Electromed, Inc. Announces Record Financial Performance in Fiscal 2025 Second Quarter

Rhea-AI Summary

Electromed (NYSE American: ELMD) reported record financial results for Q2 FY 2025. Net revenue increased 18.7% to $16.3 million, while operating income reached $2.5 million (15.6% of net revenues). Net income grew to $2.0 million ($0.22 per diluted share), up from $1.7 million ($0.19 per diluted share) in Q2 FY 2024.

The company's direct homecare business saw a 15.2% increase to $14.6 million, driven by increased referrals and approvals. The field sales force expanded to 60 employees, with 54 direct sales representatives. Gross profit improved to 77.7% of net revenues ($12.6 million). As of December 31, 2024, Electromed maintained a strong financial position with $16.2 million in cash, $22.8 million in accounts receivable, and no debt.

Positive

• Record quarterly revenue of $16.3 million, up 18.7% year-over-year
• Operating income increased to $2.5 million (15.6% of net revenues)
• Net income grew to $2.0 million ($0.22 per diluted share)
• Gross profit margin improved to 77.7%
• Strong financial position with $16.2 million cash and no debt
• Homecare revenue per sales rep at $1,077,000, exceeding target range

Negative

• SG&A expenses increased 20.3% to $9.8 million
• Cash increase of $0.2 million for six months, down from $3.1 million in previous period

Insights

Financial Analyst

Electromed's Q2 FY2025 results demonstrate exceptional operational execution and financial discipline. The 18.7% revenue growth to $16.3 million showcases strong market penetration, while the 77.7% gross margin reflects robust pricing power and operational efficiency.

The company's direct-to-patient model is proving highly scalable, with revenue per sales representative reaching $1,077,000 annually, exceeding target range. This efficiency metric suggests potential for continued profitable expansion of the sales force. The investment in a new CRM system indicates forward-thinking operational optimization, likely to enhance sales productivity and customer relationship management.

Working capital management deserves particular attention - despite aggressive growth, inventory reduction while maintaining service levels demonstrates sophisticated supply chain optimization. The strong balance sheet ($35.5 million working capital, zero debt) provides significant flexibility for strategic investments while returning capital to shareholders through share repurchases ($4.5 million in the period).

The "Triple Down on Bronchiectasis" campaign reaching over 10,000 clinicians represents a strategic market development initiative that could drive sustained referral growth. The 15.2% growth in direct homecare business suggests successful market penetration and potential for continued expansion in this core segment.

Key metrics to monitor include:

• Sustained gross margin performance amid growth
• Sales force productivity as team expands
• Working capital efficiency, particularly inventory management
• Impact of CRM implementation on operational metrics

Company maintained strong momentum to deliver another quarter of record revenue and earnings, while continuing to invest in multiple strategic growth initiatives

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 and six months ended December 31, 2024 (“Q2 FY 2025”).

Q2 FY 2025 Company Highlights

• Net revenue increased 18.7% to a record $16.3 million in Q2 FY 2025, from $13.7 million in the second quarter of the prior fiscal year.
• Operating income increased to a record $2.5 million, 15.6% of net revenues and a year-over-year increase of 12.3%.
• Net income was $2.0 million, or $0.22 per diluted share, compared to $1.7 million, or $0.19 per diluted share in Q2 FY 2024.
• Continued to deliberately expand the sales force, ending the quarter with 54 reps.
• Reached over 10,000 clinicians through the “Triple Down on Bronchiectasis” educational campaign launched in Q1 FY 2025.

“Our team’s performance across the board in sales, marketing, manufacturing, and order fulfillment was outstanding,” said Jim Cunniff, President, and Chief Executive Officer. “The impact of their work is plain to see, with strong growth in all three of our customer categories, record quarterly revenues and solid operating and net income during the quarter. A prime example of our sterling performance is our ability to improve our working capital by reducing inventory while continuing to meet our patients’ therapy needs. This is particularly important for us given our unique direct-to-patient model. We are also continually seeking ways to improve efficiency across the organization, and during the quarter we initiated an investment in a new CRM system to further enhance our commercial team’s productivity. I am proud of Electromed’s position as a growing and profitable MedTech company, and we expect to report continued improvements throughout the remainder of fiscal 2025.”

Q2 FY 2025 Results

All amounts below are for the three months ended December 31, 2024, and compare to the three months ended December 31, 2023 (“Q2 FY 2024”).

Net revenues grew 18.7% to $16.3 million, from $13.7 million.

