8-K
Electromed, Inc. (ELMD)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May9, 2023
ELECTROMED, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Minnesota | 001-34839 | 41-1732920 |
|---|---|---|
| (State or Other Jurisdiction of<br><br> <br>Incorporation) | (Commission File Number) | (I.R.S. Employer Identification<br><br> <br>Number) |
500Sixth Avenue NW
NewPrague, MN 56071
(Address of Principal Executive Offices) (Zip Code)
(952)758-9299
(Registrant’s Telephone Number, Including Area Code)
NotApplicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Common Stock, $0.01 par value | ELMD | NYSE American LLC |
|---|---|---|
| (Title of each class) | (Trading Symbol) | (Name of each exchange<br> on which registered) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
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. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On May 9, 2023, Electromed, Inc., a Minnesota corporation (the “Company”), issued a press release announcing its financial results for the fiscal quarter ended March 31, 2023. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference into this Item 2.02.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits:
| Exhibit Number | Description |
|---|---|
| 99.1 | Press Release (Earnings Announcement)<br> dated May 9, 2023 |
| 104 | Cover Page Interactive Data File (embedded in the cover page and formatted in inline XBRL) |
The information contained in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
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 hereunto duly authorized.
| ELECTROMED, INC. | ||
|---|---|---|
| Date: May 9, 2023 | By: /s/ Bradley M. Nagel | |
| Name: | Bradley M. Nagel | |
| Title: | Chief Financial Officer |
Exhibit99.1
Electromed,Inc. Announces Fiscal 2023 Third Quarter Results
QuarterlyNet Revenue Increase of 19% Year-over-Year
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 ended March 31, 2023 (“Q3 FY 2023”).
Q3FY 2023 Highlights
| ● | Record<br> quarterly net revenues of $12.1 million, a 19% year-over-year increase |
|---|---|
| ● | Homecare<br> revenue of $11.0 million, an increase of 21% year-over-year |
| --- | --- |
| ● | Generated<br> operating income of $1.2 million, an increase of 39% year-over-year |
| --- | --- |
| ● | Net<br> income of $1.1 million, or $0.12 per fully diluted share, compared with net income of<br> $645,000, or $0.07 per diluted share, in the same period a year ago |
| --- | --- |
| ● | Cash<br> as of March 31, 2023 was $6.8 million |
| --- | --- |
“I’m very pleased to report 19% revenue growth in the third quarter of fiscal year 2023 coupled with net income growth that further demonstrates that our investments in growth are yielding strong results,” said Kathleen Skarvan, President and Chief Executive Officer. “Our revenue growth was driven by strong referral growth, improved productivity by our expanded sales team and the recent launch to the homecare market of our next generation SmartVest Clearway”
Ms. Skarvan continued, “Our SmartVest Clearway has been received very positively by clinicians and patients due to its state-of-the-art patient experience with a simple touch screen user interface, remote monitoring of data, and is the lightest HFCWO generator on the market. We believe that Electromed is well-positioned for growth and profitability in calendar 2023.”
Fiscal Third Quarter Results
Net revenues for Q3 FY 2023 increased by 19% year-over-year to $12.1 million, compared with $10.1 million in the same period the prior year. The increase over the prior year was driven by an increase in referrals and approvals due to an expanded sales force and reimbursement team.
Home care revenue increased by $1,938,000, or 21.5%, for the three months ended March 31, 2023 compared to the same period in the prior year. The increase was primarily due to an increase in referrals and approvals. The increase in referrals was due to an increase in direct sales representatives as well as positive market momentum from the introduction of our newest generation SmartVest Clearway in the quarter and was partially offset by a temporary interruption in supply chain and associated operations in the quarter. Field sales force employees totaled 57 at quarter end, 48 of which were direct sales representatives. Sales productivity remained within our expected range during the quarter, with annualized home care revenues per direct sales representative at $908,000, within Electromed’s target range of $850,000 to $950,000.
Gross profit increased to $9,056,000, or 75.0% of net revenues, for the three months ended March 31, 2023, from $7,743,000, or 76.4% of net revenues, in the same period in the prior year. The decrease in gross profit as a percentage of net revenues compared to the same period in the prior year was primarily due to increased material costs and component broker fees incurred to ramp up supply for the Clearway product.
Selling, general and administrative (“SG&A”) expenses were $7,694,000 for the three months ended March 31, 2023, representing an increase of $1,150,000, or 17.6%, compared to the same period in the prior year. The increase in SG&A expense was primarily due to increased payroll and compensation expense related to the higher average number of sales, sales support, marketing, and reimbursement personnel to process higher patient referrals.
