Cover
Cover - shares | 9 Months Ended | |
Mar. 31, 2023 | May 05, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --06-30 | |
Entity File Number | 001-34839 | |
Entity Registrant Name | Electromed, Inc. | |
Entity Central Index Key | 0001488917 | |
Entity Tax Identification Number | 41-1732920 | |
Entity Incorporation, State or Country Code | MN | |
Entity Address, Address Line One | 500 Sixth Avenue NW | |
Entity Address, City or Town | New Prague | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 56071 | |
City Area Code | 952 | |
Local Phone Number | 758-9299 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | ELMD | |
Security Exchange Name | NYSEAMER | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 8,561,100 |
Condensed Balance Sheets (Unaud
Condensed Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2023 | Jun. 30, 2022 |
Current Assets | ||
Cash and cash equivalents | $ 6,776,000 | $ 8,153,000 |
Accounts receivable (net of allowances for doubtful accounts of $45,000) | 22,345,000 | 21,052,000 |
Contract assets | 570,000 | 286,000 |
Inventories | 3,451,000 | 3,178,000 |
Prepaid expenses and other current assets | 1,808,000 | 1,870,000 |
Income tax receivable | 219,000 | |
Total current assets | 35,169,000 | 34,539,000 |
Property and equipment, net | 5,502,000 | 4,568,000 |
Finite-life intangible assets, net | 604,000 | 599,000 |
Other assets | 60,000 | 120,000 |
Deferred income taxes | 1,506,000 | 1,538,000 |
Total assets | 42,841,000 | 41,364,000 |
Current Liabilities | ||
Accounts payable | 1,289,000 | 1,261,000 |
Accrued compensation | 2,082,000 | 2,742,000 |
Income tax payable | 51,000 | |
Warranty reserve | 1,333,000 | 1,256,000 |
Other accrued liabilities | 1,713,000 | 1,840,000 |
Total current liabilities | 6,417,000 | 7,150,000 |
Other long-term liabilities | 30,000 | 41,000 |
Total liabilities | 6,447,000 | 7,191,000 |
Shareholders' Equity | ||
Common stock, $0.01 par value per share, 13,000,000 shares authorized; 8,556,600 and 8,475,438 shares issued and outstanding, as of March 31, 2023 and June 30, 2022, respectively | 86,000 | 85,000 |
Additional paid-in capital | 18,548,000 | 18,308,000 |
Retained earnings | 17,760,000 | 15,780,000 |
Total shareholders' equity | 36,394,000 | 34,173,000 |
Total liabilities and shareholders' equity | $ 42,841,000 | $ 41,364,000 |
Condensed Balance Sheets (Una_2
Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2023 | Jun. 30, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 45,000 | $ 45,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized | 13,000,000 | 13,000,000 |
Common stock, outstanding | 8,556,600 | 8,475,438 |
Common stock, issued | 8,556,600 | 8,475,438 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||||
Net revenues | $ 12,068,000 | $ 10,141,000 | $ 34,455,000 | $ 30,390,000 |
Cost of revenues | 3,012,000 | 2,398,000 | 8,386,000 | 7,066,000 |
Gross profit | 9,056,000 | 7,743,000 | 26,069,000 | 23,324,000 |
Operating expenses | ||||
Selling, general and administrative | 7,694,000 | 6,544,000 | 22,937,000 | 19,806,000 |
Research and development | 166,000 | 336,000 | 618,000 | 1,041,000 |
Total operating expenses | 7,860,000 | 6,880,000 | 23,555,000 | 20,847,000 |
Operating income | 1,196,000 | 863,000 | 2,514,000 | 2,477,000 |
Interest income, net | 26,000 | 6,000 | 37,000 | 21,000 |
Net income before income taxes | 1,222,000 | 869,000 | 2,551,000 | 2,498,000 |
Income tax expense | 147,000 | 224,000 | 418,000 | 576,000 |
Net income | $ 1,075,000 | $ 645,000 | $ 2,133,000 | $ 1,922,000 |
Income per share: | ||||
Basic | $ 0.13 | $ 0.08 | $ 0.25 | $ 0.23 |
Diluted | $ 0.12 | $ 0.07 | $ 0.25 | $ 0.22 |
Weighted-average common shares outstanding: | ||||
Basic | 8,461,531 | 8,454,504 | 8,449,623 | 8,485,856 |
Diluted | 8,710,106 | 8,744,535 | 8,694,407 | 8,762,963 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash Flows From Operating Activities | ||
Net income | $ 2,133,000 | $ 1,922,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 370,000 | 368,000 |
Amortization of finite-life intangible assets | 52,000 | 105,000 |
Share-based compensation expense | 506,000 | 703,000 |
Deferred income taxes | 32,000 | 15,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,293,000) | (2,582,000) |
Contract assets | (284,000) | 98,000 |
Inventories | (264,000) | 9,000 |
Prepaid expenses and other assets | 105,000 | (519,000) |
Income tax receivable, net | (270,000) | (443,000) |
Accounts payable and accrued liabilities | (111,000) | 550,000 |
Accrued compensation | (660,000) | (173,000) |
Net cash provided by operating activities | 316,000 | 53,000 |
Cash Flows From Investing Activities | ||
Expenditures for property and equipment | (1,221,000) | (980,000) |
