Electromed, Inc 10-Q, filed Nov 10, 2026
Electromed, Inc. (ELMD)
About this 10-Q
Electromed, Inc filed this 10-Q on November 10, 2026, covering the quarter ended September 30, 2026.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| (Mark One) | |
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
| Commission File No.: |
| Electromed, Inc. |
| (Exact Name of Registrant as Specified in its Charter) |
| | | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
|
| | |
| (Address of principal executive offices) | (Zip Code) |
| ( |
| (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
| | | | ||
| (Title of each class) | (Trading Symbol(s)) | (Name of each exchange on which registered) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
There were
Electromed, Inc.
Index to Quarterly Report on Form 10-Q
PART I – FINANCIAL INFORMATION
Electromed, Inc.
Condensed Balance Sheets
| September 30, 2026 | June 30, 2026 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable (net of allowance for credit losses of $ and $ as of September 30, 2026, and June 30, 2026, respectively) | ||||||||
| Contract assets | ||||||||
| Inventories | ||||||||
| Income tax receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Finite-life intangible assets, net | ||||||||
| Other assets | ||||||||
| Deferred income taxes | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued compensation | ||||||||
| Warranty reserve, current portion | ||||||||
| Other accrued liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term warranty reserve | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Shareholders’ Equity | ||||||||
| Common stock, $ par value per share, shares authorized; and shares issued and outstanding, as of September 30, 2026, and June 30, 2026, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
| See Notes to Condensed Financial Statements (Unaudited). |
Electromed, Inc.
Condensed Statements of Operations (Unaudited)
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net revenues | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Selling, general and administrative | ||||||||
| Research and development | ||||||||
| Total operating expenses | ||||||||
| Operating income | ||||||||
| Interest income, net | ||||||||
| Income before income taxes | ||||||||
| Income tax expense | ||||||||
| Net income | $ | $ | ||||||
| Earnings per share: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
See Notes to Condensed Financial Statements (Unaudited).
Electromed, Inc.
Condensed Statements of Cash Flows (Unaudited)
| Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Share-based compensation expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Contract assets | ( | ) | ||||||
| Inventories | ( | ) | ( | ) | ||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Income tax receivable, net | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Accrued compensation | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| Cash Flows From Investing Activities | ||||||||
| Expenditures for property and equipment | ( | ) | ( | ) | ||||
| Expenditures for finite-life intangible assets | ( | ) | ( | ) | ||||
| Net cash used for investing activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Issuance of common stock upon exercise of options | ||||||||
| Taxes paid on net share settlement of stock awards | ( | ) | ( | ) | ||||
| Repurchase of common stock | ( | ) | ( | ) | ||||
| Net cash used for financing activities | ( | ) | ( | ) | ||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents | ||||||||
| Beginning of period | ||||||||
| End of period | $ | $ | ||||||
| Supplemental Disclosures of Cash Flow Information | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Supplemental Disclosures of Noncash Investing and Financing Activities | ||||||||
| Property and equipment and intangible asset acquisitions in accounts payable | $ | $ | ||||||
| Demonstration equipment transferred between inventory and property and equipment | $ | $ | ||||||
See Notes to Condensed Financial Statements (Unaudited).
Electromed, Inc.
Condensed Statements of Shareholders’ Equity (Unaudited)
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Retained | Shareholders’ | |||||||||||||||||
| Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Net income | - | |||||||||||||||||||
| Exercise of common stock options, vesting of restricted stock units, and issuance of restricted stock awards, net of cancellations and tax withholdings | ( | ) | ( | ) | ||||||||||||||||
| Share-based compensation expense | - | |||||||||||||||||||
| Repurchase of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Retained | Shareholders’ | |||||||||||||||||
| Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ||||||||||||||||
| Net income | - | |||||||||||||||||||
| Exercise of common stock options, vesting of restricted stock units, and issuance of restricted stock awards, net of cancellations and tax withholdings | ( | ) | ( | ) | ||||||||||||||||
| Share-based compensation expense | - | |||||||||||||||||||
| Repurchase of common stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | $ | ||||||||||||||||
Electromed, Inc.
