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Electromed, Inc. Reports 2011 First Quarter Results

^{Published on 2010-11-15 05:35:33 - Market Wire}
 

NEW PRAGUE, Minn.--([ BUSINESS WIRE ])--Electromed, Inc. (NASDAQ: ELMD) today announced financial results for the three months ended September 30, 2010. Net revenues for the three months ended September 30, 2010 were approximately $4,165,000, a 29% increase compared to net revenues of approximately $3,228,000 for the same period last year. The Company also announced for the three months ended September 30, 2010 net income of approximately $112,000, or $0.02 per basic and diluted share. These results represent a decrease over the reported net income of $335,737, or $0.06 and $0.05 per basic and diluted share, respectively, for the same period last year. The reduction primarily resulted from increases in expenses designed to develop, support, and maintain a higher sales level.

Gross profit increased to approximately $3,003,000, or 72.1% of net revenues, for the three months ended September 30, 2010, from approximately $2,501,000, or 77.5% of net revenues in the three month period ended September 30, 2009. The increase in gross profit dollars resulted primarily from the increase in sales volume. The decrease in gross profit percentage was primarily the result of lower than average reimbursement from the mix of referrals during the three month period. Factors such as diagnoses which are not assured of reimbursement and insurance programs with lower allowable reimbursement amounts (for example, state Medicaid programs) affect average reimbursement received on a short-term basis and tend to fluctuate on a quarterly basis. The Companya™s management does not believe the results of the quarter ended September 30, 2010 are indicative of a long-term decrease in margins.

Operating expenses for the three month period ended September 30, 2010 increased by approximately $875,400, to $2,756,000, compared to the same period last year. These planned increases resulted from higher payroll and compensation-related expenses related to adding employees to support sales and marketing initiatives, patient training costs related to a higher sales volume, and trade show expenses related to the Companya™s Annual Sales Meeting occurring in the first quarter of fiscal 2011, compared to the second quarter of fiscal 2010. Additionally, the Company continued to focus on research and development efforts, resulting in research and development expenses of approximately $198,000 in the first quarter of fiscal 2011 compared to approximately $115,000 for the same period last year.

Total cash increased to approximately $6,016,000 as of September 30, 2010. For the three months ended September 30, 2010, cash provided by financing activities was approximately $5,760,000, consisting of approximately $7,600,000 gross proceeds from the issuance of common stock in the Companya™s initial public offering, offset by approximately $1,230,000 of offering expenses incurred during the fiscal quarter, payments on the Companya™s revolving credit line of $500,000, and principal payments on long-term debt of approximately $105,000. An aggregate of $294,000 was used for investing activities during the first fiscal quarter, including $196,000 relating to defense of the SmartVest^® trademark and $98,000 for the purchase of property and equipment. On September 30, 2010, the Company reached a confidential settlement in a trademark infringement lawsuit brought against it by Hill-Rom Services, Inc., Advanced Respiratory, Inc., Hill-Rom Company, Inc., and Hill-Rom Services Pte. Ltd. (collectively, aHill-Roma), regarding the Companya™s use of the term aSmartVest^®.a The terms of the settlement agreement are confidential. The Company has no plans to change its marks. The company expects that the settlement will result in a decrease in expenses relating to litigation defense.

About Electromed, Inc.

Electromed, Inc., founded in 1992 and headquartered in New Prague, Minnesota, manufactures, markets, and sells products that provide airway clearance therapy, including the SmartVest^® Airway Clearance System and related products, to patients with compromised pulmonary function. Further information about the Company can be found at [ www.Electromed.com ].

Cautionary Statements

Certain statements found in this release may constitute forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the speakera™s current views with respect to future events and financial performance and include any statement that does not directly relate to a current or historical fact. The forward-looking statements in this release include the companya™s expectations relating to gross margins, litigation expense and continued use of the SmartVest^® mark, and can generally otherwise be identified by the words abelieve,a aexpect,a aanticipatea or aintenda or similar words. Forward-looking statements cannot be guaranteed and actual results may vary materially due to the uncertainties and risks, known and unknown, associated with such statements. Examples of risks and uncertainties for Electromed include, but are not limited to, the impact of emerging and existing competitors, the effectiveness of our sales and marketing initiatives, our ability tosuccessfully implement our marketing and sales strategies, the risk that we may be party to infringement actions in the future (although at this time we are not aware of any undisclosed actual or threatened litigation that would have a material adverse effect on our financial condition or results of operations), as well as other factors described from time to time in our reports to the Securities and Exchange Commission (including our Annual Report on Form 10-K). Investors should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or potentially inaccurate assumptions investors should take into account when making investment decisions. Shareholders and other readers should not place undue reliance on aforward-looking statements,a as such statements speak only as of the date of this release.