全米

証券取引委員会

ワシントンD.C. 20549

フォーム 10-Q

(マーク 1)

法律第12(b)条に基づき登録された証券:

登録者は、過去12か月間（または登録者がそのような報告書を提出する必要があったより短い期間にわたって）証券取引所法第13条または15(d)条によって提出する必要のあるすべての報告書を提出しているか、および過去90日間の間そのような提出要件を受けていたかをチェックマークで示してください。 はい ☑ いいえ ☐

登録者が過去12か月間（または登録者がそのようなファイルを提出する必要があった短い期間）に、Regulation S-t（この章の§232.405）のRule 405に従って提出が必要とされるすべてのインタラクティブデータファイルを電子的に提出したかどうかをチェックマークで示してください。 はい☑ いいえ ☐

登録者が大型加速度ファイラー、加速度ファイラー、非加速度ファイラー、小規模報告会社、または新興成長企業であるかどうかをチェックマークで示してください。大型加速度ファイラー、加速度ファイラー、小規模報告会社、および新興成長企業の定義については、取引所法のルール1202を参照してください。

新興成長企業の場合、証券取引法13（a）に基づく新しいまたは改訂された財務会計基準の準拠について、拡張トランジション期間を使用しないように選択した場合は、チェックマークを記入してください。 ☐

登録申請者が取引所法の規定に定義されるシェル企業であるかをチェックマークで示してください。はい ☐ 売上高は2023年3月の契約で認識されていません ☑

合計8,458,005 2024年11月7日の取引終了時点で、エレクトロメッド・インクの普通株式0.01ドルの株式が発行済みです。

エレクトロメッド、Inc.

10-Qフォームの四半期報告書のインデックス

第I部-財務情報

エレクトロメッド、Inc.

縮小されたバランスシート

See Notes to Condensed Financial Statements (Unaudited).

Electromed, Inc.

Condensed Statements of Operations (Unaudited)

See Notes to Condensed Financial Statements (Unaudited).

Electromed, Inc.

Condensed Statements of Cash Flows (Unaudited)

See Notes to Condensed Financial Statements (Unaudited).

Electromed, Inc.

Condensed Statements of Shareholders’ Equity (Unaudited)

See Notes to Condensed Financial Statements (Unaudited).

Electromed, Inc.

Notes to Condensed Financial Statements
( Unaudited)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Financial Statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and our audited financial statements and related notes thereto included in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (“fiscal 2024”).

Overview

Electromed, Inc. (“we,” “our,” “us,” “Electromed” or the “Company”) develops and provides innovative airway clearance products applying High Frequency Chest Wall Oscillation (“HFCWO”) technologies in pulmonary care for patients.

We manufacture, market and sell products that provide HFCWO, including the SmartVest® Airway Clearance System (“SmartVest System”) that includes our newest generation SmartVest Clearway® Airway Clearance System (“Clearway”), previous generation SmartVest SQL®, and related garments and accessories to patients with compromised pulmonary function. The SmartVest Clearway, which received 510(k) clearance from the U.S. Food and Drug Administration in November 2022, provides patients with proven quality of life outcomes while offering a state-of-the-art patient experience with a simple touch screen user interface, small generator footprint and comfortable, lightweight vests.

Our products are sold in both the homecare market and the hospital market for inpatient use, which we refer to as “hospital sales.” Since 2000, we have marketed the SmartVest System and its predecessor products to patients suffering from bronchiectasis, cystic fibrosis, and other chronic pulmonary conditions which require external chest manipulation to enhance mucus transport. Additionally, we offer our products to a patient population that includes neuromuscular disorders such as cerebral palsy, muscular dystrophies, amyotrophic lateral sclerosis (“ALS”), patients with post-surgical complications or who are ventilator dependent and patients who have other conditions involving excess secretion and impaired mucus transport.

The SmartVest System is often eligible for reimbursement from major private insurance providers, health maintenance organizations (“HMOs”), state Medicaid systems, and the federal Medicare system, which we believe is an important consideration for patients considering an HFCWO course of therapy. For domestic sales, the SmartVest System may be reimbursed under the Medicare-assigned billing code (E0483) for HFCWO devices if the patient has cystic fibrosis, bronchiectasis (including chronic bronchitis or COPD that has resulted in a diagnosis of bronchiectasis), or any one of certain enumerated neuromuscular diseases and myopathies and can demonstrate that another less expensive physical or mechanical treatment did not adequately mobilize retained secretions. Private payers consider a variety of sources, including Medicare, as guidelines in setting their coverage policies and payment amounts.

