-- Double-Digit Year over Year Revenue Growth
-- -- Strong Operating Cash Flow -- -- Progress on Key Growth
Initiatives: Commercial Expansion, Strategic Marketing, Research
& Development, Infrastructure Investment -- -- Provides Update
on Fiscal 2022 Strategic Priorities --
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 2021”) and
full year (“FY 2021”) ended June 30, 2021.
Q4 FY 2021 Financial
Highlights
- Net revenue increased 37.7% to $9.5 million, from $6.9 million
for the three months ended June 30, 2020 (“Q4 FY 2020”), driven by
33.6% home care revenue growth and 90.6% growth in institutional
sales.
- Operating income totaled $0.7 million, compared to $1.3 million
in Q4 FY 2020. The prior year period included $0.9 million of
government stimulus income from the Provider Relief Fund
established under the Coronavirus Aid, Relief, and Economic
Security Act (the “CARES Act”).
- Net income was $0.4 million, or $0.04 per diluted share,
compared to $1.3 million, or $0.15 per diluted share, in Q4 FY
2020.
- Repurchased $1.1 million of common stock under new $3.0 million
share repurchase program.
- Cash as of June 30, 2021 was $11.9 million, benefiting from
$0.8 million in operating cash flow in Q4 FY 2021 and offset by the
repurchase of approximately $1.1 million of common stock at an
average price of $10.79 per share.
FY 2021 Financial
Highlights
- Net revenue increased 10.1% to $35.8 million from $32.5 million
during the fiscal year ended June 30, 2020 (“FY 2020”), driven by
12.5% home care revenue growth.
- Operating income totaled $3.1 million, compared to $5.1 million
in FY 2020. The prior year period included $0.9 million of
government stimulus income from the Provider Relief Fund
established under the CARES Act.
- Net income totaled $2.4 million, or $0.27 per diluted share,
compared to $4.2 million, or $0.47 per diluted share, in FY
2020.
- Cash increased by $1.4 million during fiscal 2021, benefitting
from $3.1 million in operating cash flow.
FY 2021 Strategic Investments to
Enhance Future Growth
- Increased investment in commercial expansion, including
Marketing & Clinical Field Support.
- Increased investment in direct-to-consumer and digital
marketing.
- Conducted a comprehensive research study focused on
bronchiectasis and HFCWO market to strengthen respective growth
strategies for sales team expansion and clinical study
opportunities, and assist in identifying new market development
strategies.
- Increased spending on research and development for next
generation product.
- Made key infrastructure investments, including implementing a
new revenue cycle management system.
- Advanced clinical studies to further demonstrate the benefits
of SmartVest® Airway Clearance devices.
Kathleen Skarvan, President and Chief Executive Officer of
Electromed, commented, “We delivered exceptional results, including
double-digit revenue growth and strong cash flows, in the fiscal
2021 fourth quarter and fiscal 2021 full year, notwithstanding the
industry-wide disruption in patient visits and sales representative
access caused by the COVID-19 pandemic. These results reflect
investments we are making in our commercial organization, marketing
and brand recognition, next generation product development, and new
clinical studies to further validate the benefit of our technology
in improving patient care. Indeed, our entire team performed well
to ensure that our SmartVest® Airway Clearance devices reached
patients in need of high frequency chest wall oscillation despite
the pandemic.”
Fiscal 2022 Strategic
Priorities
Ms. Skarvan continued, “We enter fiscal 2022 encouraged by the
ongoing nationwide deployment of vaccinations and the extension of
the provisional waiver from the Centers for Medicare & Medicaid
Services. Our strong fiscal 2021 results, as well as the large and
underpenetrated bronchiectasis market, reinforce our confidence in
the strategic growth investments we are making and our ability to
continue generating sustainable profitable growth, improved
operating margins and enhanced shareholder value.”