Expenditures for finite-life intangible assets | (54,000) | (86,000) |
Net cash used in investing activities | (1,275,000) | (1,066,000) |
Cash Flows From Financing Activities | ||
Issuance of common stock upon exercise of options | 40,000 | |
Taxes paid on net share settlement of stock option exercises | (305,000) | (70,000) |
Repurchase of common stock | (153,000) | (962,000) |
Net cash used in financing activities | (418,000) | (1,032,000) |
Net decrease in cash | (1,377,000) | (2,045,000) |
Cash and cash equivalents | ||
Beginning of period | 8,153,000 | 11,889,000 |
End of period | 6,776,000 | 9,844,000 |
Supplemental Disclosures of Cash Flow Information | ||
Cash paid for income taxes | 655,000 | 1,003,000 |
Supplemental Disclosures of Noncash Investing and Financing Activities | ||
Property and equipment acquisitions in accounts payable | 136,000 | 85,000 |
Intangible asset acquisitions in accounts payable | 6,000 | 9,000 |
Lease assets obtained in exchange for new operating lease liabilities | 107,000 | |
Demonstration equipment returned to inventory | $ 9,000 | $ 17,000 |
Condensed Statements of Shareho
Condensed Statements of Shareholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Jun. 30, 2021 | $ 85,000 | $ 17,409,000 | $ 14,922,000 | $ 32,416,000 |
Balance at beginning (in shares) at Jun. 30, 2021 | 8,533,209 | |||
Net income | 439,000 | 439,000 | ||
Issuance of restricted stock | ||||
Issuance of restricted stock (in shares) | 25,900 | |||
Issuance of common stock upon exercise of options | $ 1,000 | |||
Issuance of common stock upon exercise of options (in shares) | 10,530 | |||
Taxes paid on stock options exercised on a net basis | (64,000) | (64,000) | ||
Share-based compensation expense | 191,000 | 191,000 | ||
Ending balance, value at Sep. 30, 2021 | $ 86,000 | 17,594,000 | 15,361,000 | 33,041,000 |
Balance at ending (in shares) at Sep. 30, 2021 | 8,569,639 | |||
Beginning balance, value at Jun. 30, 2021 | $ 85,000 | 17,409,000 | 14,922,000 | 32,416,000 |
Balance at beginning (in shares) at Jun. 30, 2021 | 8,533,209 | |||
Net income | 1,922,000 | |||
Repurchase of common stock | (962,000) | |||
Ending balance, value at Mar. 31, 2022 | $ 85,000 | 18,042,000 | 15,883,000 | 34,010,000 |
Balance at ending (in shares) at Mar. 31, 2022 | 8,508,788 | |||
Beginning balance, value at Sep. 30, 2021 | $ 86,000 | 17,594,000 | 15,361,000 | 33,041,000 |
Balance at beginning (in shares) at Sep. 30, 2021 | 8,569,639 | |||
Net income | 838,000 | 838,000 | ||
Issuance of restricted stock | ||||
Issuance of restricted stock (in shares) | 18,000 | |||
Issuance of common stock upon exercise of options | ||||
Issuance of common stock upon exercise of options (in shares) | 1,387 | |||
Taxes paid on stock options exercised on a net basis | (6,000) | (6,000) | ||
Share-based compensation expense | 277,000 | 277,000 | ||
Repurchase of common stock | $ (1,000) | (662,000) | (663,000) | |
Repurchase of common stock (in shares) | (55,687) | |||
Ending balance, value at Dec. 31, 2021 | $ 85,000 | 17,865,000 | 15,537,000 | 33,487,000 |
Balance at ending (in shares) at Dec. 31, 2021 | 8,533,339 | |||
Net income | 645,000 | 645,000 | ||
Share-based compensation expense | 326,000 | 326,000 | ||
Repurchase of common stock | (299,000) | (299,000) | ||
Repurchase of common stock (in shares) | (24,551) | |||
Ending balance, value at Mar. 31, 2022 | $ 85,000 | 18,042,000 | 15,883,000 | 34,010,000 |
Balance at ending (in shares) at Mar. 31, 2022 | 8,508,788 | |||
Beginning balance, value at Jun. 30, 2022 | $ 85,000 | 18,308,000 | 15,780,000 | $ 34,173,000 |
Balance at beginning (in shares) at Jun. 30, 2022 | 8,475,438 | 8,475,438 | ||
Net income | 81,000 | $ 81,000 | ||
Issuance of restricted stock | ||||
Issuance of restricted stock (in shares) | 27,400 | |||
Issuance of common stock upon exercise of options | ||||
Issuance of common stock upon exercise of options (in shares) | 11,760 | |||
Taxes paid on stock options exercised on a net basis | (60,000) | (60,000) | ||
Share-based compensation expense | 95,000 | 95,000 | ||
Repurchase of common stock | (145,000) | (145,000) | ||
Repurchase of common stock (in shares) | (14,568) | |||
Forfeiture of restricted stock | ||||
Forfeiture of restricted stock (in shares) | (14,166) | |||
Ending balance, value at Sep. 30, 2022 | $ 85,000 | 18,343,000 | 15,716,000 | 34,144,000 |
Balance at ending (in shares) at Sep. 30, 2022 | 8,485,864 | |||
Beginning balance, value at Jun. 30, 2022 | $ 85,000 | 18,308,000 | 15,780,000 | $ 34,173,000 |
Balance at beginning (in shares) at Jun. 30, 2022 | 8,475,438 | 8,475,438 | ||
Net income | $ 2,133,000 | |||
Issuance of common stock upon exercise of options (in shares) | 90,351 | |||