Revenue in our direct homecare business increased year-over-year by 15.2% to $14.6 million, from $12.7 million. The increase in revenue was due to an increase in referrals and approvals driven by an increase in direct sales representatives, higher net revenues per approval, and efficiencies within our reimbursement department. Field sales force employees totaled 60 at quarter end, 54 of which were direct sales representatives. The annualized homecare revenue per weighted average direct sales representative in Q2 was $1,077,000, slightly higher than Electromed’s target range of $900,000 to $1,000,000.

Gross profit increased to $12.6 million or 77.7% of net revenues from $10.5 million or 77.0% of net revenues. The increase in gross profit dollars and percentage were primarily a result of increased volumes and higher average net revenue per device.

Selling, general and administrative (“SG&A”) expenses were $9.8 million representing an increase of $1.7 million or 20.3%. The increase in the current year period was primarily due to the accelerated recognition of non-cash share-based compensation associated with the vesting of performance-based equity awards, along with increased salaries and incentive compensation related to the higher average number of sales, sales support, marketing, and reimbursement personnel to process higher patient referrals.

Operating income was a record $2.5 million, compared to $2.3 million. The increase in operating income was driven primarily by increased revenue and gross profit.

Net income was a record $2.0 million, or $0.22 per diluted share, compared to $1.7 million, or $0.19 per diluted share.

As of December 31, 2024, Electromed had $16.2 million in cash, $22.8 million in accounts receivable and no debt, achieving a working capital of $35.5 million and total shareholders’ equity of $43.6 million. The cash balance reflects an increase of $0.2 million for the six months ended December 31, 2024, compared to an increase in cash of $3.1 million in the six months ended December 31, 2023. The increase in cash for the 6 months ended December 31, 2024, was driven by $5.5 million of positive operating cash flow, offset by share repurchases of approximately $4.5 million of Electromed common stock and $0.8 million of taxes paid from net share settlement of vested stock.

Conference Call and Webcast Information

The conference call with members of Electromed management will be held at 5:00 p.m. Eastern Time on Tuesday, February 11, 2025.

Interested parties may participate in the call by dialing (844) 826-3033 (Domestic) or (412) 317-5185 (International) using passcode 0177798.

The live conference call webcast will be accessible in the Investor Relations section of Electromed’s website and directly via the following link: https://viavid.webcasts.com/starthere.jsp?ei=1705037&tp_key=8af23b601f.

For those who cannot listen to the live broadcast, a replay will be available by dialing (844) 512-2921 (Domestic) or (412) 317-6671 (International) and referencing the replay pin number 10196088. Additionally, an online replay will be available for one year in the Investor Relations section of Electromed’s web site at: https://investors.smartvest.com/events-and-presentations/default.aspx

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. It 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 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,” “continue,” “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, 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 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.

Electromed, Inc.
Condensed Balance Sheets
				December 31, 2024			June 30, 2024
				(Unaudited)			(Audited)
	Assets
	Current Assets
		Cash and cash equivalents		$	16,235,000		$	16,080,000
		Accounts receivable (net of allowances for credit losses of $45,000)			22,775,000			23,333,000
		Contract assets			997,000			719,000
		Inventories			3,081,000			3,712,000
		Income taxes receivable			514,000			-
		Prepaid expenses and other current assets			587,000			329,000
			Total current assets		44,189,000			44,173,000
	Property and equipment, net				5,216,000			5,165,000
	Finite-life intangible assets, net				609,000			657,000
	Other assets				108,000			87,000
	Deferred income taxes				2,152,000			2,152,000
			Total assets	$	52,274,000		$	52,234,000
	Liabilities and Shareholders' Equity
	Current Liabilities
		Accounts payable			1,506,000			1,010,000
		Accrued compensation			3,623,000			3,893,000
		Income tax payable			-			277,000
		Warranty reserve			1,599,000			1,567,000
		Other accrued liabilities			1,939,000			930,000
			Total current liabilities		8,667,000			7,677,000
	Other long-term liabilities				4,000			12,000
			Total liabilities		8,671,000			7,689,000
	Commitments and Contingencies
	Shareholders' Equity
		Common stock, $0.01 par value per share, 13,000,000 shares authorized;
			8,556,844 and 8,637,833 shares issued and outstanding, as of December 31, 2024 and June 30, 2024, respectively		86,000			87,000
		Additional paid-in capital			20,940,000			20,790,000
		Retained earnings			22,577,000			23,668,000
			Total shareholders' equity		43,603,000			44,545,000
			Total liabilities and shareholders' equity	$	52,274,000		$	52,234,000

