Electromed, Inc. Announces Record Fiscal Year 2024 Financial Results

Rhea-AI Summary

Electromed, Inc. (NYSE American: ELMD) reported record financial results for Q4 and FY 2024. Highlights include:

- Q4 net revenues increased 9.0% to $14.8 million
- Q4 operating income up 56.3% to $2.3 million
- Q4 net income reached $1.8 million or $0.20 per diluted share
- FY 2024 net revenue grew 13.8% to $54.7 million
- FY 2024 operating income increased 64.2% to $6.6 million
- FY 2024 net income totaled $5.2 million or $0.58 per diluted share

The company attributed growth to investments in commercial infrastructure and market development initiatives. As of June 30, 2024, Electromed had $16.1 million in cash, $23.3 million in accounts receivable, and no debt.

Positive

• Record Q4 net revenues of $14.8 million, up 9.0% year-over-year
• Q4 operating income increased 56.3% to $2.3 million
• FY 2024 net revenue grew 13.8% to $54.7 million
• FY 2024 operating income up 64.2% to $6.6 million
• FY 2024 net income reached $5.2 million, a 62.5% increase from FY 2023
• Strong cash position of $16.1 million with no debt
• Homecare revenue per weighted average direct sales representative of $967,000, exceeding target range

Negative

• Slight decrease in Q4 gross margin to 76.2% from 76.8% in Q4 FY 2023
• Increased SG&A expenses by 9.2% to $34.5 million in FY 2024

Insights

Financial Analyst

Electromed's Q4 and FY 2024 results showcase impressive growth and profitability. The company achieved record revenues of $54.7 million for FY 2024, a 13.8% increase year-over-year. This growth was primarily driven by their direct homecare business, which grew 12.6%. The company's focus on expanding its sales force and improving reimbursement efficiencies has paid off.

Notably, Electromed's operating income surged by 64.2% to $6.6 million, demonstrating strong operating leverage. The company's ability to maintain a high gross margin of 76.3% while scaling is commendable. With $16.1 million in cash and no debt, Electromed's financial position remains robust, providing flexibility for future growth initiatives.

However, investors should note the slight decrease in gross margin in Q4, primarily due to increased material costs. This could be a point to watch in future quarters to ensure it doesn't become a trend that impacts profitability.

Medical Device Industry Expert

Electromed's strong performance in FY 2024 reflects the growing demand for High Frequency Chest Wall Oscillation (HFCWO) therapy, particularly in treating bronchiectasis. The company's success in gaining market share through infrastructure investments and market development initiatives is noteworthy.

The increase in hospital market revenue by 21.9% is particularly impressive, indicating growing acceptance of Electromed's SmartVest System in clinical settings. This could lead to increased adoption and referrals for home use, potentially driving future growth in the direct homecare business.

However, the expiration of the CMS waiver that benefited the company in FY 2023 could present challenges in maintaining the same growth rate. Electromed will need to continue innovating and expanding its market presence to offset this headwind. The company's commitment to ongoing investments in growth suggests they are proactively addressing this challenge.

Record Q4 and full year financial results

NEW PRAGUE, Minn.--(BUSINESS WIRE)-- Electromed, Inc. (“Electromed”) (NYSE American: ELMD), a leader in innovative airway clearance technologies, today announced financial results for the three months (“Q4 FY 2024”) and full year (“FY 2024”) ended June 30, 2024.

Q4 FY 2024 Financial Highlights

• Net revenues increased 9.0% to a record $14.8 million in Q4 FY 2024, from $13.6 million in the fourth quarter of the prior fiscal year.
• Gross margin was 76.2% of revenue, compared to 76.8% in the fourth quarter of the prior fiscal year.
• Operating income increased by 56.3% to a record $2.3 million or 15.7% of revenue, compared with $1.5 million or 11.0% of revenue in the fourth quarter of the prior fiscal year.
• Net income was a record $1.8 million for the quarter, or $0.20 per diluted share, compared to $1.0 million, or $0.12 per diluted share in the fourth quarter of the prior fiscal year.
• Cash as of June 30, 2024, was $16.1 million.

FY 2024 Financial Highlights

• Net revenue increased 13.8% year over year to a record $54.7 million, from $48.1 million in the fiscal year ended June 30, 2023 (“FY 2023”).
• Operating income totaled a record $6.6 million, a 64.2% increase compared to $4.0 million in FY 2023.
• Net income totaled a record $5.2 million, or $0.58 per diluted share, compared to $3.2 million, or $0.36 per diluted share, in FY 2023.

“I’m extremely pleased with the Electromed team’s performance in fiscal 2024, as we continued to drive double-digit top line growth coupled with strong operating leverage,” said Jim Cunniff, President, and Chief Executive Officer. “The end results were excellent, namely delivering record revenues, record operating income, and record earnings for the year, an impressive feat for any company. We again gained market share, driven largely by ongoing infrastructure investments across the commercial team, as well as ongoing market development initiatives to raise awareness of HFCWO therapy with physicians and clinics treating bronchiectasis patients. These results were achieved despite headwinds from the expiration of the CMS waiver that we benefited from in FY 2023. We will continue to make deliberate investments in our growth and believe Electromed is well-positioned to deliver similar outstanding results in fiscal 2025.”