Repurchase of common stock | $ (153,000) | |||
Repurchase of common stock (in shares) | (239,995) | |||
Ending balance, value at Mar. 31, 2023 | $ 86,000 | 18,548,000 | 17,760,000 | $ 36,394,000 |
Balance at ending (in shares) at Mar. 31, 2023 | 8,556,600 | 8,556,600 | ||
Beginning balance, value at Sep. 30, 2022 | $ 85,000 | 18,343,000 | 15,716,000 | $ 34,144,000 |
Balance at beginning (in shares) at Sep. 30, 2022 | 8,485,864 | |||
Net income | 977,000 | 977,000 | ||
Issuance of restricted stock | ||||
Issuance of restricted stock (in shares) | 26,000 | |||
Issuance of common stock upon exercise of options | 16,000 | 16,000 | ||
Issuance of common stock upon exercise of options (in shares) | 3,100 | |||
Share-based compensation expense | 221,000 | 221,000 | ||
Repurchase of common stock | (8,000) | (8,000) | ||
Repurchase of common stock (in shares) | (800) | |||
Ending balance, value at Dec. 31, 2022 | $ 85,000 | 18,580,000 | 16,685,000 | 35,350,000 |
Balance at ending (in shares) at Dec. 31, 2022 | 8,514,164 | |||
Net income | 1,075,000 | 1,075,000 | ||
Issuance of common stock upon exercise of options | $ 1,000 | 23,000 | 24,000 | |
Issuance of common stock upon exercise of options (in shares) | 42,436 | |||
Taxes paid on stock options exercised on a net basis | (245,000) | (245,000) | ||
Share-based compensation expense | 190,000 | 190,000 | ||
Ending balance, value at Mar. 31, 2023 | $ 86,000 | $ 18,548,000 | $ 17,760,000 | $ 36,394,000 |
Balance at ending (in shares) at Mar. 31, 2023 | 8,556,600 | 8,556,600 |
Interim Financial Reporting
Interim Financial Reporting | 9 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Interim Financial Reporting | Note 1. Interim Financial Reporting Nature of business: International sales were $ 309,000 432,000 Impacts of COVID-19 on the Company’s business: The potential impact of the COVID-19 pandemic and its effects on our operational and financial performance will depend in large part on future developments, which cannot be reasonably estimated at this time. For a more detailed discussion, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this Quarterly Report on Form 10-Q. Basis of presentation: A summary of the Company’s significant accounting policies follows: Use of estimates. Net income per common share. 179,992 102,435 200,140 112,427 Recently Issued Accounting Standards In June 2016, the Financial Accounting Board issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments -- Credit Losses: Measurement of Credit Losses on Financial Instruments”, which was subsequently amended by ASU 2018-19, ASU 2019-04, 2019-05, 2019-10, 2019-11, and 2020-02. The standard introduces new accounting guidance for credit losses on financial instruments within its scope, including trade receivables. This new guidance adds an impairment model that is based on expected losses rather than incurred losses. It is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2022, with early adoption permitted. The adoption of the standard is not expected to have a significant impact on the Company’s consolidated results of operations and financial condition. |
Revenues
Revenues | 9 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Note 2. Revenues Revenue is measured based on consideration specified in the contract with a customer, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, including consideration paid or payable from customers and significant financing components. Revenue from all customers is recognized when a performance obligation is satisfied by transferring control of a distinct good or service to a customer, as further described below under Performance obligations and transaction price Individual promised goods and services in a contract are considered a performance obligation and accounted for separately if the individual good or service is distinct (i.e., the customer can benefit from the good or service on its own or with other resources that are readily available to the customer and the good or service is separately identifiable from other promises in the arrangement). If an arrangement includes multiple performance obligations, the consideration is allocated between the performance obligations in proportion to their estimated standalone selling price, unless discounts or variable consideration is attributable to one or more but not all the performance obligations. Costs related to products delivered are recognized in the period incurred, unless criteria for capitalization of costs under Accounting Standards Codification (“ASC”) 340-40, “Other Assets and Deferred Costs” (“ASC 340”), or other applicable guidance are met. The Company includes shipping and handling fees in net revenues. Shipping