Critical Accounting Estimates

For a description of our critical accounting estimates and assumptions used in the preparation of our financial statements, including the unaudited Condensed Financial Statements in this Quarterly Report on Form 10-Q, see Note 1 and Note 2 to our unaudited Condensed Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Part II, Item 7, and Note 1 to our audited financial statements included in Part II, Item 8, of our Annual Report on Form 10-K for fiscal 2024.

There were no material changes in our critical accounting estimates and assumptions since the filing of our Annual Report on Form 10-K for fiscal 2024.

Results of Operations

Net Revenues

Net revenues for the three months ended September 30, 2024, and 2023 are summarized in the table below.

Homecare revenue. Homecare revenue increased by $2,058,000, or 18.5%, for the three months ended September 30, 2024, compared to the same period in fiscal 2024. The increase in revenue was due to an increase in referrals driven by an increase in direct sales representatives, higher net revenues per approval, and efficiencies within our reimbursement department.

Hospital revenue. Hospital revenue increased by $183,000, or 36.1%, for the three months ended September 30, 2024, compared to the same period in fiscal 2024. This increase was primarily due to an increase in capital and disposable demand.

Homecare distributor revenue. Homecare distributor revenue increased by $14,000 or 2.4%, for the three months ended September 30, 2024, compared to the same period in fiscal 2024. The change in Homecare distributor sales was primarily a result of the timing of distributor purchases that can cause fluctuations in reported revenue on a quarterly basis.

Other revenue. Other revenue increased by $89,000, or 97.8%, for the three months ended September 30, 2024, compared to the same period in fiscal 2024. The increase in other revenue was primarily due to the timing of international distributor purchases and purchases by customers that do not fall within the other markets described above, which can cause fluctuations in reported revenue on a quarterly basis.

Though we have not identified a material impact to our net revenues for the three months ended September 30, 2024, we continue to monitor the potential impact of natural disasters such as hurricanes, which may have an impact on providers and their patients getting access to our product.

Gross profit

Gross profit increased to $11,491,000, or 78.3% of net revenues, for the three months ended September 30, 2024, from $9,498,000, or 77.1% of net revenues, in the same period in fiscal 2024. The increase in gross profit dollars for the three months ended September 30, 2024, was primarily due to increased revenue volume and a higher average net revenue per device. The gross margin rate increased year over year driven by a higher average net revenue per device.

Operating expenses

Selling, general and administrative expenses. Selling, general and administrative (“SG&A”) expenses were $9,387,000 for the three months ended September 30, 2024, representing an increase of $237,000 or 2.6%, compared to the same period in the prior year.

SG&A payroll and compensation-related expenses including health insurance benefits and other compensation increased by $691,000, or 12.0%, to $6,457,000 for the three months ended September 30, 2024, compared to the same period in the prior year. The increase in the current period was primarily due to increases in share-based compensation associated with the vesting of performance-based equity awards, salaries, and incentive compensation related to the higher average number of sales, sales support, marketing, and reimbursement personnel to process higher patient referrals. We have also continued to provide regular merit-based increases for our employees and are regularly benchmarking our compensation ranges including share-based compensation for new and existing employees to ensure we can hire and retain the talent needed to drive growth in our business. Field sales employees totaled 60 as of September 30, 2024, 53 of which were direct sales representatives, compared to 59 field sales employees and 51 direct sales representatives as of September 30, 2023.

Travel, meals and entertainment expenses increased $47,000, or 5.1%, to $964,000 for the three months ended September 30, 2024, compared to the same period in the prior year. The increase in the current year was primarily due to a higher average number of direct sales representatives and higher travel costs.

Total discretionary marketing expenses decreased $263,000, or 49.9%, to $264,000 for the three months ended September 30, 2024, compared to the same period in the prior year. The decrease was primarily due a one-time investment in market research in the prior year that did not recur in the three months ended September 30, 2024.

