Electromed, Inc. (ELMD) September 2026 Conference Transcript

Hi, everybody. Thank you for joining us today. It's my pleasure to introduce Jim Kniff, CEO of ElectroMed. Jim has more than 30 years of leadership experience across medtech and the broader healthcare industry. And he has a background span in commercial strategy, operations, manufacturing, finance, and M&A. Before joining ElectroMed in 2023, he held senior leadership roles at companies including Provista, Lighters Health, Kinetic Concepts, and Striker. And across those roles, he has focused extensively on driving growth through new go-to market strategies and operational execution. Jim, thanks very much for joining us today, and I'll hand it off to you. Super.

Thanks, Jan. Thanks for that introduction. And thank you, everyone. I know it's late in the day on a Monday. We appreciate your time and attendance today. How many of you, before I get started, are familiar with Electromed?

All right, a couple of folks. Terrific. Well, we'll tell the story.

We're going to also have time enough to answer any questions that you might have. Joining me today is Brad Nagel. Brad is our CFO, and we're really pleased to be here today. This is obviously our disclosures I'm not going to go through. But if you're not familiar with Electromed, it sounds like several of you are. We're really a single product company focused on airway clearance. Unlike probably many of the companies that you've seen today, we've actually been around for about three decades. We're based about an hour southwest of the Twin Cities in Minneapolis. All of our manufacturing is done domestically, so as we talk about tariffs, etc., we're actually pretty well insulated from that. We've got about 200 employees. Our revenue is around $75 million in trailing 12 months. We're profitable, and I'll talk a little bit more about in a second our financial position. So we're really proud of this graph, quite candidly. ElectroMed is unique, again, I think for some of the microcap companies that you may be seeing at this conference in that we're growing we're profitable we're generating cash and we have no debt and really a lot of people have asked what's really changed at ElectraMed within the last several years we've always been growing and we've always been profitable as you can see on this chart but the difference in the last three years is we've actually been getting greater operating leverage and I think that's one of the attractive things about our our business the primary disease state that we serve. It's called bronchiectasis. Bronchiectasis is caused when someone has routine infections that continue over time. And what happens is their airways actually start to expand. They don't contract, they expand. And that expansion results in mucus building up within the airwaves. As you can see here, it's a chronic disease. It's irreversible. So those are the two kind of highlights about this disease state. And it's misdiagnosed, it's underdiagnosed. And a consequence of that is that our technology, which is high frequency chest wall oscillation, is under prescribed. And I'll talk more about that in a second. That's the other thing that's a really exciting tailwind for our business is there's a lot more awareness to this disease state and treatment protocols today than there really ever has been. I know there's a lot on the slide, but this is what we call our iceberg slide. This is kind of our money slide. And a couple of things I want to direct you to, number one of which is there's a million people in the United States that have actually been diagnosed with bronchiectasis, but there's only over about 150,000 patients that are on our airway clearance technology or one of our competitors. That remaining 850,000 patients, about 35% of them are actually being treated by a pulmonologist. And I bring that up to you because really where our sales reps spend their time and cultivate their relationships are with pulmonologists. And when you take a look at that 850,000 patients times 35% that are going to a pulmonologist times our average sale price, which is over $10,500, the TAM is about $3 billion. What that doesn't include is there's about 4 million patients across the country who have COPD and bronchiectasis overlap, which is another opportunity for us. A lot of people ask, well, how is bronchiectasis treated? I've never heard of it before. There's really a three paradigm approach to treating bronchiectasis. So one of the unique things in 2026 is there's never been any type of guidelines in the United States from the physician community on how to treat bronchiectasis. That's really changed this year. There's new guidelines from CHESS, which is a major foundation within the respiratory community that have come out recently. There are also the NTM bronchiectasis foundation has also released treatment guidelines this year. So we're really excited about that. We think that's going to be a catalyst for future growth for us. But basically, these patients have a chronic irreversible condition. They have lung mucus that's building up in their lungs. They're having a hard time breathing. So the first thing you want to do is you want to remove the mucus, and that's really where we come into play. And that's where airway clearance comes into play. Many of these patients, because they've had mucus buildup in their lungs, they have an underlying infection. You want to treat that with an antibiotic. And then another neat catalyst for our business is, for the first time ever, the FDA has approved a drug to treat bronchiectasis that's really focused on the inflammation component of what these patients are going through. The nice thing about that is the drug company that has entered this space, they're actually spending millions of dollars in market awareness to help remedy some of the challenges that are in the market today where this is a misunderstood and misdiagnosed disease state. That's really changing pretty rapidly. These patients, because it's chronic and it's irreversible, they need to use airway clearance typically twice a day, 15 minutes at a time forever, because they want to keep their airways clear, because that mucus that builds up in their airways, that's really the fuel for future infections, which we want to eliminate. This gives a depiction of what our product looks like. This is a product which is used in the home predominantly, and that's really where most of our revenue comes from as well, is actually treating patients in the home. And as you can see, great industrial design of the product. We're very unique. We have a patented single hose. So you have a generator that's attached to a hose that's then attached to a vest. That patient wears that vest, again, twice a day, usually in 15-minute increments, beginning of the day and at the end of the day to clear their airways. And basically what that vest does is it gently squeezes and releases the patient's torso. That forces the mucus from the smaller airways into the larger airways so that the patient can then swallow or cough up the mucus and then breathe easier. The other thing that's really important about this is because this is a chronic disease and because these patients have to use it every day, you want to have something that's really ergonomic and easy to use. And so because we have that single hose device, it's really ergonomic and we have the lightest weight vest that's in the market. So it's very comfortable for the patients