and handling costs associated with the shipment of the Company’s SmartVest® Airway Clearance System (“SmartVest System”) after control has transferred to a customer are accounted for as a fulfillment cost and are included in cost of revenues in the Condensed Statements of Operations. The timing of revenue recognition, billings and cash collections results in accounts receivable on the Condensed Balance Sheets as further described below under Accounts receivable Contract assets Disaggregation of revenues. In the following table, net revenues are disaggregated by market: Three Months Ended March 31, Nine Months Ended March 31, 2023 2022 2023 2022 Home care $ 10,971,000 $ 9,033,000 $ 31,335,000 $ 27,721,000 Institutional 440,000 392,000 1,420,000 1,174,000 Home care distributor 501,000 520,000 1,391,000 1,063,000 International 156,000 196,000 309,000 432,000 Total $ 12,068,000 $ 10,141,000 $ 34,455,000 $ 30,390,000 In the following table, net home care revenue is disaggregated by payer type: Three Months Ended March 31, Nine Months Ended March 31, 2023 2022 2023 2022 Commercial $ 4,787,000 $ 3,358,000 $ 12,706,000 $ 10,738,000 Medicare 5,822,000 5,027,000 17,434,000 15,603,000 Medicaid 128,000 373,000 618,000 790,000 Other 234,000 275,000 577,000 590,000 Total $ 10,971,000 $ 9,033,000 $ 31,335,000 $ 27,721,000 Revenues in the Company’s home care, home care distributor, and international markets are recognized at a point in time when control passes to the customer upon product shipment or delivery. Revenues in the Company’s institutional market include revenue recognized at a point in time upon shipment or delivery as well as revenue recognized over time under operating leases. Performance obligations and transaction price. Home care market The Company makes available to its home care patients limited post-sale services that are not material in the context of the contracts, either individually or taken together, and therefore does not consider them to be performance obligations. The costs associated with the services are accrued and expensed when the related revenues are recognized. As such, transactions in the home care market consist of a single performance obligation: the SmartVest System. Home care patients generally will rely on third-party payers, including commercial payers and governmental payers such as Medicare, Medicaid and the U.S. Department of Veterans Affairs to cover and reimburse all or part of the cost of the SmartVest System. The third-party payers’ reimbursement programs fall into three types, distinguished by the differences in the timing of payments from the payer, consisting of either (i) outright sale, in which payment is received from the payer based on standard terms, (ii) capped installment sale, under which the SmartVest System is sold for a series of payments that are capped not to exceed a prescribed or negotiated amount over a period of time or (iii) installment sale, under which the SmartVest System is paid for over a period of several months as long as the patient continues to use the SmartVest System. Regardless of the type of transaction, provided criteria for an enforceable contract are met, it is the Company’s long- standing business practice to regard all home care agreements as transferring control to the patient upon shipment or delivery, in spite of possible payment cancellation under government or commercial programs where the payer is controlling the payment over specified time periods. For home care sales that feature installment payments, the ultimate amount of consideration received from Medicare, Medicaid or commercial payers can be significantly less than expected if the contract is terminated due to changes in the patient’s status, including insurance coverage, hospitalization, death or otherwise becoming unable to use the SmartVest System. However, once delivered to a patient who needs the SmartVest System, the patient is under no obligation to return the SmartVest System should payments be terminated as a result of the described contingencies. As a result, the Company’s product sales qualify for point in time revenue recognition. Control transfers to the patient, and revenue is recognized, upon shipment of the SmartVest System. At this point, physical possession and the significant risks and rewards of ownership are transferred to the patient and either a current or future right to payment is triggered, as further discussed under Accounts receivable Contract assets The Company’s contractually stated transaction prices in the home care market are generally set by the terms of the contracts negotiated with insurance companies or by government programs. The transaction price for the