NEW PRAGUE, Minn.--(BUSINESS WIRE)--Electromed, Inc. (“Electromed” or the “Company”) (NYSE American: ELMD), a leader in innovative airway clearance technologies, today announced financial results for the three months ended September 30, 2018 (“Q1 FY 2019”).
Q1 FY 2019 Highlights
- Net revenue increased 15.4% to $7.3 million from $6.3 million during the three months ended September 30, 2018 (“Q1 FY 2018”).
- Gross profit rose 18.2% to $5.5 million from $4.7 million in Q1 FY 2018.
- Operating income grew 100.6% to $199,000 from $99,000 in Q1 FY 2018.
- Net income expanded 90.7% to $154,000, or $0.02 per diluted share, from $81,000, or $0.01 per diluted share, in Q1 FY 2018.
- Cash flow from operating activities totaled $303,000, compared to $328,000 in Q1 FY 2018.
- Field sales employees grew to 49 at the end of Q1 FY 2019 from 41 at the end of Q1 FY 2018.
Kathleen Skarvan, President and Chief Executive Officer of Electromed, commented, “We achieved strong top- and bottom-line growth in the first quarter of fiscal 2019, driven by a 13.8% year-over-year increase in home care revenue. Both referrals and approvals rose year-over-year, reflecting our expanded sales force, ongoing excellence in our reimbursement operations and continuing efforts to advance physician awareness and education surrounding the benefits of high frequency chest wall oscillation therapy (“HFCWO”) with our SmartVest® device. We also are pleased to report that sales in our institutional segment this quarter rose 42.0% year-over-year, driven primarily by our strategic focus on integrated delivery networks (IDNs).”
Ms. Skarvan continued, “Looking ahead, we believe Electromed can achieve double-digit revenue growth with our strategies of providing superior device features and benefits along with world-class service, leading in bronchiectasis clinical studies and improving education and awareness of bronchiectasis prevalence and the need for the SmartVest Airway Clearance System to effectively treat these patients. We believe earnings growth will improve over the next few years as we focus on sales force productivity improvements and tighter SG&A cost control. We continue to emphasize greater frequency of visits to targeted clinics and hospital systems that more actively prescribe HFCWO therapy, versus greenfield locations with limited sales activity and generating higher quality referrals for higher referral to approval conversion rates. We remain as excited as ever about the large and growing bronchiectasis market and dedicated to improving quality-of-life and outcomes for patients with compromised pulmonary function.”
Q1 FY 2019 Review
Net revenue increased 15.4% to $7.3 million in Q1 FY 2019 from $6.3 million in Q1 FY 2018, primarily driven by higher home care revenue. Home care revenue rose 13.8% to $6.7 million in Q1 FY 2019 from $5.9 million in Q1 FY 2018, primarily due to growth in referrals and approvals driven by a larger field sales staff and continued improvements in the Company’s reimbursement operations that led to a greater referral to approval percentage.
Gross profit increased 18.2% to $5.5 million, or 76.2% of net revenue, in Q1 FY 2019 from $4.7 million, or 74.4% of net revenue, in Q1 FY 2018. The increase in gross profit resulted primarily from an increase in home care revenue.
Operating expenses, which include selling, general and administrative (“SG&A”) as well as research and development (“R&D”) expenses, totaled $5.3 million, or 73.4% of revenue, in Q1 FY 2019 compared with $4.6 million, or 72.8% of revenue, in the same period of the prior year. SG&A expenses increased 16.7% to $5.3 million in Q1 FY 2019 from $4.5 million in Q1 FY 2018, primarily due to higher payroll and compensation-related expenses and increased travel, meals and entertainment expenses which were driven by the expansion of our sales force. R&D expenses totaled $68,000 in Q1 FY 2019 compared to $71,000 in Q1 FY 2018.
Operating income increased 100.6% to $199,000 in Q1 FY 2019 from $99,000 in Q1 FY 2018, primarily due to increased gross profit driven by higher revenue, which was partially offset by costs related to the expansion of our sales force.
Net income before income tax expense rose 123.7% to $212,000 in Q1 FY 2019 from $95,000 in Q1 FY 2018.