Operating income for the three months ended March 31, 2023 was $1,196,000, compared to $863,000 for the same period in the prior year. The increase in operating income was driven primarily by revenue growth and a decrease in Research & Development expenses but partially offset by increased SG&A expenses related to our sales and reimbursement investments, as well as increased material costs and broker fees incurred to accelerate the ramp up supply for the Clearway product.
Net income for the three months ended March 31, 2023 was $1,075,000, or $0.12 per diluted share, compared to $645,000, or $0.07 per diluted share, for the same period in the prior year.
As of March 31, 2023, Electromed had $6.8 million in cash, $22.3 million in accounts receivable, working capital of $28.8 million, and total shareholders’ equity of $36.4 million.
Conference Call and Webcast Information
Interested parties may participate in the call by dialing (888) 999-5318 (Domestic) or (848) 280-6460 (International). The live conference call webcast will be accessible in the Investor Relations section of Electromed’s web site and directly via the following link: Fiscal Third Quarter Earnings Webcast.
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 0151926. Additionally, an online replay will be available in the Investor Relations section of Electromed’s web site at: http://investors.smartvest.com/.
AboutElectromed, 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.
CautionaryStatements
Certainstatements in this press release constitute forward-looking statements as defined in the U.S. Private Securities Litigation ReformAct of 1995. Forward-looking statements can generally be identified by words such as “anticipate,” “assume,”“believe,” “continue,” “expect,” “may,” “potential,” “should,”“will,” and similar expressions, including the negative of these terms, but they are not the exclusive means of identifyingsuch statements. Forward-looking statements cannot be guaranteed, and actual results may vary materially due to the uncertaintiesand risks, known or unknown associated with such statements. Examples of risks and uncertainties for Electromed include, but arenot limited to, component or raw material shortages, changes to lead times or significant price increases, changes to Medicare,Medicaid, or private insurance reimbursement policies; the duration, extent and severity of the COVID-19 pandemic, including itseffects on our business, supply chain, operations and employees as well as its impact on our customers and distribution channelsand on economies and markets more generally; the competitive nature of our market; 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 homecaredistributor channel; our need to maintain regulatory compliance and to gain future regulatory approvals and clearances; new drugor pharmaceutical discoveries; general economic and business conditions; our ability to renew our line of credit or obtain additionalcredit as necessary; our ability to protect and expand our intellectual property portfolio; the risks associated with expansioninto international markets, as well as other factors we may describe from time to time in Electromed’s reports filed withthe Securities and Exchange Commission (including Electromed’s most recent Annual Report on Form 10-K, as amended from timeto time, and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K). Investors should not consider any listof such factors to be an exhaustive statement of all of the risks, uncertainties or potentially inaccurate assumptions investorsshould take into account when making investment decisions. Shareholders and other readers should not place undue reliance on “forward-lookingstatements,” as such statements speak only as of the date of this press release. We undertake no obligation to update themin light of new information or future events.
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.
FinancialTables Follow:
Electromed,Inc.
CondensedBalance Sheets
| June30, 2022 | |||
|---|---|---|---|
| Assets | |||
| Current Assets | |||
| Cash and cash equivalents | 6,776,000 | $ | 8,153,000 |
| Accounts receivable (net of allowances for doubtful accounts of 45,000) | 22,345,000 | 21,052,000 | |
| Contract assets | 570,000 | 286,000 | |
| Inventories | 3,451,000 | 3,178,000 | |
| Prepaid expenses and other current assets | 1,808,000 | 1,870,000 | |
| Income tax receivable | 219,000 | - | |
| Total current assets | 35,169,000 | 34,539,000 | |
| Property and equipment, net | 5,502,000 | 4,568,000 | |
| Finite-life intangible assets, net | 604,000 | 599,000 | |
| Other assets | 60,000 | 120,000 | |
| Deferred income taxes | 1,506,000 | 1,538,000 | |
| Total assets | 42,841,000 | $ | 41,364,000 |
| Liabilities and Shareholders’ Equity | |||
| Current Liabilities | |||
| Accounts payable | 1,289,000 | 1,261,000 | |
| Accrued compensation | 2,082,000 | 2,742,000 | |
| Income tax payable | - | 51,000 | |
| Warranty reserve | 1,333,000 | 1,256,000 | |
| Other accrued liabilities | 1,713,000 | 1,840,000 | |
| Total current liabilities | 6,417,000 | 7,150,000 | |
| Other long-term liabilities | 30,000 | 41,000 | |
| Total liabilities | 6,447,000 | 7,191,000 | |
| Commitments and Contingencies | |||
| Shareholders’ Equity | |||
| Common stock, 0.01 par value per share, 13,000,000 shares authorized; | |||
| 8,556,600 and 8,475,438 shares issued and outstanding, as of March 31, 2023 and June 30, 2022, respectively | 86,000 | 85,000 | |
| Additional paid-in capital | 18,548,000 | 18,308,000 | |
| Retained earnings | 17,760,000 | 15,780,000 | |
| Total shareholders’ equity | 36,394,000 | 34,173,000 | |
| Total liabilities and shareholders’ equity | 42,841,000 | $ | 41,364,000 |
All values are in US Dollars.