Q4 FY 2024 Results

All amounts below are for the three months ended June 30, 2024, and compare to the three months ended June 30, 2023 (“Q4 FY 2023”) unless otherwise noted.

Net revenues grew 9.0% to $14.8 million, from $13.6 million in Q4 FY 2023.

Revenue in our direct homecare business increased year-over-year by 6.2% to $13.4 million, from $12.6 million. The increase in revenue was due to an increase in direct sales representatives, higher quality referrals, and efficiencies within our reimbursement department.

Gross profit increased to $11.3 million, or 76.2% of net revenues, from $10.5 million or 76.8% of net revenues in the prior fiscal year. The increase in gross profit in Q4 FY2024 was primarily due to increased revenues during the quarter. The decrease in gross margin rate compared to Q4 FY 2023 was primarily due to increased material costs and less favorable revenue mix across channels.

Selling, general and administrative (“SG&A”) expenses were $8.8 million representing an increase of $0.1 million, or 1.5%, compared to Q4 FY 2023. The increase in SG&A expense was primarily due to increases in share-based compensation, salaries, and incentive compensation.

Operating income for the quarter was $2.3 million, compared to $1.5 million in Q4 FY 2023. The increase in operating income was driven primarily by increased net revenues and gross profit.

Net income for the quarter was $1.8 million or $0.20 per diluted share, compared to $1.0 million, or $0.12 per diluted share, in Q4 FY 2023.

FY 2024 Summary

Net revenues for the full year grew 13.8% to $54.7 million, from $48.1 million in fiscal 2023.

Revenue in our direct homecare market increased year-over-year by 12.6% to $49.5 million, from $44.0 million. The increase in revenue was due to an increase in direct sales representatives, and efficiencies recognized within our reimbursement department because of recent investments made to streamline the claims process. Field sales force employees totaled 62 at year end, 53 of which were direct sales representatives. Homecare revenue per weighted average direct sales representative in FY 2024 was $967,000, slightly higher than Electromed’s annual target range of $850,000 to $950,000.

Revenue in our hospital market increased by $0.5 million, or 21.9%, in fiscal 2024 compared to fiscal 2023. Hospital revenue includes sales to hospitals, rental companies and other institutions. The increase was primarily due to an increase in sales representatives focused on the hospital market as well as increased capital and disposable demand.

Revenue in our homecare distributor market increased by $0.2 million, or 14.5%, in fiscal 2024 compared to fiscal 2023. The revenue increase in fiscal 2024 was due to increased demand from one of our primary homecare distribution partners. We sell to a limited number of home medical equipment distributors, who in turn sell our SmartVest System in the U.S. homecare market.

Gross profit increased to $41.7 million in fiscal 2024, or 76.3% of net revenues, from $36.5 million or 76.0% of net revenues, in fiscal 2023. The increase in gross profit was primarily related to increased revenue, decreased shipping expenses and increased material costs in the prior year to expedite purchases which did not recur in the current year.

Selling, general and administrative (“SG&A”) expenses were $34.5 million in fiscal 2024, representing an increase of $2.9 million or 9.2% from $31.6 million in fiscal 2023. The increase in SG&A expenses was primarily related to increases in share-based compensation, 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 for fiscal 2024 was $6.6 million compared to $4.0 million in fiscal 2023. The increase in operating income was driven primarily by increased net revenues and gross profit.

Net income for fiscal 2024 was $5.2 million, or $0.58 per diluted share, compared to net income of $3.2 million, or $0.36 per diluted share, in fiscal 2023.

As of June 30, 2024, Electromed had $16.1 million in cash, $23.3 million in accounts receivable and no debt, achieving working capital of $36.5 million, and total shareholders’ equity of $44.5 million.

Conference Call and Webcast Information

A conference call with members of Electromed management will be held at 5:00 p.m. Eastern Time on Tuesday, August 27, 2024.

Interested parties may participate in the call by dialing (877) 407-0789 (Domestic) or (201) 689-8562 (International).

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=1681151&tp_key=13db7f17a1

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 13748052. 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,” “estimate,” “continue,” “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 Electromed include, but are not limited to, 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 Electromed’s reports filed with the Securities and Exchange Commission (including Electromed’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
		June 30, 2024			June 30, 2023
Assets
Current Assets
Cash and cash equivalents		$	16,080,000		$	7,372,000
Accounts receivable (net of allowances for credit losses of $45,000)			23,333,000			24,130,000
Contract assets			719,000			487,000
Inventories			3,712,000			4,221,000
Prepaid expenses and other current assets			329,000			1,577,000
Total current assets			44,173,000			37,787,000
Property and equipment, net			5,165,000			5,672,000
Finite-life intangible assets, net			657,000			605,000
Other assets			87,000			161,000
Deferred income taxes			2,152,000			1,581,000
Total assets		$	52,234,000		$	45,806,000
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable		$	1,010,000		$	1,372,000
Accrued compensation			3,893,000			3,018,000
Income tax payable			277,000			336,000
Warranty reserve			1,567,000			1,378,000
Other accrued liabilities			930,000			1,949,000
Total current liabilities			7,677,000			8,053,000
Other long-term liabilities			12,000			86,000
Total liabilities			7,689,000			8,139,000
Shareholders' Equity
Common stock, $0.01 par value per share, 13,000,000 shares authorized; 8,637,883 and 8,555,236 shares issued and outstanding, respectively			87,000			86,000
Additional paid-in capital			20,790,000			18,788,000
Retained earnings			23,668,000			18,793,000
Total shareholders' equity			44,545,000			37,667,000
Total liabilities and shareholders' equity		$	52,234,000		$	45,806,000