Notes to Condensed Financial Statements
(Unaudited)
Note 1. Interim Financial Reporting
Nature of business: Electromed, Inc. (the “Company”) develops, manufactures and markets innovative airway clearance products that apply High Frequency Chest Wall Oscillation (“HFCWO”) therapy in pulmonary care for patients of all ages. The Company markets its products in the U.S. to the homecare and hospital markets. The Company also sells internationally through distributors.
Since its inception, the Company has operated in a single industry segment: developing, manufacturing, and marketing medical equipment.
Basis of presentation: The accompanying unaudited Condensed Financial Statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. In the opinion of management, the accompanying unaudited Condensed Financial Statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations as required by Regulation S-X. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The financial statements and related notes do not include all information and footnotes required by U.S. GAAP for annual reports. This interim report should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2026 (“fiscal 2026”).
A summary of the Company’s significant accounting policies and estimates:
Our significant accounting policies are detailed in Note 1. Nature of Business and Summary of Significant Accounting Policies of the Annual Report on Form 10-K for the year ended June 30, 2026. There have been no significant changes to these policies that have had a material impact on the Unaudited Condensed Financial Statements and the accompanying disclosure notes for the three months ended September 30, 2026.
Recently Issued Accounting Standards
ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)
The standard introduces increased disclosure requirements for certain costs and expenses. It is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company currently expects to adopt this standard for its fiscal year ending June 30, 2028, and is evaluating the impact of adoption and additional disclosure requirements.
ASU 2025-06 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)
The standard modernizes the accounting for software costs that are accounted for under Subtopic 350-40. It is effective for annual reporting periods beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The Company expects to adopt this standard for its fiscal year ending June 30, 2029, and is evaluating the impact of adoption and additional disclosure requirements.
Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on the Company’s financial statements and related disclosures.
Note 2. Revenues
Revenue is measured based on consideration specified in the contract with a customer, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price. Estimates of variable consideration primarily relate to capped installment payment arrangements with third‑party payers and patient responsibility amounts, including deductibles, coinsurance, copayments, and similar amounts. Estimating variable consideration requires significant judgment, including selecting estimation methodologies, evaluating historical payment experience, and assessing factors that may affect future collections. Electromed estimates variable consideration using the expected value method, as it best predicts the amount of consideration to which Electromed expects to be entitled, given the large number of contracts with similar characteristics and a wide range of possible outcomes. In applying this method, management considers quantitative inputs such as historical claims approval rates, payment timing and recovery patterns, historical termination experience, and patient demographic data, as well as qualitative factors including changes in insurance coverage, mortality, patient utilization patterns, and other relevant circumstances.
Capped installment payment arrangements represent the majority of Electromed’s variable consideration. For the three months ended September 30, 2026 and 2025, amounts subject to capped installment payment arrangements represented a significant portion of net revenues, accounting for approximately
When a contract with a customer has been established, revenue is recognized when a performance obligation is satisfied by transferring control of a distinct good or service to a customer, typically upon shipment or delivery.
Disaggregation of revenues. In the following table, net revenues are disaggregated by market:
| Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Homecare | $ | $ | ||||||
| Hospital | ||||||||
| Homecare distributor | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
In the following table, net homecare revenue is disaggregated by payer type:
| Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Commercial | $ | $ | ||||||
| Medicare | ||||||||
| Medicare Supplemental | ||||||||
| Medicaid | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
Contract balances. The following tables provide information about accounts receivable and contract assets from contracts with customers:
| As of September 30, 2026 | As of June 30, 2026 | |||||||
| Receivables, included in “Accounts receivable, net of allowance for credit losses” | $ | $ | ||||||
| Contract Assets | $ | $ | ||||||
Total Accounts receivable, net of allowance for credit losses, as of June 30, 2025, were $
Changes in the Company's allowance for credit losses are as follows:
| Three Months Ended | Fiscal Year Ended | |||||||
| September 30, 2026 | June 30, 2026 | |||||||
| Increase (decrease) | Increase (decrease) | |||||||
| Allowance for credit losses, beginning | $ | $ | ||||||
| Provision for credit losses | ||||||||
| Write Offs | ||||||||
