Electromed, Inc. (NYSE MKT: ELMD) today announced financial results for
the three-month period ended September 30, 2014. Net revenues for the
first quarter of fiscal 2015 rose approximately 40% to $4.8 million,
compared to $3.4 million in the first quarter of fiscal 2014. The
Company reported net income of $378,000, or $0.05 cents per basic and
diluted share, for the first quarter of fiscal 2015, compared to a net
loss of $335,000, or ($0.04) cents per basic and diluted share, for the
same period of fiscal 2014.
Kathleen Skarvan, Electromed’s chief executive officer, commented, “The
first quarter results are further evidence that we have made significant
progress on our strategy to strengthen and grow the Company’s core
business, as demonstrated by our strong revenue growth which resulted in
improved profitability and cash flow.”
Growth in total net revenues was attributable to strong results in the
home care market where sales increased by approximately 35%, or $1.0
million, compared to the same period of fiscal 2014. Home care sales
increased due to continued improvements in the Company’s reimbursement
operations, including new third party payer contracts and process
improvements, which led to faster approval cycle times, higher average
selling price and greater referral to approval percentage. International
sales increased by 168%, or $250,000, due primarily to the favorable
timing of orders placed by international distributors. Institutional
sales increased 25%, or $105,000, compared to the first quarter of
fiscal 2014.
Gross margins in the first quarter of fiscal 2015 improved to 69.1% from
68.9% in the first quarter of fiscal 2014 as stronger revenues offset
the higher manufacturing costs for the SmartVest SQL™ product as
compared to the predecessor product, SV2100™. Over time, the Company
expects to bring manufacturing costs for the SQL product roughly in line
with previous products. Operating expenses, which include selling,
general and administrative (SG&A) and research and development (R&D),
declined to 61% of sales compared with 86% of sales in the first quarter
of fiscal 2014. The decline resulted from the higher level of net sales
in the first quarter of fiscal 2015. Operating expenses rose slightly
due to higher sales commission expense and additional personnel in the
reimbursement area, offset by a reduction in R&D expenses.
The Company generated $945,000 of cash flow from operations in the first
quarter and finished the quarter with over $2.2 million of cash on hand.
“The fundamentals of the quarter are encouraging, including the market’s
acceptance of our newest generation device, the SQL, and I believe there
are opportunities for us to expand our market share,” said Skarvan.
“Amidst the challenging reimbursement environment, we have streamlined
our reimbursement and enhanced the customer services processes and are
having more referrals approved resulting in higher net revenues. We are
continuing to upgrade our sales team to maximize their productivity and
effectiveness and improve domestic home care lead generation, our
highest opportunity for sales growth.
“I am very pleased with the way the Electromed team is delivering
against our operating plan and our progress toward delivering profitable
growth that is sustainable beyond fiscal 2015.”
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.
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.
|
Electromed, Inc. and Subsidiary
|
Condensed Consolidated Balance Sheets
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2014
|
Assets
|
|
|
(Unaudited)
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
2,280,126
|
|
|
|
|
$
|
1,502,702
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable (net of allowances for doubtful accounts of
$45,000)
|
|
|
|
6,361,689
|
|
|
|
|
|
6,487,267
|
|
Inventories
|
|
|
|
2,243,198
|
|
|
|
|
|
2,235,496
|
|
Prepaid expenses and other current assets
|
|
|
|
485,674
|
|
|
|
|
|
397,853
|
|
Total current assets
|
|
|
|
11,370,687
|
|
|
|
|
|
10,623,318
|
|
Property and equipment, net
|
|
|
|
3,944,975
|
|
|
|
|
|
3,935,802