to use it. The other thing that's really unique about ElectroMed is we follow the patient's journey. So when we deliver the product to the patient's home, we actually do an assessment of the patient and really what their baseline is. We go back five days later, we do another assessment, we document both of those visits, and then we come back another 30 days later and we document that as well. We compile all of that information into what we call SmartNote, and we give that back to the prescribing pulmonologist so they can see if actually the patient is progressing and their quality of life is improving. And it's one of the ways in which a physician goes, I have a patient, they're doing better on this technology. I have other patients that have bronchiectasis and are suffering similarly. They want to see that the patient is actually benefiting. And we help provide that feedback. The other thing that's great about this technology is not only do we have very high patient satisfaction scores, which you see on the upper right-hand corner of the slide, but also we have really terrific clinical outcomes. And so one of the things that's really important is because we're treating the patient in the home, we want to keep that patient out of the hospital. And so if you use the SmartVest, what we have seen is a 57% reduction in antibiotic use. Many of these patients have other comorbidities. We want them off as many drugs as possible. There's a 59% decrease in hospitalization. And if any of these patients have actually ever been admitted into the hospital for bronchiectasis, the last thing a hospital system wants is for them to be readmitted. So we help keep them out of the hospital, treated at the home. And then there's obviously a reduction in emergency department visits as well to the tune of 75 percent yeah i talked about the fact that this is a home care market which is very different than the hospital market with medical devices and at the top of this i wanted just to share with everybody typically manufacturers who support the home care market what they'll do is make the product but then they'll sell it to a home medical equipment distributor that distributor is the one that has all of the payer contracts with Medicare, all the commercial payers, but they're also the one who are generating the demand for the product. They're the ones who are actually supporting the patient, doing the training at the patient's home, and helping that patient adjudicate any kind of a reimbursement claim. We're really unique at ElectraMed in that not only are we the manufacturer, but our sales reps are actually the ones out there creating the demand. We have all the payer contracts, so essentially for the patient population in the United States, we have 87% of the patient population covered by contracts. And again, that's commercial payers as well as Medicare. And a consequence of that is we actually, because we have those contracts, because we have the salespeople creating the demand, we actually deliver the product to the patient's home and do the training as well. And we're able to then capture all of the gross profit margin associated with that transaction. And so our gross profit margins are healthy. They're around 78% at the gross level, and that's very different than most other players within this market. We get asked, where's our revenue coming from? Most of it is actually coming from home care, about 94% of our total revenue. We also have a budding and faster growing hospital business. This is where we're actually selling capital equipment into the hospitals to serve their patients. And then we have a real nascent international business as well, which is about 1% of our total revenue. International, we get asked this all the time, is that a focus for you? Are you looking to expand there? And the short answer is no. Really what we want to do is support our distributors that exist in those markets today, but really our focus and where we get the best return on our investment is continuing to accelerate what we're doing in the United States. I've talked about our payer types. It's really a a nice split between Medicare and private pay. And then I've talked throughout this presentation about bronchiectasis, but many, we can also treat other patients that have cystic fibrosis or if they have a neuromuscular disease, we can treat those patients as well. How are we gonna continue to grow? I mean, I think the algorithm for us has been successful and it will be going forward by adding feet on the streets. We're gonna continue to expand our sales team, both in the home care market as well as in the hospital market we're really excited part of the investments we've been making in research and development is to expand our portfolio if you're selling house products specifically into the hospital market as an example the hospital doesn't want to buy a generator that's only can be used for a larger adult or pediatric patient they want to be able to cover the gamut of patients that they have coming through their doors and so we have a bit of a void in the lower sizes of our portfolio and we're in the process of filling that void right now because also this is a disease that is getting a lot more awareness we've made big investments into our direct to consumer team as well so if patients are you know they know they have bronchiectasis and they're looking for solutions they can go online find Electromed, and we actually have respiratory therapists on staff that they can talk to live to help them find out what their treatment options are. And then also because we have cash, we have no debt, and we're a single product company, I'm always looking for, and Brad and I are always looking for, is there a one plus one for Electromed that equals three on the M&A side? We haven't found it yet, but it's a journey that we're continuing. Speaking of the capital allocation, we're continuing to invest in the business on the commercial side of our business. The reimbursement team, we continue to invest in that and expand our payer coverage as well as research and development. So we continue to do that. But because we have $20 million in cash, about two years ago, our board had actually approved a $10 million stock repurchase program, which we exhausted. And last year, they approved another $10 million stock repurchase plan. So if we feel like the stock is at an attractive price, we have the latitude to buy back some of our shares and return that value back to our shareholders. So why invest in ElectraMed? We're in a large, expanding market, as we've discussed this afternoon. We have clinically proven technology that's best in class. We have phenomenal pair coverage. 87% of the patient population in the United States is covered by our device. We've had a really consistent track record of double-digit top-line growth and expanded operating leverage. And as I've mentioned now a couple of times, we're growing, we're profitable, we're generating cash, and we have no debt. And when you take a look at our results, you know, over the course of the last 12 months versus the Russell Medical Index, as you can see, whether it's sales growth, gross profit margin, or operating margin, we're really head and shoulders above the averages as a micro-cap company. So I appreciate your time and attention. I hope, I know that was a lot in a very short period of time. and Brad and I want to open it up if anyone has any questions that we might be able to answer