| Recoveries | ||||||||
| Allowance for credit losses, ending | $ | $ | ||||||
Significant changes in contract assets during the period are as follows:
| Three Months Ended | Fiscal Year Ended | |||||||
| September 30, 2026 | June 30, 2026 | |||||||
| Contract assets, beginning | $ | $ | ||||||
| Reclassification of contract assets to accounts receivable | ( | ) | ( | ) | ||||
| Contract assets recognized | ||||||||
| Decrease as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period | ( | ) | ( | ) | ||||
| Contract assets, ending | $ | $ | ||||||
Note 3. Selected Balance Sheet Information
Inventory consists of the following:
| As of September 30, 2026 | As of June 30, 2026 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Estimated inventory to be returned | ||||||||
| Less: Reserve for obsolescence | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Other assets consist of the following:
| As of September 30, 2026 | As of June 30, 2026 | |||||||
| Capitalized software costs | $ | $ | ||||||
| Right of use assets | ||||||||
| Other assets | ||||||||
| Total | $ | $ | ||||||
Other accrued liabilities consist of the following:
| As of September 30, 2026 | As of June 30, 2026 | |||||||
| Accrued insurance recoupments | $ | $ | ||||||
| Other accrued expenses | ||||||||
| Total | $ | $ | ||||||
Note 4. Warranty Reserve
The Company provides a lifetime warranty on its products to the prescribed patient for sales within the U.S. and a - to -year warranty for all homecare distributor, hospital and other sales. The Company estimates the costs that may be incurred under its warranty and records a liability in the amount of such costs at the time the product is shipped. Factors that affect the Company’s warranty reserve include the number of units shipped, historical and anticipated rates of warranty claims, the product’s useful life and cost per claim. The Company periodically assesses the adequacy of its recorded warranty reserve and adjusts the amounts as necessary.
The Company's estimated warranty reserve is classified between current and long-term liabilities based on management's estimate of the timing of expected warranty expenditures. Amounts expected to settle within twelve months of $
Changes in the Company’s warranty reserve were as follows:
| Three Months Ended | Fiscal Year Ended | |||||||
| September 30, 2026 | June 30, 2026 | |||||||
| Warranty reserve, beginning | $ | $ | ||||||
| Accrual for products sold | ||||||||
| Expenditures and costs incurred for warranty claims | ( | ) | ( | ) | ||||
| Warranty reserve, ending | $ | $ | ||||||
Note 5. Income Taxes
Income tax expense was estimated at $
Income tax expense was estimated at $
The Company is subject to U.S. federal and state income tax in multiple jurisdictions. With limited exceptions, years prior to the Company’s fiscal year ended June 30, 2023, are longer open to U.S. federal, state or local examinations by taxing authorities. The Company is not under any current income tax examinations by any federal, state or local taxing authority. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.
Note 6. Financing Arrangements
On December 16, 2025, the Company entered into a credit agreement with BMO Bank N.A. The credit agreement provides the Company with a senior secured credit facility with a $
The documents governing the credit facility contain certain customary financial and non-financial covenants that include a maximum total funded debt ratio of not more than and a minimum fixed charge coverage ratio of at least (as each such term is defined in the credit agreement), as well as restrictions on the Company's ability to incur certain additional indebtedness.
Note 7. Common Stock
Authorized shares: The Company’s Articles of Incorporation, as amended, have established
On September 9, 2025, the Company announced the approval of a stock repurchase authorization. Under the authorization, the Company may repurchase up to $
Repurchased shares are automatically retired and constitute authorized but unissued shares.
Note 8. Share-Based Compensation
The Company’s share-based compensation plans are described in Note 8 to the financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2026. Share-based compensation expense was $
Stock Options
Stock option transactions during the three months ended September 30, 2026, are summarized as follows:
| Weighted-Average | ||||||||
| Exercise Price | ||||||||
| Number of Shares | per Share | |||||||
| Outstanding at June 30, 2026 | $ | |||||||
| Granted | $ | |||||||
| Exercised | ( | ) | $ | |||||
| Cancelled or Forfeited | $ | |||||||
| Outstanding at September 30, 2026 | $ | |||||||
The following assumptions were used to estimate the fair value of stock options granted:
| Three Months Ended | Fiscal Year Ended | |||||
| September 30, 2026 | June 30, 2026 | |||||
| Risk-free interest rate | | | ||||
| Expected term (years) | ||||||
| Expected volatility | | |
The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. On September 30, 2026, the weighted-average remaining contractual term for all outstanding stock options was
Restricted Stock
During the three months ended September 30, 2026, the Company issued restricted stock awards to employees totaling
During the three months ended September 30, 2026, the Company issued restricted stock units to employees totaling
Note 9. Commitments and Contingencies
The Company is occasionally involved in claims and disputes arising in the ordinary course of business. The Company insures certain business risks where possible to mitigate the financial impact of individual claims and establishes reserves for an estimate of any probable cost of settlement or other disposition.