Electromed, Inc.
Condensed Statements of Operations
				Three Months Ended						Six Months Ended
				December 31,						December 31,
				2024			2023			2024			2023
	Net revenues			$	16,255,000		$	13,689,000		$	30,923,000		$	26,013,000
	Cost of revenues				3,628,000			3,144,000			6,805,000			5,970,000
		Gross profit			12,627,000			10,545,000			24,118,000			20,043,000
	Operating expenses
		Selling, general and administrative			9,834,000			8,175,000			19,221,000			17,325,000
		Research and development			251,000			107,000			417,000			313,000
		Total operating expenses			10,085,000			8,282,000			19,638,000			17,638,000
		Operating income			2,542,000			2,263,000			4,480,000			2,405,000
	Interest income, net				152,000			96,000			347,000			173,000
			Net income before income taxes		2,694,000			2,359,000			4,827,000			2,578,000
	Income tax expense				726,000			685,000			1,385,000			749,000
			Net income	$	1,968,000		$	1,674,000		$	3,442,000		$	1,829,000
	Income per share:
		Basic		$	0.23		$	0.20		$	0.41		$	0.21
		Diluted		$	0.22		$	0.19		$	0.38		$	0.21
	Weighted-average common shares outstanding:
		Basic			8,424,534			8,545,120			8,494,511			8,541,254
		Diluted			8,953,349			8,800,172			8,983,726			8,791,519

Electromed, Inc.
Condensed Statements of Cash Flows
						Six Months Ended December 31,
						2024				2023
						(Unaudited)				(Unaudited)
	Cash Flows From Operating Activities
		Net income				$	3,442,000			$	1,829,000
		Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation				414,000				398,000
			Amortization of finite-life intangible assets				78,000				25,000
			Share-based compensation expense				1,652,000				791,000
			Changes in operating assets and liabilities:
				Accounts receivable			558,000				1,142,000
				Contract assets			(278,000	)			(87,000	)
				Inventories			500,000				(509,000	)
				Prepaid expenses and other assets			(279,000	)			1,104,000
				Income taxes receivable, net			(791,000	)			(83,000	)
				Accounts payable and accrued liabilities			434,000				(1,171,000	)
				Accrued compensation			(270,000	)			(212,000	)
					Net cash provided by operating activities		5,460,000				3,227,000
	Cash Flows From Investing Activities
			Expenditures for property and equipment				(270,000	)			(180,000	)
			Expenditures for finite-life intangible assets				(25,000	)			(40,000	)
					Net cash used for investing activities		(295,000	)			(220,000	)
	Cash Flows From Financing Activities
			Issuance of common stock upon exercise of options				346,000				55,000
			Taxes paid on net share settlement of stock awards				(820,000	)			-
			Repurchase of common stock				(4,536,000	)			-
					Net cash (used for) provided by financing activities		(5,010,000	)			55,000
					Net increase in cash		155,000				3,062,000
	Cash And Cash Equivalents
		Beginning of period					16,080,000				7,372,000
		End of period				$	16,235,000			$	10,434,000

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250211877373/en/

Brad Nagel, Chief Financial Officer

(952) 758-9299

investorrelations@electromed.com



Mike Cavanaugh, Investor Relations

ICR Healthcare

(617) 877-9641

mike.cavanaugh@icrhealthcare.com

Source: Electromed, Inc.

FAQ

What was Electromed's (ELMD) revenue growth in Q2 FY 2025?

Electromed's revenue grew 18.7% year-over-year to $16.3 million in Q2 FY 2025, compared to $13.7 million in Q2 FY 2024.

How much did ELMD's direct homecare business grow in Q2 FY 2025?

ELMD's direct homecare business increased by 15.2% to $14.6 million, up from $12.7 million in the same quarter of the previous year.

What was Electromed's earnings per share in Q2 FY 2025?

Electromed reported earnings of $0.22 per diluted share in Q2 FY 2025, compared to $0.19 per diluted share in Q2 FY 2024.

How many sales representatives did ELMD have at the end of Q2 FY 2025?

Electromed had 54 direct sales representatives out of a total field sales force of 60 employees at the end of Q2 FY 2025.

What was ELMD's cash position as of December 31, 2024?

As of December 31, 2024, Electromed had $16.2 million in cash, $22.8 million in accounts receivable, and no debt.