Company’s products may be further impacted by variable consideration. ASC 606 requires the Company to adjust the transaction price at contract inception and throughout the contract duration for the estimated value of payments to be received from insurance payers based on historical experience and other available information, subject to the constraint on estimates of variable consideration. Transactions requiring estimates of variable consideration primarily include (i) capped installment payments, which are subject to the third-party payer’s termination due to changes in insurance coverage, death or the patient’s discontinued use of the SmartVest System, (ii) contracts under appeal and (iii) patient responsibility amounts for deductibles, coinsurance, copays and other similar payments. Although estimates may be made on a contract-by-contract basis, whenever possible, the Company uses all available information, including historical collection patterns, to estimate variable consideration for portfolios of contracts. The Company’s estimates of variable consideration consist of amounts it may receive from insurance providers in excess of its initial revenue estimate due to patients meeting deductibles or coinsurance during the payment duration, changes to a patient’s insurance status, changes in an insurance allowable, claims in appeals with Medicare and amounts received directly from patients for their allowable or coinsurance. The Company believes it has representative historical information to estimate the amount of variable consideration in relevant portfolios considering the significant experience it has with each portfolio and the similarity of patient accounts within a portfolio. The analysis includes steps to ensure that revenue recognized on a portfolio basis does not result in a material difference when compared with an individual contract approach. The Company also leverages its historical experience and all available relevant information for each portfolio of contracts to minimize the risk its estimates used to arrive at the transaction price will result in a significant reversal in the amount of cumulative revenue recognized when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. For example, for contracts in which the Company believes the criteria for reimbursement under government or commercial payer contracts have been met but for which coverage is unconfirmed or payments are under appeal, the Company has significant observable evidence of relatively consistent claims recovery experience over the prior three to five years. The Company believes the low volatility in historical claims approval rates for populations of patients whose demographics are similar to those of current patients provides reliable predictive value in arriving at estimates of variable consideration in such contracts. Similarly, historical payment trends for recovery of claims subject to payer installments and payments from patients have remained relatively consistent over the past five years. No significant changes in patient demographics or other relevant factors have occurred that would limit the predictive value of such payment trends in estimating variable consideration for current contracts. As a result, the Company believes its estimates of variable consideration are generally not subject to the risk of significant revenue reversal. For each type of variable consideration discussed above, there are a large number of contracts with similar characteristics with a wide range of possible transaction prices. For that reason, the Company uses the probability-weighted expected value method provided under ASC 606 to estimate variable consideration. The Company often receives payment from third-party payers for SmartVest System sales over a period of time that may exceed one year. Despite these extended payment terms, no significant financing component is deemed to exist because the purpose of such terms is not to provide financing to the patient, the payer or the Company. Rather, the extended payment terms are mandated by the government or commercial insurance programs; the fundamental purpose of which is to avoid paying the full purchase price of equipment that may potentially be used by the patient for only a short period of time. Home care distributors. Institutional market. ● Outright sale – Under these transactions, the Company sells its products for a prescribed or negotiated price. Transfer of control of the product, and associated revenue recognition, occurs at the time of shipment and payment is made within normal credit terms, usually within thirty days. ● Wrap usage agreements – Under these transactions, the Company provides a generator device at no