For fiscal 2022, strategic investments and priorities
include:
- Increasing sales and marketing investments to expand the
Company’s sales force in regions of the U.S. where there is a high
incidence of bronchiectasis diagnosing physicians and increase
awareness for the SmartVest brand through direct-to-consumer and
digital marketing initiatives;
- Completing the final phases of development for the Company’s
next generation SmartVest product, which is targeted for launch in
the first half of fiscal 2023 following FDA 510(k) clearance;
- Advancing enrollment in existing clinical studies to further
demonstrate the clinical benefits of SmartVest® for patients with
compromised pulmonary function. The Company’s prospective
bronchiectasis outcomes multi-site study enrollment is at
approximately 25% to-date, after enrollment was put on hold for
several months by the study sites due to the COVID-19 pandemic;
and
- Exploring additional studies during the year, including a post
surveillance study with SmartVest patients using an industry
approved quality of life questionnaire.
For fiscal 2022, the Company is targeting growth faster than the
homecare HFCWO market by taking market share and with deeper
penetration of SmartVest prescribing physicians in the largest,
fastest growing segments: adult pulmonology/bronchiectasis.
Q4 FY 2021 Review
Net revenue in Q4 FY 2021 increased 37.7% to $9.5 million, from
$6.9 million in Q4 FY 2020, primarily driven by higher home care
revenue. Home care revenue increased 33.6% to $8.5 million from
$6.3 million in Q4 FY 2020, primarily due to an increase in
referrals and approvals as patient clinic visits and face-to-face
access for the Company’s sales representative increased
substantially from COVID-19 driven limitations in the prior fiscal
year. Field sales employees totaled 46, of which 37 were direct
sales, at the end of Q4 FY 2021, compared to 44 at the end of Q4 FY
2020, of which 37 were direct sales. In July 2021 the Company added
three new direct sales representatives and one new regional
manager. Sales force productivity continued to improve during the
quarter, with annualized home care revenue per direct sales rep at
$906,000, above the targeted range of $750,000 to $850,000.
Institutional revenue increased 90.6% to $520,000 from $273,000
in Q4 FY 2020, primarily due to an increase in volume of devices
and garments sold as hospitals returned to more normal purchasing
activity.
Gross profit in Q4 FY 2021 increased 24.0% to $6.9 million, or
73.2% of net revenue, from $5.6 million, or 81.3% of net revenue,
in Q4 FY 2020. The increase in gross profit dollars was primarily
due to the increase in home care revenue. The decrease in gross
profit percentage was due to higher warranty costs related to an
increase in the product components included in the warranty reserve
calculation, costs associated with the discontinuation of the
Company’s SV2100 device in the United States, a lower mix of home
care revenue as compared to the prior year period, and some limited
product input cost increases. Electromed expects gross margin
percentage to be in the mid to high 70% range moving forward, which
is consistent with our historical gross margin performance
range.
Selling, general and administrative (“SG&A”) expenses in Q4
FY 2021 increased by $1.2 million to $6.0 million from $4.8 million
in Q4 FY 2020. The increase in SG&A spending was primarily due
to increased investments in sales and marketing headcount, higher
compensation costs related to stronger revenue performance, and
increased direct-to-consumer marketing. As a percentage of revenue,
SG&A expenses were 62.9% compared to 69.7% in the same period
in the prior year. Research and development expenses decreased to
$326,000 from $415,000 in Q4 FY 2020. The Company continued to
invest in its next generation device at a rate consistent with past
recent quarters and expects to launch the product in the first half
of fiscal 2023 following FDA 510(k) clearance.
Operating income totaled $0.7 million, compared to $1.3 million
in Q4 FY 2020. The prior year period included $0.9 million of
government stimulus from the Provider Relief Fund established under
the CARES Act which was intended to offset losses in revenue and
expenses Medicare fee-for-service providers incurred due to the
impacts of the COVID-19 pandemic. The decline in operating income
for Q4 FY 2021 was driven primarily by increased strategic
investments in SG&A, offset by higher gross margin dollars
resulting from the stronger home care revenue performance.
Net income before income taxes totaled $0.7 million compared to
$1.3 million in Q4 FY 2020.
