0.27
Diluted
$
0.12
$
0.04
$
0.36
$
0.26
Weighted-average common shares
outstanding:
Basic
8,511,632
8,427,404
8,463,684
8,471,320
Diluted
8,723,700
8,735,154
8,700,833
8,768,703
Electromed, Inc.
Condensed Statements of Cash
Flows
For the Years Ended June
30,
2023
2022
Cash Flows From Operating Activities
Net income
$
3,166,000
$
2,305,000
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation
550,000
503,000
Amortization of finite-life intangible
assets
63,000
125,000
Share-based compensation expense
708,000
976,000
Deferred income taxes
(43,000
)
(489,000
)
Changes in operating assets and
liabilities:
Accounts receivable
(3,078,000
)
(4,020,000
)
Contract assets
(201,000
)
107,000
Inventories
(1,033,000
)
(1,072,000
)
Prepaid expenses and other current
assets
202,000
(1,322,000
)
Income tax receivable
285,000
(237,000
)
Accounts payable and accrued
liabilities
420,000
2,170,000
Accrued compensation
276,000
268,000
Net cash provided by (used in)
operating activities
1,315,000
(686,000
)
Cash Flows From Investing Activities
Investment in property and equipment
(1,648,000
)
(1,425,000
)
Investment in finite-life intangible
assets
(68,000
)
(100,000
)
Net cash used in investing
activities
(1,716,000
)
(1,525,000
)
Cash Flows From Financing Activities
Issuance of common stock upon exercise of
options
83,000
-
Taxes paid on stock options exercised on a
net basis
(310,000
)
(77,000
)
Repurchase of common stock
(153,000
)
(1,448,000
)
Net cash used in financing
activities
(380,000
)
(1,525,000
)
Net (decrease) increase in cash
(781,000
)
(3,736,000
)
Cash And Cash Equivalents
Beginning of period
8,153,000
11,889,000
End of period
$
7,372,000
$
8,153,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230822410095/en/
Brad Nagel, Chief Financial Officer (952) 758-9299
investorrelations@electromed.com
Mike Cavanaugh, Investor Relations ICR Westwicke (617) 877-9641
mike.cavanaugh@westwicke.com
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