cost to the hospital in return for a fixed annual commitment to purchase consumable wraps. These agreements are cancellable upon at least sixty days prior written notice by either party. If cancelled, the generator is returned to the Company, where it can be refurbished and used again at a later date. Revenue for the consumable wraps is recognized when control transfers to the customer. International market. Product warranty. Accounts receivable. Contract assets. Contract balances. The following table provides information about contract assets from contracts with customers: Nine Months Ended Fiscal Year Ended Increase (decrease) Increase (decrease) Contract assets, beginning $ 286,000 $ 393,000 Reclassification of contract assets to accounts receivable (1,107,000 ) (833,000 ) Contract assets recognized 1,372,000 784,000 Increase (decrease) as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period 19,000 (58,000 ) Contract assets, ending $ 570,000 $ 286,000 Incremental costs to obtain a contract. |
Inventories
Inventories | 9 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 3. Inventories The components of inventory were as follows March 31, 2023 June 30, 2022 Parts inventory $ 2,908,000 $ 2,672,000 Work in process 213,000 100,000 Finished goods 280,000 469,000 Estimated inventory to be returned 263,000 228,000 Less: Reserve for obsolescence (213,000 ) (291,000 ) Total $ 3,451,000 $ 3,178,000 |
Warranty Reserve
Warranty Reserve | 9 Months Ended |
Mar. 31, 2023 | |
Guarantees and Product Warranties [Abstract] | |
Warranty Reserve | Note 4. Warranty Reserve The Company provides a lifetime warranty on its products to the prescribed patient for sales within the U.S. and a three-year warranty for all institutional sales and sales to individuals outside the U.S. The Company estimates the costs that may be incurred under its warranty and records a liability in the amount of such costs at the time the product is shipped. Factors that affect the Company’s warranty reserve include the number of units shipped, historical and anticipated rates of warranty claims, the product’s useful life and cost per claim. The Company periodically assesses the adequacy of its recorded warranty reserve and adjusts the amounts as necessary. Changes in the Company’s warranty reserve were as follows: Nine Months Ended Fiscal Year Ended Warranty reserve, beginning $ 1,256,000 $ 940,000 Accrual for products sold 290,000 494,000 Expenditures and costs incurred for warranty claims (213,000 ) (178,000 ) Warranty reserve, ending $ 1,333,000 $ 1,256,000 |
Income Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 5. Income Taxes Income tax expense was estimated at $ 147,000 418,000 12.0 16.4 176,000 219,000 Income tax expense was estimated at $ 224,000 576,000 25.8 23.1 22,000 43,000 The Company is subject to U.S. federal and state income tax in multiple jurisdictions. With limited exceptions, years prior to the Company’s fiscal year ended June 30, 2019 are no longer open to U.S. federal, state or local examinations by taxing authorities. The Company is not under any current income tax examinations by any federal, state or local taxing authority. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. |
Financing Arrangements
Financing Arrangements | 9 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Note 6. Financing Arrangements The Company has a credit facility that provides for a $ 2,500,000 no 8.00 1.00 2,500,000 57.00 December 18, 2023 2,500,000 The documents governing the line of credit contain certain financial and nonfinancial covenants that include a minimum tangible net worth covenant of not less than $ 10,125,000 |
Common Stock
Common Stock | 9 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Common Stock | Note 7. Common Stock Authorized shares: 15,000,000 13,000,000 0.01 2,000,000 On May 26, 2021, the Company’s Board of Directors (the “Board”) approved a stock repurchase authorization. Under the authorization, the Company was originally able to repurchase up to $ 3.0 239,995 2,725,000 |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation | Note 8. Share-Based Compensation The Company’s share-based compensation plans are described in Note 8 to the financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2022. Share-based compensation expense was $ 506,000 703,000 Stock Options Stock option transactions during the nine months ended March 31, 2023 are summarized as follows: Number of Shares Weighted-Average Exercise Price per Share Outstanding at June 30, 2022 502,084 $ 5.82 Granted 104,325 $ 9.93 Exercised (90,351 ) $ 1.82 Cancelled or Forfeited (47,930 ) $ 11.19 Outstanding at March 31, 2023 468,128 $ 6.96 The following assumptions were used to