NEW PRAGUE, Minn.--(BUSINESS WIRE)--Electromed, Inc. (NYSE Amex: ELMD) today announced financial results for the three-month period ended March 31, 2012. Management indicated that, while the Company’s Sales Team provided an increase in the number of prescriptions for the SmartVest® System versus the prior year quarter, actual revenue has been negatively impacted by certain reimbursement factors. Among these factors are diagnoses that are not assured of reimbursement and insurance programs with lower allowable reimbursement amounts.
Net Revenues for the three months ended March 31, 2012, were approximately $4,774,000, an 8.2% decrease compared to Net Revenues of approximately $5,199,000 for the same period last year. The Company also announced Net Income of approximately $95,000, or $0.01 per basic and diluted share, for the three months ended March 31, 2012, compared to Net Income of approximately $487,000, or $0.06 per basic and diluted share, for the same period last year. Management continues to believe that planned increases in the Company’s sales force and reimbursement staff, coupled with the expansion of marketing and research and development efforts, will provide strong impetus for continued annual sales growth.
Jim Cassidy, Interim CEO, commented on the Company, saying,
“This past quarter’s revenue was adversely impacted by referral source and payer mix. We are encouraged by the effectiveness of our high quality tenured sales representatives and by the early performance of our newly hired representatives.”
Gross Profit decreased to approximately $3,369,000, or 70.6% of Net Revenues, for the three months ended March 31, 2012, compared to $3,703,000, or 71.2% of Net Revenue, for the same period in Fiscal 2011. The decrease in gross profit percentage was primarily the result of a change in average reimbursement from the mix of referrals during the three month period. Factors such as diagnoses that 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. These factors tend to fluctuate on a quarterly basis. However, management does not believe the results of the quarter ended March 31, 2012, are indicative of a long-term trend in decreasing margins.
Operating Expenses, which consist of Selling, General, and Administrative Expenses and Research and Development expenses, were approximately $3,143,000 for the three months ended March 31, 2012, an increase of approximately 3.7% over Operating Expenses for the same period last year. This increase primarily resulted from a 14.3% increase in employees in our reimbursement, sales, administrative, and patient services departments.
Total cash and cash equivalents was approximately $1,393,000 as of March 31, 2012. For the three months ended March 31, 2012, cash used in financing activities was approximately $86,000, consisting of payments of long-term debt, capital lease obligations, and deferred financing fees. An aggregate of $120,000 was used for investing activities during the three months ended March 31, 2012, for purchases of property and equipment. The Company used approximately $146,000 in operating activities composed primarily of an increase in the Company’s accounts receivable, inventory, and other assets. Accounts receivable increased to approximately $11,092,000, or 3.6% compared to December 31, 2011. In addition to existing cash and cash equivalents the Company had unused availability of $3,435,000 under its line of credit as of March 31, 2012.
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 speaker’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. Forward-looking
statements can generally be identified by the words “believe,” “expect,”
“anticipate” or “intend” or similar words. Forward-looking statements
made in this release include the Company’s plans and expectations
regarding sales growth, long-term trends involving margins, planned
increases in sales force, reimbursement and production personnel, and
expansion of marketing and research and development. 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,
changes to reimbursement programs, 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
“forward-looking statements,” as such statements speak only as of the
date of this release.
| Electromed, Inc. and Subsidiary | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| March 31, | June 30, | |||||||||
| 2012 | 2011 | |||||||||
| Assets | (Unaudited) | |||||||||
| Current Assets | ||||||||||
| Cash and cash equivalents | $ | 1,392,935 | $ | 4,091,739 | ||||||
| Accounts receivable (net of allowances for doubtful accounts of $45,000) | 11,091,562 | 9,593,105 | ||||||||
| Inventories | 2,411,937 | 1,855,957 | ||||||||
| Prepaid expenses and other current assets | 515,021 | 371,257 | ||||||||
| Deferred income taxes | 722,000 | 722,000 | ||||||||
| Total current assets | 16,133,455 | 16,634,058 | ||||||||
| Property and equipment, net | 3,252,940 | 2,807,082 | ||||||||
| Finite-life intangible assets, net | 1,169,942 | 1,235,828 | ||||||||
| Other assets ……………………………………………………………… assets | 264,761 | 191,964 | ||||||||
| Total assets | $ | 20,821,098 | $ | 20,868,932 | ||||||
| Liabilities and Shareholders’ Equity | ||||||||||
| Current Liabilities | ||||||||||
| Revolving line of credit | $ | 1,768,128 | $ | 1,768,128 | ||||||