Electromed, Inc. Condensed Statements of Operations
		Three Months Ended June 30						Twelve Months Ended June 30
			2024			2023			2024			2023
		(Unaudited)			(Unaudited)
Net revenues		$	14,832,000		$	13,612,000		$	54,716,000		$	48,067,000
Cost of revenues			3,531,000			3,162,000			12,990,000			11,548,000
Gross profit			11,301,000			10,450,000			41,726,000			36,519,000
Operating expenses
Selling, general and administrative			8,790,000			8,658,000			34,489,000			31,595,000
Research and development			176,000			298,000			656,000			916,000
Total operating expenses			8,966,000			8,956,000			35,145,000			32,511,000
Operating income			2,335,000			1,494,000			6,581,000			4,008,000
Interest income (expense), net			162,000			41,000			455,000			78,000
Net income before income taxes			2,497,000			1,535,000			7,036,000			4,086,000
Income tax expense			669,000			502,000			1,886,000			920,000
Net income		$	1,828,000		$	1,033,000		$	5,150,000		$	3,166,000
Income per share:
Basic		$	0.21		$	0.12		$	0.60		$	0.37
Diluted		$	0.20		$	0.12		$	0.58		$	0.36
Weighted-average common shares outstanding:
Basic			8,601,206			8,511,632			8,562,245			8,463,684
Diluted			8,997,310			8,723,700			8,864,585			8,700,833

Electromed, Inc. Condensed Statements of Cash Flows
		For the Years Ended June 30,
			2024				2023
Cash Flows from Operating Activities
Net income		$	5,150,000			$	3,166,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			789,000				550,000
Amortization of finite-life intangible assets			52,000				63,000
Share-based compensation expense			1,692,000				708,000
Deferred income taxes			(571,000	)			(43,000	)
Changes in operating assets and liabilities:
Accounts receivable			797,000				(3,078,000	)
Contract assets			(232,000	)			(201,000	)
Inventories			459,000				(1,033,000	)
Prepaid expenses and other assets			1,321,000				202,000
Income tax payable			(59,000	)			285,000
Accounts payable and accrued liabilities			(1,206,000	)			420,000
Accrued compensation			875,000				276,000
Net cash provided by operating activities			9,067,000				1,315,000
Cash Flows from Investing Activities
Expenditures for property and equipment			(287,000	)			(1,648,000	)
Expenditures for in finite-life intangible assets			(108,000	)			(68,000	)
Net cash used in investing activities			(395,000	)			(1,716,000	)
Cash Flows from Financing Activities
Issuance of common stock upon exercise of options			311,000				83,000
Taxes paid on stock options exercised on a net basis			-				(310,000	)
Repurchase of common stock			(275,000	)			(153,000	)
Net cash provided by (used in) financing activities			36,000				(380,000	)
Net increase (decrease) in cash			8,708,000				(781,000	)
Cash and Cash Equivalents
Beginning of period			7,372,000				8,153,000
End of period		$	16,080,000			$	7,372,000

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240827710530/en/

Brad Nagel, Chief Financial Officer

(952) 758-9299

investorrelations@electromed.com



Mike Cavanaugh, Investor Relations

ICR Westwicke

(617) 877-9641

mike.cavanaugh@westwicke.com

Source: Electromed, Inc.

FAQ

What were Electromed's (ELMD) Q4 FY 2024 financial results?

Electromed reported Q4 FY 2024 net revenues of $14.8 million, up 9.0% year-over-year. Operating income increased 56.3% to $2.3 million, and net income reached $1.8 million or $0.20 per diluted share.

How did Electromed (ELMD) perform in fiscal year 2024?

For FY 2024, Electromed's net revenue grew 13.8% to $54.7 million. Operating income increased 64.2% to $6.6 million, and net income totaled $5.2 million or $0.58 per diluted share.

What was Electromed's (ELMD) cash position as of June 30, 2024?

As of June 30, 2024, Electromed had $16.1 million in cash, $23.3 million in accounts receivable, and no debt, with a working capital of $36.5 million.

How did Electromed's (ELMD) direct homecare business perform in FY 2024?

Electromed's direct homecare revenue increased by 12.6% to $49.5 million in FY 2024, with homecare revenue per weighted average direct sales representative reaching $967,000.