Electromed, Inc. Announces Fiscal 2017 Third Quarter Financial Results
-- 13.5% year-over-year increase in home care sales --
Electromed, Inc. (“Electromed” or the “Company”) (NYSE MKT:ELMD), a leader in innovative airway clearance technologies, today
announced financial results for the three months ended March 31, 2017 (“Q3 FY 2017”).
Q3 FY 2017 Highlights
- Net revenue increased 10.5% to $6.7 million from $6.0 million during the three months ended March 31,
2016 (“Q3 FY 2016”).
- Gross profit rose 14.8% to $5.3 million from $4.6 million in Q3 FY 2016.
- Operating income grew 40.9% to $1.0 million from $736,000 in Q3 FY 2016.
- Net income expanded 38.9% to $648,000, or $0.08 per diluted share, from $467,000, or $0.06 per
diluted share, in Q3 FY 2016.
- Cash flow from operations increased 52.4% to $767,000 from $503,000 in Q3 FY 2016.
- Field sales employees grew to 35 at the end of Q3 FY 2017 from 29 at the end of Q3 FY 2016.
- The SmartVest® Airway Clearance System wireless connectivity and patient monitoring solution remains
on schedule for June 2017 commercial launch.
Kathleen Skarvan, President and Chief Executive Officer of Electromed, commented, “In our fiscal third quarter we reported
strengthening revenue and net income growth, driven by a 13.5% year-over-year increase in home care sales, reflecting solid
performance by our sales and reimbursement teams. We are pleased with our team’s progress as well as the ongoing execution of our
growth strategies. We expanded our sales staff, increased payer coverage, won market share, boosted awareness of clinical evidence
of bronchiectasis patient outcomes with our solution and advanced product innovations. We are particularly encouraged by the
overwhelmingly positive feedback we received from clinicians participating in our SmartVest Connect® wireless connectivity beta
testing program this quarter. Finally, we were thrilled to announce our agreement with Monaghan Medical Corporation in February to
distribute and sell the Aerobika® Oscillating Positive Expiratory Pressure (OPEP) Device in the U.S. homecare market. With Aerobika
OPEP and SmartVest devices, Electromed now offers a continuum of airway clearance therapies for patients to use in their home.”
Ms. Skarvan continued, “We look forward to the commercial launch of our SmartVest Connect® wireless connectivity solution this
summer and believe its ease of use will appeal to both clinicians and patients, fostering improved therapy adherence and better
patient outcomes. In addition to launching this important connectivity and reporting feature, we intend to continue to invest in
the growth of our business by expanding our sales force in the coming quarters, while focusing on sales productivity improvements
among current staff. We remain excited about the significant, underpenetrated bronchiectasis market opportunity and dedicated to
improving our patients’ quality of life with SmartVest® Airway Clearance while reducing overall healthcare utilization.”
Q3 FY 2017 Review
Net revenue increased 10.5% to $6.7 million in Q3 FY 2017 from $6.0 million in Q3 FY 2016, driven by higher home care revenue.
Home care revenue rose 13.5% to $6.1 million in Q3 FY 2017 from $5.4 million in Q3 FY 2016, primarily due to an increase in
approvals and referrals, driven by a higher number of field sales employees.
Gross profit increased 14.8% to $5.3 million, or 79.7% of net revenue, in Q3 FY 2017 from $4.6 million, or 76.7% of net revenue,
in Q3 FY 2016. The increase in gross profit resulted from increases in domestic home care revenues and a decrease in our
manufacturing costs of the SmartVest SQL as compared to the prior fiscal year.
Operating expenses, which include selling, general and administrative (“SG&A”) as well as research and development
(“R&D”) expenses, totaled $4.3 million, or 64.1% of revenue, in Q3 FY 2017 compared with $3.9 million, or 64.5% of revenue, in
the same period of the prior year. SG&A expenses increased 10.2% to $4.2 million in Q3 FY 2017 from $3.8 million in Q3 FY 2016,
primarily due to higher payroll and compensation-related expenses and increased travel, meals and entertainment expenses. R&D
expenses totaled $81,000 in Q3 FY 2017 compared to $84,000 in Q3 FY 2016.