| Current maturities of long-term debt | 351,477 | 438,267 | ||||||||
| Accounts payable | 724,505 | 733,621 | ||||||||
| Accrued compensation | 632,870 | 868,229 |
|
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| Warranty reserve | 464,559 | 444,096 | ||||||||
| Other accrued liabilities ……………………………………………….. liabilities | 88,980 | 161,166 | ||||||||
| Total current liabilities | 4,030,519 | 4,413,507 | ||||||||
| Long-term debt, less current maturities | 1,403,220 | 1,582,102 | ||||||||
| Deferred income taxes | 167,000 | 167,000 | ||||||||
| Total liabilities | 5,600,739 | 6,162,609 | ||||||||
| Commitments and Contingencies (Note 8) | ||||||||||
| Shareholders’ Equity | ||||||||||
|
Common stock, $0.01 par value; authorized: 13,000,000; shares issued and outstanding: 8,114,252 and 8,100,485 shares, respectively |
81,143 | 81,005 | ||||||||
| Additional paid-in capital | 12,920,575 | 12,794,368 | ||||||||
| Retained earnings | 2,218,641 | 1,853,450 | ||||||||
| Common stock subscriptions receivable for 15,000 shares outstanding as of June 30, 2011 | - | (22,500 | ) | |||||||
| Total shareholders’ equity | 15,220,359 | 14,706,323 | ||||||||
| Total liabilities and shareholders’ equity | $ | 20,821,098 | $ | 20,868,932 | ||||||
| Electromed, Inc. and Subsidiary | |||||||||||||||||||
| Condensed Consolidated Statements of Income | |||||||||||||||||||
| (Unaudited) |
|
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|
For the Three Months Ended |
For the Nine Months Ended | ||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||||
| Net revenues | $ | 4,774,347 | $ | 5,198,828 | $ | 14,943,612 | $ | 14,049,803 | |||||||||||
| Cost of revenues | 1,405,804 | 1,495,509 | 4,024,577 | 3,872,565 | |||||||||||||||
| Gross profit | 3,368,543 | 3,703,319 | 10,919,035 | 10,177,238 | |||||||||||||||
| Operating expenses | |||||||||||||||||||
| Selling, general and administrative | 2,904,534 | 2,759,543 | 9,434,995 | 8,025,578 | |||||||||||||||
| Research and development | 238,230 | 272,270 | 705,655 | 689,360 | |||||||||||||||
| Total operating expenses | 3,142,764 | 3,031,813 | 10,140,650 | 8,714,938 | |||||||||||||||
| Operating income | 225,779 | 671,506 | 778,385 | 1,462,300 | |||||||||||||||
| Interest expense, net of interest income | 42,684 | 38,077 | 130,194 | 150,929 | |||||||||||||||
| Net income before income taxes | 183,095 | 633,429 | 648,191 | 1,311,371 | |||||||||||||||
| Income tax expense | (88,000 | ) | (146,000 | ) | (283,000 | ) | (420,000 | ) | |||||||||||
| Net income | $ | 95,095 | $ | 487,429 | $ | 365,191 | $ | 891,371 | |||||||||||
| Earnings per share attributable to Electromed, Inc. common shareholders: | |||||||||||||||||||
| Basic | $ | 0.01 | $ | 0.06 | $ | 0.05 | $ | 0.12 | |||||||||||
| Diluted | $ | 0.01 | $ | 0.06 | $ | 0.04 | $ | 0.12 | |||||||||||
| Weighted-average Electromed, Inc. common shares outstanding: | |||||||||||||||||||
| Basic | 8,114,120 | 8,099,752 | 8,105,562 | 7,722,075 | |||||||||||||||
| Diluted | 8,116,759 | 8,112,696 | 8,116,977 | 7,750,956 | |||||||||||||||
| Electromed, Inc. and Subsidiary | ||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (Unaudited) | For the Nine Months Ended | |||||||||
| March 31, | ||||||||||
| 2012 | 2011 | |||||||||
| Cash Flows From Operating Activities | ||||||||||
| Net income | $ | 365,191 |
$ |
891,371 | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||
| Depreciation | 300,248 | 246,426 | ||||||||
| Amortization of finite-life intangible assets | 91,032 | 83,848 | ||||||||
| Amortization of debt issuance costs | 9,461 | 27,778 | ||||||||
| Share-based compensation expense | 97,044 | 129,396 | ||||||||
| Loss on disposal of property and equipment | 23,009 | 15,758 | ||||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | (1,498,457 | ) | (2,655,542 | ) | ||||||
| Inventories | (555,980 | ) | (194,190) | |||||||
| Prepaid expenses and other assets | (214,709 | ) | (149,566) | |||||||
| Accounts payable and accrued liabilities | (296,198 | ) | 329,215 | |||||||
| Net cash used in operating activities | (1,679,359 | ) | (1,275,506 | ) | ||||||
| Cash Flows From Investing Activities | ||||||||||
| Expenditures for property and equipment | (736,197 | ) | (315,456 | ) | ||||||
| Expenditures for finite-life intangible assets | (25,146 | ) | (648,616 | ) | ||||||
| Net cash used in investing activities | (761,343 | ) | (964,072 | ) | ||||||
| Cash Flows From Financing Activities | ||||||||||
| Net payments on revolving line of credit | - | (500,000 | ) | |||||||
| Principal payments on long-term debt including capital lease obligations | (298,590 | ) | (327,113 | ) | ||||||
| Payments of deferred financing fees | (11,313) | (6,717 | ) | |||||||
| Proceeds from warrant exercises | 29,301 | 24,000 | ||||||||
| Proceeds from sales of 1,900,000 shares of common stock, net of offering costs of $1,236,287 | - | 6,363,713 | ||||||||
| Proceeds from subscription notes receivable | 22,500 | 27,000 | ||||||||
| Net cash provided by (used in) financing activities | (258,102) | 5,580,883 | ||||||||
| Net increase (decrease) in cash and cash equivalents | (2,698,804) | 3,341,305 | ||||||||
| Cash and cash equivalents | ||||||||||
| Beginning of period | 4,091,739 | 610,727 | ||||||||
| End of period | $ | 1,392,935 | $ | 3,952,032 | ||||||