Net income increased 90.7% to $154,000, or $0.02 per diluted share, in Q1 FY 2019, from $81,000, or $0.01 per diluted share, in Q1 FY 2018. In Q1 FY 2019, income tax expense totaled $58,000, compared to $14,000 in the same period of the prior year.
Electromed’s balance sheet at September 30, 2018 included cash of $7.7 million, long-term debt including current maturities of $1.1 million, working capital of $18.9 million, and shareholders’ equity of $23.0 million.
Management will host a conference call on November 14, 2018 at 8:00 am CT (9:00 am ET) to discuss Q1 FY 2019 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/39454
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://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 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 can generally be identified by words such as “believe,” “estimate,” “expect,” “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 competitive nature of our market; risks associated with expansion into international markets; changes to Medicare, Medicaid, or private insurance reimbursement policies; new drug or pharmaceutical discoveries; changes to health care laws; changes affecting the medical device industry; our need to maintain regulatory compliance and to gain future regulatory approvals and clearances; our ability to protect and expand our intellectual property portfolio; our ability to renew our line of credit or obtain additional credit as necessary; our ability to develop new sales channels for our product; and general economic and business conditions, as well as other factors described from time to time in our 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
|September 30, 2018||June 30, 2018|
|Accounts receivable (net of allowances for doubtful accounts of $45,000)||11,545,915||11,811,308|
|Prepaid expenses and other current assets||415,476||751,541|
|Total current assets||23,384,758||23,281,879|
|Property and equipment, net||2,965,526||3,091,242|
|Finite-life intangible assets, net||641,039||649,103|
|Deferred income taxes||517,000||364,000|
|Liabilities and Shareholders’ Equity|
|Current maturities of long-term debt||$||1,089,120||$||1,101,043|
|Income taxes payable||156,640||397,390|
|Other accrued liabilities||542,513||464,357|
|Total current liabilities||4,480,188||4,803,283|
|Commitments and Contingencies|
|Common stock, $0.01 par value; authorized: 13,000,000 shares; 8,329,826 and 8,288,659 issued and outstanding at September 30, 2018 and June 30, 2018, respectively||83,298||82,887|
|Additional paid-in capital||15,243,494||14,953,103|
|Total shareholders’ equity||23,034,042||22,588,848|
|Total liabilities and shareholders’ equity||$||27,514,230||$||27,392,131|
Condensed Statements of Operations
|For the Three Months Ended September 30,|
|Cost of revenues||1,733,051||1,613,604|
|Selling, general and administrative||5,275,755||4,520,905|
|Research and development||68,137||70,663|
|Total operating expenses||5,343,892||4,591,568|
|Interest income (expense), net||13,452||(4,199||)|
|Net income before income taxes||212,392||94,951|
|Income tax expense||58,000||14,000|
|Income per share:|
|Weighted-average common shares outstanding:|
Condensed Statements of Cash Flows
|Three Months Ended September 30,|
|Cash Flows From Operating Activities|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Amortization of finite-life intangible assets||29,850||28,258|
|Amortization of debt issuance costs||979||2,197|
|Share-based compensation expense||257,234||190,385|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other assets||336,065||(180,740||)|
|Income tax receivable||-||(226,582||)|
|Income tax payable||(240,750||)||(156,524||)|
|Accounts payable and accrued liabilities||(103,253||)||(38,157||)|
|Net cash provided by operating activities||302,834||328,127|
|Cash Flows From Investing Activities|
|Expenditures for property and equipment||(10,429||)||(95,011||)|
|Expenditures for finite-life intangible assets||(21,786||)||(7,436||)|
|Net cash used in investing activities||(32,215||)||(102,447||)|
|Cash Flows From Financing Activities|
|Principal payments on long-term debt including capital lease obligations||(12,902||)||(12,397||)|
|Issuance of common stock upon exercise of options||33,568||-|
|Net cash provided by (used in) financing activities||20,666||(12,397||)|
|Net increase in cash||291,285||213,283|
|Beginning of period||7,455,844||5,573,709|
|End of period||$||7,747,129||$||5,786,992|