Operating income increased 40.9% to $1.0 million in Q3 FY 2017 from $736,000 in Q3 FY 2016, primarily due to increased gross
profit, which was partially offset by higher payroll and compensation expenses in sales and administrative positions.
Net income before income tax expense rose 42.3% to $1.0 million in Q3 FY 2017 from $723,000 in Q3 FY 2016.
Net income increased 38.9% to $648,000, or $0.08 per basic and diluted share, in Q3 FY 2017, from $467,000, or $0.06 per basic
and diluted share, in Q3 FY 2016. In Q3 FY 2017, income tax expense totaled $380,000, compared to $256,000 in the same period of
the prior year.
Year-to-Date FY 2017 Summary
For the nine months ended March 31, 2017, revenue increased 7.4% to $18.6 million from $17.3 million in the same period of
fiscal 2017. Gross margins were 78.4%, compared to 77.4% in the same period of the prior year, while net income was $1.3 million,
or $0.15 per diluted share, compared to $1.9 million, or $0.23 per diluted share in the same period of the prior year.
Financial Condition
Electromed’s balance sheet at March 31, 2017 included cash of $5.4 million, long-term debt including current maturities of $1.2
million, working capital of $14.6 million, and shareholders’ equity of $18.0 million.
Conference Call
Management will host a conference call on May 16, 2017 at 8:00 am CT (9:00 am ET) to discuss Q3 FY 2017 financial results and
other matters.
Interested parties may participate in the call by dialing:
- (877) 407-9753 (Domestic)
- (201) 493-6739 (International)
The conference call will also be accessible via the following link: http://www.investorcalendar.com/event/15158.
For those who cannot listen to the live broadcast, an online webcast replay will be available in the Investor Relations section
of Electromed’s web site at: http://www.smartvest.com/electromed/investor-relations/.
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. The Company 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 release constitute forward-looking statements as defined in the U.S. Private Securities Litigation
Reform Act of 1995. Forward-looking statements reflect 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,” “estimate,” “expect,” “will” and similar words. Forward-looking statements
in this release include estimated revenue trends, changes in sales opportunities and our sales force, product and service
innovations, referral quality and processing, financial performance, profitability and market trends. 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 the Company include, but are not limited to, the impact of emerging and
existing competitors, the effect of new legislation on the Company’s industry and business, the effectiveness of the Company’s
sales and marketing and cost control initiatives, changes to reimbursement programs, as well as other factors described from time
to time in the Company’s reports to 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 reports on Form 10-Q and Form 8-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.