Note 10. Segment Reporting
We have determined that we have a reportable and operating segment structure. Our President and Chief Executive Officer is our chief operating decision maker (“CODM”). The CODM reviews financial information, including long-lived assets, presented on a consolidated basis, accompanied by information about revenue by market, for purposes of allocating resources and evaluating financial performance. Furthermore, the CODM uses consolidated net income (loss) as the measure of our sole segment’s profit or loss. Significant segment expenses are those expenses reported in the Condensed Statements of Operations. We have a single active product and engage in the single business activity of selling and supporting that single product. There are no managers who are held accountable for operations, operating results or plans for levels or components below the consolidated level. We and our CODM evaluate our performance based on revenue from our single product in the markets in which the Company operates and consolidated net income (loss), which is reflected in the Condensed Statements of Operations. Revenue by market is described above in Note 2.
Note 11. Earnings Per Common Share (“EPS”)
The computations of the basic and diluted EPS amounts were as follows:
| Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net Income | $ | $ | ||||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | ||||||||
| Effect of dilutive common stock equivalents | ||||||||
| Diluted | ||||||||
| Earnings per common share: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
Common stock equivalents excluded from the calculation of diluted earnings per share because their impact was anti-dilutive were
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Financial Statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and our audited financial statements and related notes thereto included in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2026 (“fiscal 2026”).
Overview
Electromed, Inc. (“we,” “our,” “us,” “Electromed” or the “Company”) develops and provides innovative airway clearance products applying High Frequency Chest Wall Oscillation (“HFCWO”) technologies in pulmonary care for patients.
We manufacture, market and sell products that provide HFCWO, including the SmartVest® Airway Clearance System (“SmartVest System”) that includes our newest generation SmartVest Clearway® Airway Clearance System (“Clearway”), previous generation SmartVest SQL®, and related garments and accessories to patients with compromised pulmonary function. The SmartVest Clearway, which received 510(k) clearance from the U.S. Food and Drug Administration in 2022, provides patients with proven quality of life outcomes while offering a state-of-the-art patient experience with a simple touch screen user interface, small generator footprint and comfortable, lightweight vests.
Our products are sold in both the homecare market and the hospital market for inpatient use, which we refer to as “hospital sales.” Since 2000, we have marketed the SmartVest System and its predecessor products to patients suffering from bronchiectasis, cystic fibrosis, and other chronic pulmonary conditions that require external chest manipulation to enhance mucus transport. Additionally, we offer our products to a patient population that includes neuromuscular disorders such as cerebral palsy, muscular dystrophies, amyotrophic lateral sclerosis (“ALS”), patients with post-surgical complications or who are ventilator dependent and patients who have other conditions involving excess secretion and impaired mucus transport.
The SmartVest System is often eligible for reimbursement from major private insurance providers, health maintenance organizations (“HMOs”), state Medicaid systems, and the federal Medicare system, which we believe is an important consideration for patients considering an HFCWO course of therapy. For domestic sales, the SmartVest System may be reimbursed under the Medicare-assigned billing code (E0483) for HFCWO devices if the patient has cystic fibrosis, bronchiectasis (including chronic bronchitis or Chronic Obstructive Pulmonary Disease that has resulted in a diagnosis of bronchiectasis), or any one of certain enumerated neuromuscular diseases and myopathies and can demonstrate that another less expensive physical or mechanical treatment did not adequately mobilize retained secretions. Private payers consider a variety of sources, including Medicare, as guidelines in setting their coverage policies and payment amounts.
