Electromed (ELMD) Tops Q1 EPS by 11c, Revenues Beat

Electromed (NYSE: ELMD) reported Q1 EPS of $0.06, $0.11 better than the analyst estimate of ($0.05). Revenue for the quarter came in at $8 million versus the consensus estimate of $7.01 million.

Q1 FY 2021 Highlights

• Net revenue was $8.0 million, down 3.6% compared to the three months ended September 30, 2019 (“Q1 FY 2020”), primarily reflecting lower institutional revenue due to the continued impact of COVID-19 on hospital purchasing activity.
• Net revenue grew 16.4% compared to the three months ended June 30, 2020 (“Q4 FY 2020”), driven by a 17.9% increase in home care.
• Gross profit percentage increased to 76.8% of net revenue, compared to 76.4% for Q1 FY 2020, primarily due to a greater portion of revenue coming from home care.
• Net income equaled $535,000, or $0.06 per diluted share, compared to $1.0 million, or $0.12 per diluted share, in Q1 FY 2020. The decrease was primarily due to a $382,000 increase in R&D spending on next generation platform development, lower institutional revenue and higher average sales and marketing headcount compared to Q1 FY 2020.
• Cash as of September 30, 2020 was $11.1 million, benefiting from $822,000 in operating cash flow in Q1 FY 2021.

Kathleen Skarvan, President and Chief Executive Officer of Electromed, commented, “We were pleased with our strong execution in the first quarter resulting in a 17.9% increase in home care revenue compared to the three months ended June 30, 2020, evidence of an improving environment for our therapy despite continued disruption related to the COVID-19 pandemic. Our strengthening home care business reflects increasing patient face-to-face interaction with physicians and the success of our sales team adapting quickly to a hybrid virtual and face-to-face selling approach. While the institutional side of our business remained soft due to COVID-19, we registered an uptick in hospital orders of disposable wraps compared to the three months ended, June 30, 2020.

“We continue to fund strategic investments for our long-term growth, including research and development on our next generation HFCWO therapy, hiring key sales and marketing personnel and expanding our direct-to-patient marketing to increase awareness of bronchiectasis and SmartVest® as an effective treatment. We are confident in our long-term revenue growth potential and remain committed to these strategic investments, while continuing to generate positive operating cash flow and managing the business successfully through the COVID-19 pandemic.”

Ms. Skarvan continued, “Home care referral and revenue growth improved throughout the quarter and has continued into October, though uncertainty surrounding COVID-19 persists. During this pandemic, our priority continues to be the health, safety and well-being of our teammates, clinicians and patients, while executing on our strategy to gain greater share of the large, underpenetrated bronchiectasis market. We are well positioned to succeed given our strong balance sheet, excellent cash flow profile and differentiated SmartVest® Airway Clearance System.”

Financial Condition

The Company’s balance sheet at September 30, 2020 included cash of $11.1 million, accounts receivable of $13.6 million, no debt, working capital of $25.8 million, and shareholders’ equity of $30.9 million.

For earnings history and earnings-related data on Electromed (ELMD) click here.

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