estimate the fair value of stock options granted: Nine Months Ended Fiscal Year Ended Risk-free interest rate 2.88 4.23 0.89 2.52 Expected term (years) 6 6 Expected volatility 53 54 55 64 The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. At March 31 2023, the weighted average remaining contractual term for all outstanding stock options was 5.9 1,802,672 339,342 1,762,445 328,218 2.0 Restricted Stock During the nine months ended March 31, 2023, the Company issued restricted stock awards to employees totaling 32,400 2.7 9.92 21,000 9.86 57,818 10.32 244,063 1.3 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9. Commitments and Contingencies The Company is occasionally involved in claims and disputes arising in the ordinary course of business. The Company insures certain business risks where possible to mitigate the financial impact of individual claims and establishes reserves for an estimate of any probable cost of settlement or other disposition. On September 8, 2021, a state court putative class action lawsuit was filed in Minnesota against the Company asserting injury resulting from the previously announced data breach that impacted the Company’s customer protected health information and employee personal information and seeking compensatory damages, equitable relief, and attorneys’ fees and costs. On October 6, 2021, the proceeding was removed to the District of Minnesota. The Company believes the plaintiff was not injured as a result of the data privacy incident and, as a result, the claims are without merit. Accordingly, on November 11, 2021, the Company moved to dismiss the complaint in its entirety. Prior to the hearing on the motion to dismiss, the parties agreed in principle to settle the case. The parties have executed a settlement agreement and submitted a motion to settle the class action in the near future. During January 2023, the settlement was preliminarily approved. The hearing for final approval is scheduled for June 5, 2023. If the court does not grant the approval for settlement, the Company will continue to vigorously defend the lawsuit. At this time, the Company is unable to determine the ultimate outcome or potential exposure to loss, if any. |
Interim Financial Reporting (Po
Interim Financial Reporting (Policies) | 9 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of estimates. | Use of estimates. |
Net income per common share. | Net income per common share. 179,992 102,435 200,140 112,427 |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In June 2016, the Financial Accounting Board issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments -- Credit Losses: Measurement of Credit Losses on Financial Instruments”, which was subsequently amended by ASU 2018-19, ASU 2019-04, 2019-05, 2019-10, 2019-11, and 2020-02. The standard introduces new accounting guidance for credit losses on financial instruments within its scope, including trade receivables. This new guidance adds an impairment model that is based on expected losses rather than incurred losses. It is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2022, with early adoption permitted. The adoption of the standard is not expected to have a significant impact on the Company’s consolidated results of operations and financial condition. |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
In the following table, net revenues are disaggregated by market: | Disaggregation of revenues. In the following table, net revenues are disaggregated by market: Three Months Ended March 31, Nine Months Ended March 31, 2023 2022 2023 2022 Home care $ 10,971,000 $ 9,033,000 $ 31,335,000 $ 27,721,000 Institutional 440,000 392,000 1,420,000 1,174,000 Home care distributor 501,000 520,000 1,391,000 1,063,000 International 156,000 196,000 309,000 432,000 Total $ 12,068,000 $ 10,141,000 $ 34,455,000 $ 30,390,000 In the following table, net home care revenue is disaggregated by payer type: Three Months Ended March 31, Nine Months Ended March 31, 2023 2022 2023 2022 Commercial $ 4,787,000 $ 3,358,000 $ 12,706,000 $ 10,738,000 Medicare 5,822,000 5,027,000 17,434,000 15,603,000 Medicaid 128,000 373,000 618,000 790,000 Other 234,000 275,000 577,000 590,000 Total $ 10,971,000 $ 9,033,000 $ 31,335,000 $ 27,721,000 |
The following table provides information about contract assets from contracts with customers: | Contract balances. The following table provides information about contract assets from contracts with customers: Nine Months Ended Fiscal Year Ended Increase (decrease) Increase (decrease) Contract assets, beginning $ 286,000 $ 393,000 Reclassification of contract assets to accounts receivable (1,107,000 ) (833,000 ) Contract assets recognized 1,372,000 784,000 Increase (decrease) as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period 19,000 (58,000 ) Contract assets, ending $ 570,000 $ 286,000 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