Critical Accounting Estimates
For a description of our critical accounting estimates and assumptions used in the preparation of our financial statements, including the unaudited Condensed Financial Statements in this Quarterly Report on Form 10-Q, see Notes 1 and 2 to our unaudited Condensed Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Part II, Item 7, and Note 1 to our audited financial statements included in Part II, Item 8, of our Annual Report on Form 10-K for fiscal 2026.
There have been no material changes to our critical accounting estimates and assumptions since the filing of our Annual Report on Form 10-K for fiscal 2026.
Results of Operations
Net Revenues
Net revenues for the three months ended September 30, 2026, and 2025 are summarized in the table below.
| Three Months Ended |
||||||||||||||||
| September 30, |
||||||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
||||||||||||||
| Homecare |
$ | 17,506,000 | $ | 14,889,000 | $ | 2,617,000 | 17.6 | % | ||||||||
| Hospital |
716,000 | 1,047,000 | (331,000 | ) | (31.6 | )% | ||||||||||
| Homecare distributor |
366,000 | 829,000 | (463,000 | ) | (55.9 | )% | ||||||||||
| Other |
94,000 | 122,000 | (28,000 | ) | (23.0 | )% | ||||||||||
| Total |
$ | 18,682,000 | $ | 16,887,000 | $ | 1,795,000 | 10.6 | % | ||||||||
Homecare revenue. Homecare revenue increased by $2,617,000, or 17.6%, for the three months ended September 30, 2026, compared to the same period in the prior year. The increase in revenue was due to higher volume, which was driven by additional sales representatives and increased sales representative productivity. Throughout the three months ended September 30, 2026, we averaged 63 homecare field sales representatives.
Hospital revenue. Hospital revenue was $716,000, a decrease of $331,000, or 31.6%, for the three months ended September 30, 2026, compared to the same period in the prior year. The decrease in the three months ended September 30, 2026, was primarily due to large capital purchases in the prior period that did not recur, partially offset by an increase in disposable volume.
Homecare distributor revenue. Homecare distributor revenue decreased by $463,000, or 55.9%, for the three months ended September 30, 2026, compared to the same period in the prior year. The decrease in homecare distributor sales was primarily a result of timing of distributor purchases.
Other revenue. Other revenue was $94,000, a decrease of $28,000, or 23.0%, for the three months ended September 30, 2026, compared to the same period in the prior year. The decrease in other revenue was primarily due to the lower demand for purchases by international distributors and other customers that do not fall within the markets described above.
Gross profit
Gross profit dollars increased to $14,937,000, or 80.0% of net revenues, for the three months ended September 30, 2026, from $13,197,000, or 78.1% of net revenues, in the same period in the prior year. The increase in gross profit was primarily a result of increased overall revenue and the increase in gross profit percentage was due to revenue mix.
Operating expenses
Selling, general and administrative expenses. Selling, general and administrative (“SG&A”) expenses were $11,171,000 for the three months ended September 30, 2026, representing an increase of $885,000, or 8.6%, compared to the same period in the prior year.
Payroll and compensation-related expenses were $7,413,000 for the three months ended September 30, 2026, representing an increase of $537,000, or 7.8%, compared to the same period in the prior year. The increase was primarily due to the increase in salaries and incentive compensation related to the higher average number of sales representatives and higher overall compensation costs. We have also continued to provide regular merit-based increases for our employees and are regularly benchmarking our compensation ranges, including share-based compensation, for new and existing employees to ensure we can hire and retain the talent needed to drive growth in our business.
Travel, meals and entertainment expenses were $1,502,000 for the three months ended September 30, 2026, representing an increase of $228,000, or 17.9%, compared to the same period in the prior year. The increase in the current-year period was primarily due to a higher average number of direct sales representatives, training, and increased travel to support sales activity as well as market development.
Total discretionary marketing expenses were $323,000 for the three months ended September 30, 2026, representing a decrease of $87,000, or 21.2%, compared to the same period in the prior year. The decrease was due to timing of routine marketing spend.
Professional fees were $1,187,000 for the three months ended September 30, 2026, representing an increase of $97,000, or 8.9%, compared to the same period in the prior year. Professional fees are primarily for services related to legal costs, shareowner services and reporting requirements, information technology technical support, insurance and consulting fees. The increase in the current period was primarily due to increased recruiting and consulting costs.