Condensed Balance Sheets
|
| |
|
|
March 31, 2017 |
|
June 30, 2016 |
|
|
(Unaudited) |
|
|
| Assets |
|
|
|
|
| Current Assets |
|
|
|
|
| Cash |
|
$ |
5,401,943 |
|
$ |
5,123,355 |
| Accounts receivable (net of allowances for doubtful accounts of $45,000) |
|
|
8,933,426 |
|
|
7,611,437 |
| Inventories |
|
|
2,587,635 |
|
|
2,480,443 |
| Prepaid expenses and other current assets |
|
|
491,968 |
|
|
419,616 |
| Income tax receivable |
|
|
- |
|
|
192,685 |
| Total current assets |
|
|
17,414,972 |
|
|
15,827,536 |
| Property and equipment, net |
|
|
3,288,480 |
|
|
3,375,189 |
| Finite-life intangible assets, net |
|
|
762,853 |
|
|
904,033 |
| Other assets |
|
|
101,441 |
|
|
127,759 |
| Deferred income taxes |
|
|
330,000 |
|
|
343,000 |
| Total assets |
|
$ |
21,897,746 |
|
$ |
20,577,517 |
|
|
|
|
|
| Liabilities and Shareholders’ Equity |
|
|
|
|
| Current Liabilities |
|
|
|
|
| Current maturities of long-term debt |
|
$ |
50,203 |
|
$ |
46,309 |
| Accounts payable |
|
|
593,806 |
|
|
589,225 |
| Accrued compensation |
|
|
917,742 |
|
|
1,489,798 |
| Income taxes payable |
|
|
17,024 |
|
|
- |
| Warranty reserve |
|
|
670,000 |
|
|
660,000 |
| Other accrued liabilities |
|
|
524,564 |
|
|
287,194 |
| Total current liabilities |
|
|
2,773,339 |
|
|
3,072,526 |
| Long-term debt, less current maturities and net of debt issuance costs |
|
|
1,108,921 |
|
|
1,146,395 |
| Total liabilities |
|
|
3,882,260 |
|
|
4,218,921 |
|
|
|
|
|
| Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
| Shareholders' Equity |
|
|
|
|
| Common stock, $0.01 par value; authorized: 13,000,000 shares; 8,230,167 and 8,187,112
issued and outstanding at March 31, 2017 and June 30, 2016, respectively |
|
|
82,302 |
|
|
81,871 |
| Additional paid-in capital |
|
|
13,923,033 |
|
|
13,549,551 |
| Retained earnings |
|
|
4,010,151 |
|
|
2,727,174 |
| Total shareholders’ equity |
|
|
18,015,486 |
|
|
16,358,596 |
| Total liabilities and shareholders’ equity |
|
$ |
21,897,746 |
|
$ |
20,577,517 |
|
|
|
|
|
|
|
| |
|
Electromed, Inc.
Condensed Statements of Operations (Unaudited)
|
| |
|
|
For the Three Months Ended
March 31,
|
|
For the Nine Months Ended
March 31,
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| Net revenues |
|
$ |
6,669,638 |
|
|
$ |
6,035,700 |
|
|
$ |
18,587,243 |
|
|
$ |
17,298,995 |
|
| Cost of revenues |
|
|
1,357,093 |
|
|
|
1,408,716 |
|
|
|
4,020,615 |
|
|
|
3,913,984 |
|
| Gross profit |
|
|
5,312,545 |
|
|
|
4,626,984 |
|
|
|
14,566,628 |
|
|
|
13,385,011 |
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
|
4,195,156 |
|
|
|
3,806,885 |
|
|
|
11,979,261 |
|
|
|
10,631,539 |
|
| Research and development |
|
|
80,613 |
|
|
|
84,410 |
|
|
|
532,255 |
|
|
|
183,043 |
|
| Total operating expenses |
|
|
4,275,769 |
|
|
|
3,891,295 |
|
|
|
12,511,516 |
|
|
|
10,814,582 |
|
| Operating income |
|
|
1,036,776 |
|
|
|
735,689 |
|
|
|
2,055,112 |
|
|
|
2,570,429 |
|
|
|
|
|
|
|
|
|
|
| Interest expense, net of interest income of $4,956, $4,978, $11,925 and
$8,525 respectively |
|
|
8,831 |
|
|
|
13,064 |
|
|
|
41,135 |
|
|
|
51,150 |
|
| Net income before income taxes |
|
|
1,027,945 |
|
|
|
722,625 |
|
|
|
2,013,977 |
|
|
|
2,519,279 |
|
|
|
|
|
|
|
|
|
|
| Income tax expense |
|
|
(380,000 |
) |
|
|
(256,000 |
) |
|
|
(731,000 |
) |
|
|
(644,000 |
) |
| Net income |
|
$ |
647,945 |
|
|
$ |
466,625 |
|
|
$ |
1,282,977 |
|
|
$ |
1,875,279 |
|
|
|
|
|
|
|
|
|
|
| Income per share: |
|
|
|
|
|
|
|
|
| Basic |
|
$ |
0.08 |
|
|
$ |
0.06 |
|
|
$ |
0.16 |
|
|
$ |
0.23 |
|
| Diluted |
|
$ |
0.08 |
|
|
$ |
0.06 |
|
|
$ |
0.15 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
| Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
| Basic |
|
|
8,167,112 |
|
|
|
8,133,857 |
|
|
|
8,167,112 |
|
|
|
8,133,857 |
|
| Diluted |
|
|
8,452,942 |
|
|
|
8,287,237 |
|
|
|
8,449,201 |
|
|
|
8,215,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Electromed, Inc.
