Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact:
Robert D. Hansen
Chairman and Chief Executive Officer
Electromed, Inc.
952-758-9299
bhansen@electromed.com
Pankti Shah
Director of Strategic Marketing
The Event Group, Incorporated
763-548-1304
pankti.shah@eventshows.com
ELECTROMED, INC. REPORTS 2012 FIRST QUARTER RESULTS
29.1% Increase in First Quarter Net Revenues Compared to Prior Year
New Prague, Minnesota – November 8, 2011 – Electromed, Inc. (NYSE Amex: ELMD) today announced financial results for the three-month period ended September 30, 2011. Net Revenues for the three months ended September 30, 2011 were approximately $5,379,000, a 29.1% increase compared to Net Revenues of approximately $4,165,000 for the same period last year. The Company also announced Net Income of approximately $246,000, or $0.03 per basic and diluted share, for the three months ended September 30, 2011, compared to Net Income of approximately $112,000, or $0.02 per basic and diluted share, for the same period last year. Net Revenues increased in correlation with the expansion of the sales force. Net Income results were attributable to higher Net Revenues, offset by increased expenses related to increases in sales force. Research investments, additions to senior management, and additional facilities have all added to expenses in the first quarter.
Robert Hansen, Chairman and CEO, commented on the Company, saying,
“In very uncertain times, Electromed, Inc. continues to execute successfully on its business plans. The Company is committed to building a platform in sales, product innovation, and patient services sufficient to assure its expanding position in airway clearance therapy.”
Electromed, Inc.
Results for the Three-Months Ended September 30, 2011
Page 2
Gross Profit increased to approximately $4,058,000, or 75.4% of Net Revenues, for the three months ended September 30, 2011, compared to $2,934,000, or 70.4% for the same period in Fiscal 2011. The increase in Gross Profit dollars resulted primarily from the increase in Sales volume. The change in Gross Profit percentage for the three-month period ended September 30, 2011, was primarily the result of higher reimbursement from the mix of referrals and approvals compared to the three-month period ended September 30, 2010. Factors such as diagnoses that are not assured of reimbursement, along with insurance programs which present lower allowable reimbursement amounts (for example, state Medicaid programs) affect average reimbursement received on a short-term basis and tend to cause margins to fluctuate on a quarterly basis.
Operating Expenses, which consist of Selling, General, and Administrative Expenses and Research and Development expenses, were approximately $3,605,000 for the three months ended September 30, 2011, an increase of approximately 34.2% over total Operating Expenses for the same period last year. These planned increases resulted from higher payroll and marketing expenses related to increasing the size of the sales team, increases in reimbursement, administration, patient services staff, and patient training costs related to the higher Sales volume, increased expenses relating to being a new public Company, and increased Research and Development expenses.
Total cash was approximately $2,946,000 as of September 30, 2011. For the three months ended September 30, 2011, cash used in financing activities was approximately $86,000, consisting of primarily $110,000 on payments of Long-term Debt and capital lease obligations offset by proceeds from a warrant exercise and subscription notes receivable of approximately $24,000. An aggregate of $237,000 was used for investing activities during the three months ended September 30, 2011, including $22,000 in payments for patent-related costs and $215,000 in expenditures for property and equipment. The Company used approximately $823,000 in operating activities composed primarily of an increase in the Company’s receivable position, which increased approximately $807,000, or 8.4% to approximately $10,400,000 during the three months ended September 30, 2011.
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.
Electromed, Inc.
Results for the Three-Months Ended September 30, 2011
Page 3
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 and product innovation. 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.
Financial Tables Follow:
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Electromed, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
| | | September 30
2011 | | June 30
2011 |
| | | (Unaudited) | | |
| Assets | | | | | | | | |
| Current Assets | | | | | | | | |
| Cash and cash equivalents | | $ | 2,946,173 | | | $ | 4,091,739 | |
| Accounts receivable (net of allowances for doubtful accounts of $45,000) | | | 10,400,466 | | | | 9,593,105 | |
| Inventories | | | 2,163,802 | | | | 1,855,957 | |
| Prepaid expenses and other current assets | | | 419,203 | | | | 371,257 | |
| Deferred income taxes | | | 722,000 | | | | 722,000 | |
| Total current assets | | | 16,651,644 | | | | 16,634,058 | |
| Property and equipment, net | | | 3,070,662 | | | | 2,807,082 | |
| Finite-life intangible assets, net assets, net assets | | | 1,227,572 | | | | 1,235,828 | |