Research and development expenses. Research and development (“R&D”) expenses were $277,000 for the three months ended September 30, 2026, representing an increase of $36,000, or 14.9%, compared to the same period in the prior year. The increase was primarily due to increased average headcount and consulting expenses related to product enhancements and sustaining engineering.
Operating income
Operating income increased by $819,000, or 30.7%, to $3,489,000, or 18.7% of net revenues, for the three months ended September 30, 2026, compared to the same period in the prior year. The increase was primarily due to an increase in revenue and gross profit.
Interest income, net
Net interest income for the three months ended September 30, 2026, was $148,000, compared to $134,000 for the same period in the prior year. The increase was primarily due to an increase in average cash balances, partially offset by a decrease in interest rates.
Income tax expense
Income tax expense was estimated at $876,000, and the effective tax rate was 24.1%, for the three months ended September 30, 2026. Estimated income tax expense for the three months ended September 30, 2026, includes a discrete current tax benefit of $75,000, primarily related to the windfall tax benefit of vested stock awards and vested restricted stock units.
Income tax expense was estimated at $668,000, and the effective tax rate was 23.8%, for the three months ended September 30, 2025. Estimated income tax expense for the three months ended September 30, 2025, includes a discrete current tax benefit of $81,000, primarily related to the windfall tax benefit of vested stock awards and the exercise of stock options.
Net income
Net income for the three months ended September 30, 2026, was $2,761,000, representing an increase of 29.3% compared to $2,136,000 for the same period in the prior year. The increase in net income was primarily due to increased revenue and gross profit.
Liquidity and Capital Resources
Cash Flows and Sources of Liquidity
Cash Flows from Operating Activities
For the three months ended September 30, 2026, net cash provided by operating activities was $373,000. Cash flows provided by operating activities consisted of net income of $2,761,000, non-cash expenses of $701,000, a decrease in income tax receivable, net of $763,000, a decrease in prepaid expenses and other assets of $284,000, and a decrease in contract assets of $68,000. These cash flows from operating activities were offset by a decrease in accrued compensation of $3,241,000, an increase in accounts receivable of $462,000, a decrease in accounts payable and accrued expenses of $347,000, and an increase in inventories of $154,000.
Cash Flows from Investing Activities
For the three months ended September 30, 2026, cash used for investing activities was $202,000. Cash used for investing activities consisted of $165,000 in expenditures for property and equipment and $37,000 in expenditures for intangible assets.
Cash Flows from Financing Activities
For the three months ended September 30, 2026, cash used for financing activities was $4,746,000. Cash used for financing activities consisted of $4,328,000 used for our share repurchase program and $466,000 for taxes paid on net share settlement of stock awards, partially offset by $48,000 received from the issuance of common stock upon exercise of options.
Adequacy of Capital Resources
Our primary working capital requirements relate to adding employees to our sales force and support functions, continuing infrastructure investments, and supporting general corporate needs, including financing equipment purchases and other capital expenditures incurred in the ordinary course of business. Based on our current operational performance, we believe our working capital of approximately $44,933,000 and available borrowings under our existing credit facility will provide sufficient liquidity to meet our anticipated working capital and other liquidity needs for the next twelve months from the date of this report.
We maintain a credit facility that was entered into in December 2025, which provides us with a revolving line of credit. The credit agreement provides the Company with a senior secured credit facility with a $10,000,000 revolving line of credit. Any borrowings under the credit facility will bear interest at the applicable one-month Term SOFR (3.68% on September 30, 2026), plus 1.75%, payable monthly. The credit agreement provides that the credit facility will mature on December 16, 2026, if not renewed or replaced before such date. There was no outstanding principal balance on the line of credit as of September 30, 2026. The Company provided a first priority security interest in substantially all of its existing and future assets to secure the payment obligations under the credit agreement.
The documents governing the credit facility contain certain customary financial and non-financial covenants that include a maximum total funded debt ratio of not more than 2.50x and a minimum fixed charge coverage ratio of at least 1.20x (as each such term is defined in the credit agreement), as well as restrictions on the Company's ability to incur certain additional indebtedness. So long as there is no default or event of default, the governing documents do not restrict the Company's ability to pay dividends or repurchase common stock.
