Electromed, Inc. (NYSE MKT: ELMD) today announced financial results for
the three- and nine-month periods ended March 31, 2015. Net revenues for
the third quarter of fiscal 2015 rose approximately 15% to $4.56
million, compared to $3.96 million in the same quarter of fiscal 2014.
The Company reported net income of $37,000, or $0.00 cents per basic and
diluted share, for the third quarter of fiscal 2015, compared to a net
loss of $1,004,000, or ($0.12) per basic and diluted share, for the same
period of fiscal 2014.
Growth in total net revenues was attributable to strong results in the
home care market where revenue increased by approximately 18.5%, or $0.6
million, compared to the same period of fiscal 2014. Home care sales
increased due to a greater number of approvals from third party payers,
such as insurance companies, Medicare and Medicaid, for the Company’s
SmartVest™ products. International sales decreased by 44%, or $128,000,
due primarily to the timing of orders placed by international
distributors in the first quarter of fiscal 2015. Institutional and
government sales increased 30%, or $131,000, compared to the third
quarter of fiscal 2014 as a result of the continued focused efforts of
our sales force.
Gross margins in the third quarter of fiscal 2015 were 69.3%, up from
63.7% in the third quarter of fiscal 2014. The increase in gross profit
percentage resulted primarily from the increase in domestic home care
revenue at higher average selling price and greater referral to approval
percentage, as compared with the same period in the prior year. The
gross margin was also negatively affected by an impairment charge of
$70,000, taken on tools that became obsolete during the third quarter of
fiscal 2015 as we implemented certain improved manufacturing processes
that reduce the cost of producing the SmartVest SQL™. 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 68% of revenue compared with 69% of revenue in the
third quarter of fiscal 2014. The decline resulted from the higher level
of net revenues in the third quarter of fiscal 2015. Operating expenses
rose slightly as a result of higher sales commission and bonus expenses
due to higher revenue and profitability and higher consulting fees for
sales training, information technology improvements, and a contract
employee.
The Company generated $558,000 of cash from operations in the third
quarter and finished the quarter with over $2.9 million of cash on hand.
For the nine months ended March 31, 2015, revenue increased 31%, to
$14.2 million, compared to the same period of fiscal 2014. Gross margins
were 69.4%, up from 68% in the third quarter of fiscal 2014, while net
income increased to $837,000 or $0.10 per basic and diluted share
compared to a net loss of $1,579,000, or ($0.19) per basic and diluted
share, in the same period of the prior year.
Kathleen Skarvan, Electromed’s chief executive officer, commented, “I am
very pleased that we reported our fourth consecutive profitable quarter
and continued to see year-over-year revenue growth. Revenue growth was
15 percent compared to the prior year quarter attributable primarily to
growth in home care sales. We continue to see year-over-year new
referral growth and increases in the average reimbursement per approved
referral. On a sequential quarter comparison, revenue declined due to a
decrease in home care approvals primarily attributable to third party
payer referral mix. We believe the quarter’s lower approvals are not
indicative of a longer term trend.
Institutional revenue grew 30% compared to the prior year quarter. While
it is a lower percentage of our total revenue, this growth in revenue
suggests that our focus on this sales channel is yielding results. We
expect to offer the SQL product to institutions during the fourth
quarter of fiscal 2015. We believe that the differentiated features of
SQL from our previous model, SV2100, may generate interest from
institutions that currently utilize a competitor’s device.
Cash flow continues to be positive due to process improvement by our
reimbursement team and improved collections. I am very proud of the
entire Electromed team as they have worked diligently to return
Electromed to consistent revenue growth and profitability. They are a
talented group with an intense focus on improving the experience
patients have with our products. The Electromed team understands that
our products have a significant impact on the lives of patients and they
approach that responsibility with passion and commitment.”
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 “anticipate,” “believe,” “expect,” “will” and
similar words. Forward-looking statements made in this release
include the Company’s beliefs regarding continued progress in its
reimbursement, product launch timing, 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:
Electromed, Inc. and Subsidiary
|
Condensed Consolidated Balance Sheets
|
|
|
March 31,
|
|
June 30,
|
|
|
|
2015
|
|
|
|
2014
|
Assets
|
|
|
(Unaudited)
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2,904,811
|
|
|
$
|
1,502,702
|