|
|
Finite-life intangible assets, net assets,net
|
|
|
|
899,559
|
|
|
|
|
|
930,451
|
|
Other assets
|
|
|
|
299,902
|
|
|
|
|
|
302,595
|
|
Total assets
|
|
|
$
|
16,515,123
|
|
|
|
|
$
|
15,792,166
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
|
$
|
47,003
|
|
|
|
|
$
|
46,375
|
|
Accounts payable
|
|
|
|
781,823
|
|
|
|
|
|
380,582
|
|
Accrued compensation
|
|
|
|
447,354
|
|
|
|
|
|
391,040
|
|
Warranty reserve
|
|
|
|
720,000
|
|
|
|
|
|
700,000
|
|
Other accrued liabilities
|
|
|
|
166,497
|
|
|
|
|
|
302,482
|
|
Total current liabilities
|
|
|
|
2,162,677
|
|
|
|
|
|
1,820,479
|
|
Long-term debt, less current maturities
|
|
|
|
1,239,333
|
|
|
|
|
|
1,251,192
|
|
Total liabilities
|
|
|
|
3,402,010
|
|
|
|
|
|
3,071,671
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Equity
|
|
|
|
|
|
|
|
|
|
Common stock, $0.01 par value; authorized: 13,000,000 shares;
8,114,252 issued and outstanding
|
|
|
|
81,143
|
|
|
|
|
|
81,143
|
|
Additional paid-in capital
|
|
|
|
13,232,256
|
|
|
|
|
|
13,217,166
|
|
Accumulated deficit
|
|
|
|
(200,286
|
)
|
|
|
|
|
(577,814
|
)
|
Total equity
|
|
|
|
13,113,113
|
|
|
|
|
|
12,720,495
|
|
Total liabilities and equity
|
|
|
$
|
16,515,123
|
|
|
|
|
$
|
15,792,166
|
|
|
|
|
|
|
|
|
|
|
|
|
Electromed, Inc. and Subsidiary
|
Condensed Consolidated Statements of Operations (Unaudited)
|
|
|
|
For the Three Months Ended
|
|
|
|
September 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
$
|
4,770,539
|
|
|
|
$
|
3,418,178
|
|
Cost of revenues
|
|
|
|
1,475,797
|
|
|
|
|
1,062,346
|
|
Gross profit
|
|
|
|
3,294,742
|
|
|
|
|
2,355,832
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
2,821,495
|
|
|
|
|
2,723,927
|
|
Research and development
|
|
|
|
75,265
|
|
|
|
|
209,108
|
|
Total operating expenses
|
|
|
|
2,896,760
|
|
|
|
|
2,933,035
|
|
Operating income (loss)
|
|
|
|
397,982
|
|
|
|
|
(577,203
|
)
|
Interest expense, net of interest income of $1,212 and $7,398
respectively
|
|
|
|
20,453
|
|
|
|
|
15,202
|
|
Net income (loss) before income taxes
|
|
|
|
377,529
|
|
|
|
|
(592,405
|
)
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
|
|
|
|
|
-
|
|
|
|
257,000
|
|
Net income (loss)
|
|
|
$
|
377,529
|
|
|
|
$
|
(335,405
|
)
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
$
|
0.05
|
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
8,114,252
|
|
|
|
|
8,114,252
|
|
Diluted
|
|
|
|
8,114,252
|
|
|
|
|
8,114,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electromed, Inc. and Subsidiary
|
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
For the Three Months Ended
|
|
|
|
September 30,
|
|
|
|
2014
|
|
|
2013
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
377,529
|
|
|
|
$
|
(335,405
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
155,341
|
|
|
|
|
122,923
|
|
Amortization of finite-life intangible assets
|
|
|
|
30,892
|
|
|
|
|
31,619
|
|
Amortization of debt issuance costs
|
|
|
|
4,942
|
|
|
|
|
2,314
|
|
Share-based compensation expense
|
|
|
|
15,089
|
|
|
|
|
39,460
|
|
Loss on disposal of property and equipment
|
|
|
|
18,824
|
|
|
|
|
18,134
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
125,578
|
|
|
|
|
1,024,688
|
|
Inventories
|
|
|
|
(7,702
|
)
|
|
|
|
(52,628
|
)
|
Prepaid expenses and other assets
|
|
|
|
(90,070
|
)
|
|
|
|
(270,260
|
)
|
Accounts payable and accrued liabilities
|
|
|
|
314,901
|
|
|
|
|
161,138
|
|
Net cash provided by operating activities
|
|
|
|
945,324
|
|
|
|
|
741,983
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
Expenditures for property and equipment
|
|
|
|
(156,669
|
)
|
|
|
|
(148,915
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Principal payments on long-term debt including capital lease
obligations
|
|
|
|
(11,231
|
)
|
|
|
|
(19,250
|
)
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
|
777,424
|
|
|
|
|
573,818
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
|
1,502,702
|
|
|
|
|
503,564
|
|
End of period
|
|
|
$
|
2,280,126
|
|
|
|
$
|
1,077,382
|
|
|
|
|
|
|
|
|
|
|
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Copyright Business Wire 2014