Any failure to comply with these covenants in the future may result in an event of default, which if not cured or waived, could result in the lender accelerating the maturity of our indebtedness, preventing access to additional funds under the line of credit, requiring prepayment of outstanding indebtedness, or refusing to renew the line of credit. If the maturity of the indebtedness is accelerated or the line of credit is not renewed, sufficient cash resources to satisfy the debt obligations may not be available and we may not be able to continue operations as planned. If we are unable to repay such indebtedness, the lender could foreclose on these assets.
For the three months ended September 30, 2026, and 2025, we spent approximately $165,000 and $252,000, respectively, on property and equipment. We currently expect to finance planned equipment purchases with cash flows from operations or borrowings under our credit facility. We may need to incur additional debt if we have an unforeseen need for additional capital equipment or if our operating performance does not generate adequate cash flow.
While the impact of macroeconomic factors such as inflation is difficult to predict, we believe our cash, cash equivalents and cash flows from operations will be sufficient to meet our working capital, capital expenditure, and operational cash requirements for fiscal 2027 and the foreseeable future. We will continue to evaluate our projected expenditures relative to our available cash and evaluate financing alternatives to satisfy our working capital and other cash requirements.
Information Regarding Forward-Looking Statements
Statements contained in this Quarterly Report on Form 10-Q that are not statements of historical fact should be considered forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include, but are not limited to, statements regarding: our business strategy, our expectations with respect to ongoing compliance with the terms of our credit facility and the ongoing availability of credit; anticipated tax benefits; and our anticipated revenues, expenses, capital requirements and liquidity. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “ongoing,” “plan,” “project,” “should,” “will,” “would,” and similar expressions, including the negative of these terms, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Although we believe these forward-looking statements are reasonable, they involve risks and uncertainties that may cause actual results to differ materially from those projected by such statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or our industry’s actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by the forward-looking statements.
Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, the following:
| • |
our ability to obtain and maintain reimbursement from Medicare, Medicaid, or private insurance payers for our products; |
| • |
component or raw material shortages, changes to lead times or significant price increases, inflationary trends in electronic components, and uncertainty related to trade regulations (including, but not limited to, changes to tariffs); |
| • |
adverse changes to state and federal health care regulations; |
| • |
our ability to maintain regulatory compliance and to gain future regulatory approvals and clearances; |
| • |
entry of new competitors including new drug or pharmaceutical discoveries; |
| • |
adverse economic and business conditions or intense competition; |
| • |
our ability to attract, train and retain personnel and remain competitive with wage inflation; |
|
| • | rising energy costs and geopolitical conflicts; |
| • |
technical problems with our research and products; |
| • |
the risks associated with cyberattacks, data breaches, computer viruses and other similar security threats; |
| • |
changes affecting the medical device industry; |
| • |
our ability to develop new sales channels for our products such as the hospital or homecare distributor channels; |
| • |
adverse international health care regulation impacting current international business; |
| • |
our ability to renew our line of credit or obtain additional credit as necessary; and |
| • |
our ability to protect and expand our intellectual property portfolio. |
This list of factors is not exhaustive, however, and these or other factors, many of which are outside of our control, could have a material adverse effect on us and our results of operations. Therefore, you should consider these risk factors with caution and form your own critical and independent conclusions about the likely effect of these risk factors on our future performance. Forward-looking statements speak only as of the date on which the statements are made, and we undertake no obligation, and expressly disclaim any such obligation, to update any forward-looking statement for any reason other than as required by law, even if new information becomes available or other events occur in the future. You should carefully review the disclosures, and the risk factors described in this and other documents we file from time to time with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for fiscal 2026. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth herein.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company, we are not required to provide disclosure pursuant to this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period subject to this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as the end of the period covered to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.
Changes to Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Occasionally, we may be party to legal actions, proceedings, or claims in the ordinary course of business, including claims based on the assertions of patent and trademark infringement. Corresponding costs are accrued when it is probable that loss will be incurred, and the amount can be reasonably estimated. We are not aware of any undisclosed actual or threatened litigation, other than ordinary routine litigation incidental to our business, that would have a material adverse effect on our financial condition or results of operations.