Accounts receivable (net of allowances for doubtful accounts of
$45,000)
|
|
|
6,388,454
|
|
|
|
6,487,267
|
Inventories
|
|
|
2,401,864
|
|
|
|
2,235,496
|
Prepaid expenses and other current assets
|
|
|
481,477
|
|
|
|
397,853
|
Total current assets
|
|
|
12,176,606
|
|
|
|
10,623,318
|
Property and equipment, net
|
|
|
3,617,372
|
|
|
|
3,935,802
|
Finite-life intangible assets, net
|
|
|
832,520
|
|
|
|
930,451
|
Other assets
|
|
|
361,076
|
|
|
|
302,595
|
Total assets
|
|
$
|
16,987,574
|
|
|
$
|
15,792,166
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
48,098
|
|
|
$
|
46,375
|
Accounts payable
|
|
|
684,290
|
|
|
|
380,582
|
Accrued compensation
|
|
|
561,938
|
|
|
|
391,040
|
Warranty reserve
|
|
|
670,000
|
|
|
|
700,000
|
Other accrued liabilities
|
|
|
171,893
|
|
|
|
302,482
|
Total current liabilities
|
|
|
2,136,219
|
|
|
|
1,820,479
|
Long-term debt, less current maturities
|
|
|
1,214,795
|
|
|
|
1,251,192
|
Total liabilities
|
|
|
3,351,014
|
|
|
|
3,071,671
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Common stock, $0.01 par value; authorized: 13,000,000; shares
issued and outstanding: 8,133,857 and 8,114,252 at March 31, 2015,
June 30, 2014, respectively
|
|
|
81,339
|
|
|
|
81,143
|
Additional paid-in capital
|
|
|
13,295,566
|
|
|
|
13,217,166
|
Retained earnings (accumulated deficit)
|
|
|
259,655
|
|
|
|
(577,814)
|
Total equity
|
|
|
13,636,560
|
|
|
|
12,720,495
|
Total liabilities and equity
|
|
$
|
16,987,574
|
|
|
$
|
15,792,166
|
|
|
|
|
|
|
|
|
Electromed, Inc. and Subsidiary
|
|
Condensed Consolidated Statements of Operations
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
|
For the Nine Months Ended March 31,
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
4,556,977
|
|
|
$
|
3,956,335
|
|
|
$
|
|
14,209,239
|
|
$
|
10,875,588
|
Cost of revenues
|
|
|
1,400,252
|
|
|
|
1,436,195
|
|
|
|
|
4,354,339
|
|
|
3,476,570
|
Gross profit
|
|
|
3,156,725
|
|
|
|
2,520,140
|
|
|
|
|
9,854,900
|
|
|
7,399,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
3,020,849
|
|
|
|
2,634,036
|
|
|
|
|
8,714,746
|
|
|
8,097,067
|
Research and development
|
|
|
78,292
|
|
|
|
103,166
|
|
|
|
|
237,201
|
|
|
405,009
|
Total operating expenses
|
|
|
3,099,141
|
|
|
|
2,737,202
|
|
|
|
|
8,951,947
|
|
|
8,502,076
|
Operating income (loss)
|
|
|
57,584
|
|
|
|
(217,062)
|
|
|
|
|
902,953
|
|
|
(1,103,058)
|
Interest expense, net of interest income of $371, $392, $2,044 and
$11,730 respectively
|
|
|
20,355
|
|
|
|
23,321
|
|
|
|
|
65,484
|
|
|
57,992
|
Net income (loss) before income taxes
|
|
|
37,229
|
|
|
|
(240,383)
|
|
|
|
|
837,469
|
|
|
(1,161,050)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
-
|
|
|
|
(764,000)
|
|
|
|
|
|
-
|
|
|
(418,000)
|
Net Income (loss)
|
|
$
|
37,229
|
|
|
$
|
(1,004,383)
|
|
|
$
|
|
837,469
|
|
$
|
(1,579,050)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
.00
|
|
|
$
|
(0.12)
|
|
|
$
|
|
.10
|
|
$
|
(0.19)
|
Diluted
|
|
$
|
.00
|
|
|
$
|
(0.12)
|
|
|
$
|
|
.10
|
|
$
|
(0.19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
8,114,252
|
|
|
|
8,114,252
|
|
|
|
|
8,114,252
|
|
|
8,114,252
|
Diluted
|
|
|
8,166,659
|
|
|
|
8,114,252
|
|
|
|
|
8,131,496
|
|
|
8,114,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electromed, Inc. and Subsidiary
|
Condensed Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
For the Nine Months Ended March 31,
|
|
|
|
2015
|
|
|
2014
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
837,469
|
|
|
$
|
(1,579,050)
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
459,223
|
|
|
|
409,651
|
|
Amortization of finite-life intangible assets
|
|
|
97,931
|
|
|
|
95,082
|
|
Amortization of debt issuance costs
|
|
|
14,546
|
|
|
|
13,078
|
|
Share-based compensation expense
|
|
|
78,596
|
|
|
|
73,821
|
|
Deferred income taxes
|
|
|
-
|
|
|
|
454,000
|
|
Loss on disposal of property and equipment
|
|
|
233,116
|
|
|
|
34,110
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
98,813
|
|
|
|
2,544,116
|
|
Inventories
|
|
|
(166,368
|
)
|
|
|
(1,171,221
|
)
|
Prepaid expenses and other assets
|
|
|
(141,854
|
)
|
|
|
(37,930
|
)
|
Accounts payable and accrued liabilities
|
|
|
319,717
|
|
|
|
184,333
|
|
Net cash provided by operating activities
|
|
|
1,831,189
|
|
|
|
1,019,990
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
Expenditures for property and equipment
|
|
|
(379,609
|
)
|
|
|
(626,327
|
)
|
Expenditures for finite-life intangible assets
|
|
|
-
|
|
|
|
(8,155
|
)
|
Net cash used in investing activities
|
|
|
(379,609
|
)
|
|
|
(634,482
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Principal payments on long-term debt including capital lease
obligations
|
|
|
(34,674
|
)
|
|
|
(81,348
|
)
|
Payments of deferred financing fees
|
|
|
(14,797
|
)
|
|
|
(35,296
|
)
|
Net cash used in financing activities
|
|
|
(49,471
|
)
|
|
|
(116,644
|
)
|
Net increase in cash and cash equivalents
|
|
|
1,402,109
|
|
|
|
268,864
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
1,502,702
|
|
|
|
503,564
|
|
End of period
|
|
$
|
2,904,811
|
|
|
$
|
772,428
|
|
Copyright Business Wire 2015