Professional fees decreased $171,000, or 13.0%, to $1,140,000 for the three months ended September 30, 2024, compared to the same period in the prior year. Professional fees are primarily for services related to legal costs, shareowner services and reporting requirements, information technology technical support and consulting fees. The decrease was primarily due to clinical fees in the prior year related to the finalization of a clinical study that did not recur in the three months ended September 30, 2024.

Research and development expenses. Research and development (“R&D”) expenses decreased $40,000, or 19.4%, to $166,000 for the three months ended September 30, 2024, compared to the same period in the prior year. The decrease was primarily due to reduced costs associated with our SmartVest Clearway platform development in the prior year which has now been launched into the Homecare and Hospital markets.

Operating income

Operating income increased by $1,796,000, to $1,938,000 for the three months ended September 30, 2024, compared to the same period in the prior year. The increase is primarily due to an increase in revenue and gross profit and growth in selling, general and administrative expense growth tracking below revenue growth.

Interest income, net

Net interest income increased $118,000, to $195,000 for the three months ended September 30, 2024, compared to the same period in the prior year. The increase is due to increased savings rates on higher cash balances.

Income tax expense

Income tax expense was estimated at $659,000 for the three months ended September 30, 2024, compared to an estimated income tax expense of $64,000 for the three months ended September 30, 2023. The effective tax rates were 30.9% and 29.3% for the three months ended September 30, 2024, and 2023, respectively. The income tax expense for the three months ended September 30, 2024, included a discrete tax benefit of $4,000 primarily related to the vesting of restricted stock awards.

Net income

Net income for the three months ended September 30, 2024, was $1,474,000 compared to $155,000 for the same period in the prior year. The increase in net income was primarily due to increased revenue and gross profit.

Liquidity and Capital Resources

Cash Flows and Sources of Liquidity

Cash Flows from Operating Activities

For the three months ended September 30, 2024, net cash provided by operating activities was $2,309,000. Cash flows provided by operating activities consisted of net income of $1,474,000, non-cash expenses of $917,000, a decrease in accounts receivable of $967,000, a decrease in inventory of $278,000, and an increase in accounts payable and accrued liabilities of $806,000. These cash flows from operating activities were offset by a decrease in accrued compensation of $1,743,000, an increase in prepaid expenses and other assets of $266,000, a decrease in income tax payable of $89,000, and an increase in contract assets of $35,000. The decrease in accrued compensation was primarily due to the payment of previously accrued annual incentives.

Cash Flows from Investing Activities

For the three months ended September 30, 2024, cash used in investing activities was $58,000. Cash used in investing activities consisted of $37,000 of expenditures for property and equipment and $21,000 in expenditures for intangible asset costs.

Cash Flows from Financing Activities

For the three months ended September 30, 2024, cash used by financing activities was $4,467,000, consisting of $4,536,000 used to repurchase common stock and $15,000 used to pay taxes for equity issued on a net basis. These amounts were partially offset by cash received from the issuance of common stock upon the exercise of options of $84,000.

Adequacy of Capital Resources

Our primary working capital requirements relate to adding employees to our sales force and support functions, continuing infrastructure investments, and supporting general corporate needs, including financing equipment purchases and other capital expenditures incurred in the ordinary course of business. Based on our current operational performance, we believe our working capital of approximately $33,591,000 and available borrowings under our existing credit facility will provide sufficient liquidity to meet our anticipated working capital and other liquidity needs for the next twelve months from the date of this report.

We maintain a credit facility that was last amended in December 2023, which provides us with a revolving line of credit. Interest on borrowings on the line of credit accrues at the prime rate (8.0% as of September 30, 2024) less 1.0% and is payable monthly. There was no outstanding principal balance on the line of credit as of September 30, 2024, or June 30, 2024. The amount eligible for borrowing on the line of credit is limited to the lesser of $2,500,000 or 57.0% of eligible accounts receivable, and the line of credit expires on December 18, 2025, if not renewed. As of September 30, 2024, the maximum $2,500,000 was available under the line of credit. Payment obligations under the line of credit are secured by a security interest in substantially all our tangible and intangible assets.

The documents governing our line of credit contain certain financial and nonfinancial covenants that include a minimum tangible net worth of not less than $10,125,000 and restrictions on our ability to incur certain additional indebtedness or pay dividends.