Net income was $0.4 million, or $.04 per diluted share, compared
to $1.3 million, or $0.15 per diluted share, in Q4 FY 2020. In Q4
FY 2021, income tax expense totaled $250,000, compared to an income
tax benefit of $9,000 in the same period of the prior year. The
prior year period included a discrete tax benefit of $343,000 that
was recognized as a result of the exercise of outstanding stock
options.
FY 2021 Summary
For the fiscal year ended June 30, 2021, revenue grew 10.1% to
$35.8 million, from $32.5 million in FY 2020, driven by a 12.5%
increase in home care revenue and 30.9% increase in distributor
revenue, which more than offset a 22.6% decrease in institutional
revenue and 8.4% decline in international revenue. Gross margins
were 76.4%, compared to 77.6% in the prior fiscal year, while net
income was $2.4 million, or $0.27 per diluted share, compared to
$4.2 million, or $0.47 per diluted share, in FY 2020. The Company’s
cash increased by $1.4 million, driven by $3.1 million of operating
cash flow, partially offset by $1.1 million of cash used to
repurchase shares during the year.
Balance Sheet and Share Repurchase
Program
The Company’s balance sheet as of June 30, 2021 included cash of
$11.9 million, accounts receivable of $17.0 million, no debt,
working capital of $27.1 million, and shareholders’ equity of $32.4
million.
In May 2021, Electromed’s Board of Directors approved a new $3.0
million share repurchase program. During Q4 FY 2021, the Company
repurchased approximately $1.1 million of common stock under the
program, and will continue to evaluate opportunities to repurchase
shares in fiscal year 2022.
Conference Call
Management will host a conference call on Tuesday, August 24,
2021 at 4:00 pm CT (5:00 pm ET) to discuss Q4 FY 2021 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 also will be accessible via the following
link:
https://78449.themediaframe.com/dataconf/productusers/elctr/mediaframe/46280/indexl.html
For those who cannot listen to the live broadcast, an online
webcast replay will be available in the Investor Relations section
of the Company’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.
The Company is headquartered in New Prague, Minnesota and was
founded in 1992. Further information about the Company 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 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 press release. We undertake no obligation to
update them in light of new information or future events.
Financial Tables Follow:
Electromed, Inc.
Condensed Balance
Sheets
June 30,
2021
2020
Assets
(Unaudited)
Current Assets
Cash and cash equivalents
$
11,889,000
$
10,479,000
Accounts receivable (net of allowances for
doubtful accounts of $45,000)
17,032,000
12,941,000
Contract assets
393,000
903,000
Inventories
2,114,000
3,085,000
Prepaid expenses and other current
assets
276,000
353,000
Income tax receivable
-
262,000
Total current assets
31,704,000
28,023,000
Property and equipment, net
3,605,000
3,788,000
Finite-life intangible assets, net
663,000
598,000
Other assets
88,000
81,000
Deferred income taxes
1,049,000
755,000
Total assets
$
37,109,000
$
33,245,000
Liabilities and Shareholders’
Equity
Current Liabilities
Current maturities of other long-term
liabilities
$
33,000
$
72,000
Accounts payable
685,000
556,000
Accrued compensation
2,474,000
1,404,000
Income tax payable
288,000
-
Warranty reserve
940,000
740,000
Other accrued liabilities
219,000
214,000
Total current liabilities
4,639,000
2,986,000
Other long-term liabilities
54,000
9,000
Total liabilities
4,693,000
2,995,000
Commitments and Contingencies
Shareholders’ Equity
Common stock, $0.01 par value, 13,000,000
shares authorized; 8,533,209 and 8,567,834 issued and outstanding,
as of June 30, 2021 and June 30, 2020, respectively
85,000
86,000
Additional paid-in capital
17,409,000
16,480,000
Retained earnings
14,922,000
13,684,000
Total shareholders’ equity
32,416,000
30,250,000
Total liabilities and shareholders’
equity
$
37,109,000
$
33,245,000
Electromed, Inc.