| Other assets | | | 217,907 | | | | 191,964 | |
| Total assets | | $ | 21,167,785 | | | $ | 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 | | | 403,745 | | | | 438,267 | |
| Accounts payable | | | 758,986 | | | | 733,621 | |
| Accrued compensation | | | 906,425 | | | | 868,229 | |
| Warranty reserve | | | 475,019 | | | | 444,096 | |
| Other accrued liabilities | | | 174,613 | | | | 161,166 | |
| Total current liabilities | | | 4,486,916 | | | | 4,413,507 | |
| Long-term debt, less current maturities | | | 1,506,654 | | | | 1,582,102 | |
| Deferred income taxes | | | 167,000 | | | | 167,000 | |
| Total liabilities | | | 6,160,570 | | | | 6,162,609 | |
| | | | | | | | | |
| Commitments and Contingencies (Note 8) | | | | | | | | |
| | | | | | | | | |
| Shareholders’ Equity | | | | | | | | |
| Common stock, $0.01 par value; authorized: 13,000,000; shares; issued and outstanding: 8,101,085 and 8,100,485 shares respectively | | | 81,011 | | | | 81,005 | |
| Additional paid-in capital | | | 12,827,215 | | | | 12,794,368 | |
| Retained earnings | | | 2,098,989 | | | | 1,853,450 | |
| Common stock subscriptions receivable for 15,000 shares outstanding as of June 30, 2011 | | | — | | | | (22,500 | ) |
| | | | | | | | | |
| Total shareholders’ equity | | | 15,007,215 | | | | 14,706,323 | |
| Total liabilities and shareholders’ equity | | $ | 21,167,785 | | | $ | 20,868,932 | |
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Electromed, Inc. and Subsidiary
Condensed Consolidated Statements of Income
(Unaudited)
| | | For the Three Months Ended
September 30, |
| | | 2011 | | 2010 |
| | | | | |
| Net revenues | | $ | 5,378,918 | | | $ | 4,165,429 | |
| Cost of revenues | | | 1,321,318 | | | | 1,231,690 | |
| Gross profit | | | 4,057,600 | | | | 2,933,739 | |
| | | | | | | | | |
| Operating expenses | | | | | | | | |
| Selling, general and administrative | | | 3,397,553 | | | | 2,487,595 | |
| Research and development | | | 207,585 | | | | 198,386 | |
| Total operating expenses | | | 3,605,138 | | | | 2,685,981 | |
| Operating income | | | 452,462 | | | | 247,758 | |
| Interest expense, net of interest income of $2,027 and $1,971 respectively | | | 43,923 | | | | 59,688 | |
| Net income before income taxes | | | 408,539 | | | | 188,070 | |
| | | | | | | | | |
| Income tax expense | | | (163,000 | ) | | | (76,000 | ) |
| Net income | | $ | 245,539 | | | $ | 112,070 | |
| | | | | | | | | |
| Earnings per share attributable to Electromed, Inc. common shareholders: | | | | | | | | |
| Basic | | $ | 0.03 | | | $ | 0.02 | |
| Diluted | | $ | 0.03 | | | $ | 0.02 | |
| | | | | | | | | |
| Weighted-average Electromed, Inc. common shares outstanding: | | | | | | | | |
| Basic | | | 8,100,915 | | | | 6,986,798 | |
| Diluted | | | 8,119,190 | | | | 7,002,904 | |
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Electromed, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | For the Three Months Ended
September 30, |
| | | 2011 | | 2010 |
| Cash Flows From Operating Activities | | | | | | | | |
| Net income | | $ | 245,539 | | | $ | 112,070 | |
| Adjustments to reconcile net income to net cash used in operating activities: | | | | | | | | |
| Depreciation | | | 90,552 | | | | 78,684 | |
| Amortization of finite-life intangible assets | | | 30,006 | | | | 25,721 | |
| Amortization of debt issuance costs | | | 3,297 | | | | 13,408 | |
| Share-based compensation expense | | | 31,053 | | | | 42,900 | |
| Loss on disposal of property and equipment | | | 9,864 | | | | 2,385 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts receivable | | | (807,361 | ) | | | (470,716 | ) |
| Inventories | | | (307,845 | ) | | | 35,730 | |
| Prepaid expenses and other assets | | | (77,186 | ) | | | (96,234 | ) |
| Accounts payable and accrued liabilities | | | (40,754 | ) | | | 194,943 | |
| Net cash used in operating activities | | | (822,835 | ) | | | (61,109 | ) |
| | | | | | | | | |
| Cash Flows From Investing Activities | | | | | | | | |
| Expenditures for property and equipment | | | (215,311 | ) | | | (97,544 | ) |
| Expenditures for finite-life intangible assets | | | (21,750 | ) | | | (196,332 | ) |
| Net cash used in investing activities | | | (237,061 | ) | | | (293,876 | ) |
| | | | | | | | | |
| Cash Flows From Financing Activities | | | | | | | | |
| Net borrowings on revolving line of credit | | �� | — | | | | (500,000 | ) |
| Principal payments on long-term debt including capital lease obligations | | | (109,970 | ) | | | (105,428 | ) |
| Payments of deferred financing fees | | | — | | | | (4,659 | ) |
| Proceeds from warrant exercises | | | 1,800 | | | | — | |
| Proceeds from sales of 1.9 million shares of common stock, net of offering costs of $1,229,882 | | | — | | | | 6,370,118 | |
| Proceeds from subscription notes receivable | | | 22,500 | | | | — | |
| Net cash provided by (used in) financing activities | | | (85,670 | ) | | | 5,760,031 | |
| Net increase (decrease) in cash and cash equivalents | | | (1,145,566 | ) | | | 5,405,046 | |
| Cash and cash equivalents | | | | | | | | |
| Beginning of period | | | 4,091,739 | | | | 610,727 | |
| End of period | | $ | 2,946,173 | | | $ | 6,015,773 | |
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