As a smaller reporting company, we are not required to provide disclosure pursuant to this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On September 9, 2025, we announced the approval of a stock repurchase authorization. Under this authorization, the Company may repurchase up to $10.0 million of outstanding shares of our common stock. The shares of our common stock may be repurchased under authorization on the open market or in privately negotiated transactions subject to applicable securities laws and regulations. The current repurchase authorization does not expire and as of September 30, 2026, a total of 309,252 shares have been repurchased under the authorization with an average cost of $26.66 per share. The approximate dollar value of shares that may yet be purchased under the plan as of September 30, 2026, was approximately $1,755,000.
The following table sets forth information concerning all repurchases of shares of our common stock, including shares reacquired to satisfy tax withholding obligations upon vesting of restricted stock awards, for the three months ended September 30, 2026:
| Total Number of |
Approximate Dollar |
|||||||||||||||
| Shares Purchased |
Value of Shares that |
|||||||||||||||
| as Part of Publicly |
May Yet be Purchased |
|||||||||||||||
| Total Number of |
Average Price |
Announced Plans |
Under the Plans |
|||||||||||||
| Period |
Shares Purchased |
Paid per Share |
or Programs |
or Programs |
||||||||||||
| July 1 – July 31, 2026 |
- | $ | - | - | $ | 6,082,000 | ||||||||||
| August 1 – August 31, 2026 |
- | $ | - | - | $ | 6,082,000 | ||||||||||
| September 1 – September 30, 2026 (a) |
161,530 | $ | 27.49 | 157,341 | $ | 1,755,000 | ||||||||||
| Total |
161,530 | 157,341 | ||||||||||||||
(a) Includes 4,189 shares forfeited to the Company to satisfy tax withholding obligations in connection with the vesting of restricted stock awards that were outstanding under the 2017 Omnibus Incentive Plan and 2023 Employee Incentive Plan. The average price paid per share reflects the closing price of our common stock on the applicable vesting dates.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
During the three months ended September 30, 2026, director or officer of the Company adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
| Exhibit Number |
Description |
Method of Filing |
|
| Incorporated by Reference |
|||
| Incorporated by Reference |
|||
| Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
Filed Electronically |
||
| Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
Filed Electronically |
||
| Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Furnished Electronically |
||
| Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Furnished Electronically |
||
| 101 |
Financial statements from the Quarterly Report on Form 10-Q for the period ended September 30, 2026, formatted in inline XBRL: (i) Condensed Balance Sheets, (ii) Condensed Statements of Operations, (iii) Condensed Statements of Cash Flows, (iv) Condensed Statements of Shareholders’ Equity, (v) Notes to Condensed Financial Statements and (vi) the information set forth in Part II, Item 5 |
Filed Electronically |
|
| 104 |
Cover Page Interactive Data File (embedded within the inline XBRL Document) |
Filed Electronically |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ELECTROMED, INC. |
||
| Date: |
November 10, 2026 |
/s/ James L. Cunniff |
| James L. Cunniff, President and Chief Executive Officer | ||
| (duly authorized officer) | ||
| Date: |
November 10, 2026 | /s/ Bradley M. Nagel |
| Bradley M. Nagel, Chief Financial Officer | ||
| (principal financial officer and principal accounting officer) | ||
Exhibit 31.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, James L. Cunniff, certify that:
|
1. |
I have reviewed this report on Form 10-Q of Electromed, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
|
Date: November 10, 2026 |
/s/ James L. Cunniff |
|
James L. Cunniff |
|
|
President and Chief Executive Officer |
Exhibit 31.2
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Bradley M. Nagel, certify that:
|
1. |
I have reviewed this report on Form 10-Q of Electromed, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
|
Date: November 10, 2026 |
/s/ Bradley M. Nagel |
|
Bradley M. Nagel |
|
|
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Electromed, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2026, as filed with the Securities and Exchange Commission (the “Report”), I, James L. Cunniff, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
|
Date: November 10, 2026 |
/s/ James L. Cunniff |
|
James L. Cunniff |
|
|
President and Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Electromed, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2026, as filed with the Securities and Exchange Commission (the “Report”), I, Bradley M. Nagel, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
|
Date: November 10, 2026 |
/s/ Bradley M. Nagel |
|
Bradley M. Nagel |
|
|
Chief Financial Officer |