Electromed,Inc.
CondensedStatements of Operations (Unaudited)
| Three Months Ended | Nine Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| March 31, | March 31, | |||||||
| 2023 | 2022 | 2023 | 2022 | |||||
| Net revenues | $ | 12,068,000 | $ | 10,141,000 | $ | 34,455,000 | $ | 30,390,000 |
| Cost of revenues | 3,012,000 | 2,398,000 | 8,386,000 | 7,066,000 | ||||
| Gross profit | 9,056,000 | 7,743,000 | 26,069,000 | 23,324,000 | ||||
| Operating expenses | ||||||||
| Selling, general and administrative | 7,694,000 | 6,544,000 | 22,937,000 | 19,806,000 | ||||
| Research and development | 166,000 | 336,000 | 618,000 | 1,041,000 | ||||
| Total operating expenses | 7,860,000 | 6,880,000 | 23,555,000 | 20,847,000 | ||||
| Operating income | 1,196,000 | 863,000 | 2,514,000 | 2,477,000 | ||||
| Interest income, net | 26,000 | 6,000 | 37,000 | 21,000 | ||||
| Net income before income taxes | 1,222,000 | 869,000 | 2,551,000 | 2,498,000 | ||||
| Income tax expense | 147,000 | 224,000 | 418,000 | 576,000 | ||||
| Net income | $ | 1,075,000 | $ | 645,000 | $ | 2,133,000 | $ | 1,922,000 |
| Income per share: | ||||||||
| Basic | $ | 0.13 | $ | 0.08 | $ | 0.25 | $ | 0.23 |
| Diluted | $ | 0.12 | $ | 0.07 | $ | 0.25 | $ | 0.22 |
| Weighted-average common shares outstanding: | ||||||||
| Basic | 8,461,531 | 8,454,504 | 8,449,623 | 8,485,856 | ||||
| Diluted | 8,710,106 | 8,744,535 | 8,694,407 | 8,762,963 |
Electromed,Inc.
CondensedStatements of Cash Flows (Unaudited)
| Nine Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Cash Flows From Operating Activities | ||||||
| Net income | $ | 2,133,000 | $ | 1,922,000 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation | 370,000 | 368,000 | ||||
| Amortization of finite-life intangible assets | 52,000 | 105,000 | ||||
| Share-based compensation expense | 506,000 | 703,000 | ||||
| Deferred income taxes | 32,000 | 15,000 | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | (1,293,000 | ) | (2,582,000 | ) | ||
| Contract assets | (284,000 | ) | 98,000 | |||
| Inventories | (264,000 | ) | 9,000 | |||
| Prepaid expenses and other assets | 105,000 | (519,000 | ) | |||
| Income tax receivable, net | (270,000 | ) | (443,000 | ) | ||
| Accounts payable and accrued liabilities | (111,000 | ) | 550,000 | |||
| Accrued compensation | (660,000 | ) | (173,000 | ) | ||
| Net cash provided by operating activities | 316,000 | 53,000 | ||||
| Cash Flows From Investing Activities | ||||||
| Investment in property and equipment | (1,221,000 | ) | (980,000 | ) | ||
| Investment in finite-life intangible assets | (54,000 | ) | (86,000 | ) | ||
| Net cash used in investing activities | (1,275,000 | ) | (1,066,000 | ) | ||
| Cash Flows From Financing Activities | ||||||
| Issuance of common stock upon exercise of options | 40,000 | - | ||||
| Taxes paid on stock options exercised on a net basis | (305,000 | ) | (70,000 | ) | ||
| Repurchase of common stock | (153,000 | ) | (962,000 | ) | ||
| Net cash used in financing activities | (418,000 | ) | (1,032,000 | ) | ||
| Net (decrease) increase in cash | (1,377,000 | ) | (2,045,000 | ) | ||
| Cash And Cash Equivalents | ||||||
| Beginning of period | 8,153,000 | 11,889,000 | ||||
| End of period | $ | 6,776,000 | $ | 9,844,000 |