Any failure to comply with these covenants in the future may result in an event of default, which if not cured or waived, could result in the lender accelerating the maturity of our indebtedness, preventing access to additional funds under the line of credit, requiring prepayment of outstanding indebtedness, or refusing to renew the line of credit. If the maturity of the indebtedness is accelerated or the line of credit is not renewed, sufficient cash resources to satisfy the debt obligations may not be available and we may not be able to continue operations as planned. If we are unable to repay such indebtedness, the lender could foreclose on these assets.

For the three months ended September 30, 2024, and 2023, we spent approximately $37,000 and $109,000, respectively, on property and equipment. We currently expect to finance planned equipment purchases with cash flows from operations. We may need to incur additional debt if we have an unforeseen need for additional capital equipment or if our operating performance does not generate adequate cash flows.

While the impact of macroeconomic factors such as inflation are difficult to predict, we believe our cash, cash equivalents and cash flows from operations will be sufficient to meet our working capital, capital expenditure, operational cash requirements for fiscal 2025 and the foreseeable future. We will continue to evaluate our projected expenditures relative to our available cash and evaluate financing alternatives to satisfy our working capital and other cash requirements.

Information Regarding Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q that are not statements of historical fact should be considered forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include, but are not limited to, statements regarding: our business strategy, including our intended level of investment in R&D and marketing activities; our expectations with respect to earnings, gross margins and sales growth, industry relationships, marketing strategies and international sales; estimated sizes of markets into which our products are or may be sold; our business strengths and competitive advantages; our ability to grow additional sales distribution channels; our intent to retain any earnings for use in operations rather than paying dividends; our expectation that our products will continue to qualify for reimbursement and payment under government and private insurance programs; our intellectual property plans and practices; the expected impact of applicable regulations on our business; our beliefs about our manufacturing processes; our expectations and beliefs with respect to our employees and our relationships with them; our belief that our current facilities are adequate to support our growth plans; our expectations with respect to ongoing compliance with the terms of our credit facility; our expectations regarding the ongoing availability of credit and our ability to renew our line of credit; enhancements to our products and services; expected excise tax exemption for the SmartVest System; and our anticipated revenues, expenses, capital requirements and liquidity. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “project,” “goal,” “target,” “should,” “will,” “would,” and similar expressions, including the negative of these terms, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Although we believe these forward-looking statements are reasonable, they involve risks and uncertainties that may cause actual results to differ materially from those projected by such statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or our industry’s actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements.

Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, the following: 

This list of factors is not exhaustive, however, and these or other factors, many of which are outside of our control, could have a material adverse effect on us and our results of operations. Therefore, you should consider these risk factors with caution and form your own critical and independent conclusions about the likely effect of these risk factors on our future performance. Forward-looking statements speak only as of the date on which the statements are made, and we undertake no obligation, and expressly disclaim any such obligation, to update any forward-looking statement for any reason other than as required by law, even if new information becomes available or other events occur in the future. You should carefully review the disclosures, and any risk factors described in this and other documents we file from time to time with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for fiscal 2024. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth herein.

As a smaller reporting company, we are not required to provide disclosure pursuant to this Item.

Evaluation of Disclosure Controls and Procedures

Our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period subject to this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the date of such evaluation to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

Changes to Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Occasionally, we may be party to legal actions, proceedings, or claims in the ordinary course of business, including claims based on assertions of patent and trademark infringement. We are not party to any material pending legal proceedings.

As a smaller reporting company, we are not required to provide disclosure pursuant to this Item.

On September 11, 2024, our Board of Directors (the “Board”) approved and announced the repurchase of up to $5.0 million of outstanding shares of our common stock. The shares of our common stock may be repurchased under the authorization on the open market or in privately negotiated transactions subject to applicable securities laws and regulations. The current repurchase authorization does not expire and the approximate dollar value of shares that may yet be purchased under the plan as of September 30, 2024, was approximately $464,000. The following table sets forth information concerning repurchases of shares of our common stock for the three months ended September 30, 2024:

None.

None.

During the three months ended September 30, 2024, no director or officer of the Company adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

*Management compensatory contract or arrangement.

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 thereunto duly authorized.