NEW PRAGUE, Minn.--(BUSINESS WIRE)--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.
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.
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.
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:
Condensed Balance Sheets
|March 31, 2017||June 30, 2016|
|Accounts receivable (net of allowances for doubtful accounts of $45,000)||8,933,426||7,611,437|
|Prepaid expenses and other current assets||491,968||419,616|
|Income tax receivable||-||192,685|
|Total current assets||17,414,972||15,827,536|
|Property and equipment, net||3,288,480||3,375,189|
|Finite-life intangible assets, net||762,853||904,033|
|Deferred income taxes||330,000||343,000|
|Liabilities and Shareholders’ Equity|
|Current maturities of long-term debt||$||50,203||$||46,309|
|Income taxes payable||17,024||-|
|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|
|Commitments and Contingencies|
|Common stock, $0.01 par value; authorized: 13,000,000 shares; 8,230,167 and 8,187,112 issued and outstanding at March 31, 2017 and June 30, 2016, respectively||82,302||81,871|
|Additional paid-in capital||13,923,033||13,549,551|
|Total shareholders’ equity||18,015,486||16,358,596|
|Total liabilities and shareholders’ equity||$||21,897,746||$||20,577,517|
Condensed Statements of Operations (Unaudited)
For the Three Months Ended
For the Nine Months Ended
|Cost of revenues||1,357,093||1,408,716||4,020,615||3,913,984|
|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|
|Interest expense, net of interest income of $4,956, $4,978, $11,925 and $8,525 respectively||8,831||13,064||41,135||51,150|
|Net income before income taxes||1,027,945||722,625||2,013,977||2,519,279|
|Income tax expense||(380,000||)||(256,000||)||(731,000||)||(644,000||)|
|Income per share:|
|Weighted-average common shares outstanding:|
Condensed Statements of Cash Flows (Unaudited)
Nine Months Ended March 31,
|Cash Flows From Operating Activities|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Amortization of finite-life intangible assets||89,813||91,815|
|Amortization of debt issuance costs||10,871||13,672|
|Share-based compensation expense||373,913||153,465|
|Loss on disposal of property and equipment||520||38,667|
|Loss on disposal of intangible assets||111,498||7,848|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other assets||(49,140||)||(22,711||)|
|Income tax receivable||192,685||(180,785||)|
|Income tax payable||17,024||(122,657||)|
|Accounts payable and accrued liabilities||(323,453||)||706,236|
Net cash provided by operating activities
|Cash Flows From Investing Activities|
|Expenditures for property and equipment||(425,838||)||(256,806||)|
|Expenditures for finite-life intangible assets||(60,131||)||(27,752||)|
|Net cash used in investing activities||(485,969||)||(284,558||)|
|Cash Flows From Financing Activities|
|Principal payments on long-term debt including capital lease obligations||(36,473||)||(36,397||)|
|Payment of deferred financing fees||(4,872||)||(13,520||)|
|Net cash used in financing activities||(41,345||)||(49,917||)|
|Net increase in cash||278,588||1,335,872|
|Beginning of period||5,123,355||3,598,240|
|End of period||$||5,401,943||$||4,934,112|