Condensed Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
Nine Months Ended March 31,
|
|
|
2017 |
|
2016 |
| Cash Flows From Operating Activities |
|
|
|
|
| Net income |
|
$ |
1,282,977 |
|
|
$ |
1,875,279 |
|
| Adjustments to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
| Depreciation |
|
|
473,813 |
|
|
|
458,850 |
|
| Amortization of finite-life intangible assets |
|
|
89,813 |
|
|
|
91,815 |
|
| Amortization of debt issuance costs |
|
|
10,871 |
|
|
|
13,672 |
|
| Share-based compensation expense |
|
|
373,913 |
|
|
|
153,465 |
|
| Deferred taxes |
|
|
13,000 |
|
|
|
(337,000 |
) |
| Loss on disposal of property and equipment |
|
|
520 |
|
|
|
38,667 |
|
| Loss on disposal of intangible assets |
|
|
111,498 |
|
|
|
7,848 |
|
| Changes in operating assets and liabilities: |
|
|
|
|
| Accounts receivable |
|
|
(1,321,989 |
) |
|
|
(791,915 |
) |
| Inventories |
|
|
(65,630 |
) |
|
|
(220,417 |
) |
| Prepaid expenses and other assets |
|
|
(49,140 |
) |
|
|
(22,711 |
) |
| Income tax receivable |
|
|
192,685 |
|
|
|
(180,785 |
) |
| Income tax payable |
|
|
17,024 |
|
|
|
(122,657 |
) |
| Accounts payable and accrued liabilities |
|
|
(323,453 |
) |
|
|
706,236 |
|
|
Net cash provided by operating activities
|
|
|
805,902 |
|
|
|
1,670,347 |
|
|
|
|
|
|
| Cash Flows From Investing Activities |
|
|
|
|
| Expenditures for property and equipment |
|
|
(425,838 |
) |
|
|
(256,806 |
) |
| Expenditures for finite-life intangible assets |
|
|
(60,131 |
) |
|
|
(27,752 |
) |
| Net cash used in investing activities |
|
|
(485,969 |
) |
|
|
(284,558 |
) |
|
|
|
|
|
| Cash Flows From Financing Activities |
|
|
|
|
| Principal payments on long-term debt including capital lease obligations |
|
|
(36,473 |
) |
|
|
(36,397 |
) |
| Payment of deferred financing fees |
|
|
(4,872 |
) |
|
|
(13,520 |
) |
| Net cash used in financing activities |
|
|
(41,345 |
) |
|
|
(49,917 |
) |
| Net increase in cash |
|
|
278,588 |
|
|
|
1,335,872 |
|
| Cash |
|
|
|
|
| Beginning of period |
|
|
5,123,355 |
|
|
|
3,598,240 |
|
| End of period |
|
$ |
5,401,943 |
|
|
$ |
4,934,112 |
|
Electromed, Inc.
Jeremy Brock, Chief Financial Officer
(952) 758-9299
investorrelations@electromed.com
or
The Equity Group Inc.
Kalle Ahl, CFA
(212) 836-9614
kahl@equityny.com
or
Devin Sullivan
(212) 836-9608
dsullivan@equityny.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170515006477/en/