Condensed Statements of
Operations
Three Months Ended
Twelve Months Ended
June 30,
June 30,
2021
2020
2021
2020
(Unaudited)
(Unaudited)
(Unaudited)
Net revenues
$
9,469,000
$
6,877,000
$
35,756,000
$
32,471,000
Cost of revenues
2,536,000
1,289,000
8,451,000
7,271,000
Gross profit
6,931,000
5,589,000
27,305,000
25,200,000
Operating expenses
Selling, general and administrative
5,953,000
4,797,000
22,443,000
19,945,000
Research and development
326,000
415,000
1,722,000
1,050,000
Government stimulus income
-
(913,000
)
-
(913,000
)
Total operating expenses
6,279,000
4,299,000
24,165,000
20,082,000
Operating income
652,000
1,290,000
3,140,000
5,118,000
Interest income, net
10,000
10,000
39,000
121,000
Other expense, net
(12,000
)
-
(12,000
)
-
Net income before income taxes
650,000
1,300,000
3,167,000
5,239,000
Income tax expense (benefit)
250,000
(9,000
)
805,000
1,078,000
Net income
$
400,000
$
1,309,000
$
2,362,000
$
4,161,000
Income per share:
Basic
$
0.05
$
0.16
$
0.28
$
0.50
Diluted
$
0.04
$
0.15
$
0.27
$
0.47
Weighted-average common shares
outstanding:
Basic
8,588,093
8,443,954
8,566,224
8,403,220
Diluted
8,897,595
8,968,800
8,911,842
8,826,418
Electromed, Inc.
Condensed Statements of Cash
Flows
Twelve Months Ended June
30,
2021
2020
(Unaudited)
Cash Flows From Operating
Activities
Net income
$
2,362,000
$
4,161,000
Adjustments to reconcile net
income to net cash provided by operating activities:
Depreciation
477,000
619,000
Amortization of finite-life
intangible assets
133,000
122,000
Share-based compensation
expense
1,024,000
902,000
Deferred income taxes
(294,000
)
(126,000
)
Changes in operating assets and
liabilities:
Accounts receivable
(4,091,000
)
(181,000
)
Contract assets
510,000
93,000
Inventories
971,000
(449,000
)
Prepaid expenses and other
assets
151,000
78,000
Income tax receivable
262,000
(262,000
)
Income tax payable
288,000
(289,000
)
Accounts payable and accrued
liabilities
1,284,000
(472,000
)
Net cash provided by operating
activities
3,077,000
4,196,000
Cash Flows From Investing
Activities
Expenditures for property and
equipment
(287,000
)
(844,000
)
Expenditures for finite-life
intangible assets
(161,000
)
(133,000
)
Net cash used in investing
activities
(448,000
)
(977,000
)
Cash Flows From Financing
Activities
Taxes paid on stock options
exercised on a net basis
(141,000
)
(628,000
)
Issuance of common stock upon
exercise of options
46,000
80,000
Repurchase of common stock
(1,124,000
)
-
Net cash used in financing
activities
(1,219,000
)
(548,000
)
Net increase in cash
1,410,000
2,671,000
Cash and cash equivalents
Beginning of period
10,479,000
7,808,000
End of period
$
11,889,000
$
10,479,000
Supplemental Disclosures of Cash
Flow Information
Cash paid for income taxes
$
534,000
$
1,755,000
Supplemental Disclosures of
Noncash Investing and Financing Activities
Property and equipment
acquisitions in accounts payable
$
10,000
$
1,000
Intangible asset acquisitions in
accounts payable
$
42,000
$
6,000
Lease assets obtained in exchange
for new operating lease liabilities
$
91,000
$
120,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210824005817/en/
Electromed, Inc. Mike MacCourt, Chief Financial Officer
(952) 758-9299 investorrelations@electromed.com
The Equity Group Inc. Kalle Ahl, CFA (212) 836-9614
kahl@equityny.com
Devin Sullivan (212) 836-9608 dsullivan@equityny.com
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