The components of inventory were as follows | The components of inventory were as follows March 31, 2023 June 30, 2022 Parts inventory $ 2,908,000 $ 2,672,000 Work in process 213,000 100,000 Finished goods 280,000 469,000 Estimated inventory to be returned 263,000 228,000 Less: Reserve for obsolescence (213,000 ) (291,000 ) Total $ 3,451,000 $ 3,178,000 |
Warranty Reserve (Tables)
Warranty Reserve (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Guarantees and Product Warranties [Abstract] | |
Changes in the Company’s warranty reserve were as follows: | Changes in the Company’s warranty reserve were as follows: Nine Months Ended Fiscal Year Ended Warranty reserve, beginning $ 1,256,000 $ 940,000 Accrual for products sold 290,000 494,000 Expenditures and costs incurred for warranty claims (213,000 ) (178,000 ) Warranty reserve, ending $ 1,333,000 $ 1,256,000 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock option transactions during the nine months ended March 31, 2023 are summarized as follows: | Stock option transactions during the nine months ended March 31, 2023 are summarized as follows: Number of Shares Weighted-Average Exercise Price per Share Outstanding at June 30, 2022 502,084 $ 5.82 Granted 104,325 $ 9.93 Exercised (90,351 ) $ 1.82 Cancelled or Forfeited (47,930 ) $ 11.19 Outstanding at March 31, 2023 468,128 $ 6.96 |
The following assumptions were used to estimate the fair value of stock options granted: | The following assumptions were used to estimate the fair value of stock options granted: Nine Months Ended Fiscal Year Ended Risk-free interest rate 2.88 4.23 0.89 2.52 Expected term (years) 6 6 Expected volatility 53 54 55 64 |
Interim Financial Reporting (De
Interim Financial Reporting (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Net revenues | $ 12,068,000 | $ 10,141,000 | $ 34,455,000 | $ 30,390,000 |
Common stock equivalents excluded from calculation of diluted earnings per share | 179,992 | 102,435 | 200,140 | 112,427 |
International [Member] | ||||
Net revenues | $ 309,000 | $ 432,000 |
In the following table, net rev
In the following table, net revenues are disaggregated by market: (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 12,068,000 | $ 10,141,000 | $ 34,455,000 | $ 30,390,000 |
Home Care [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 10,971,000 | 9,033,000 | 31,335,000 | 27,721,000 |
Home Care [Member] | Commercial [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 4,787,000 | 3,358,000 | 12,706,000 | 10,738,000 |
Home Care [Member] | Medicare [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 5,822,000 | 5,027,000 | 17,434,000 | 15,603,000 |
Home Care [Member] | Medicaid [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 128,000 | 373,000 | 618,000 | 790,000 |
Home Care [Member] | Other [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 234,000 | 275,000 | 577,000 | 590,000 |
Institutional [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 440,000 | 392,000 | 1,420,000 | 1,174,000 |
Home Care Distributor [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 501,000 | 520,000 | 1,391,000 | 1,063,000 |
International One [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 156,000 | $ 196,000 | $ 309,000 | $ 432,000 |
The following table provides in
The following table provides information about contract assets from contracts with customers: (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | ||
Contract assets, beginning | $ 286,000 | $ 393,000 |
Reclassification of contract assets to accounts receivable | (1,107,000) | (833,000) |
Contract assets recognized | 1,372,000 | 784,000 |
Increase (decrease) as a result of changes in the estimate of amounts to be realized frompayers, excluding amounts transferred to receivables during the period | 19,000 | (58,000) |
Contract assets, ending | $ 570,000 | $ 286,000 |
The components of inventory wer
The components of inventory were as follows (Details) - USD ($) | Mar. 31, 2023 | Jun. 30, 2022 |
Inventory Disclosure [Abstract] | ||
Parts inventory | $ 2,908,000 | $ 2,672,000 |
Work in process | 213,000 | 100,000 |
Finished goods | 280,000 | 469,000 |
Estimated inventory to be returned | 263,000 | 228,000 |
Less: Reserve for obsolescence | (213,000) | (291,000) |
Total | $ 3,451,000 | $ 3,178,000 |
Changes in the Company_s warran
Changes in the Company’s warranty reserve were as follows: (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Jun. 30, 2022 | |
Guarantees and Product Warranties [Abstract] | ||
Warranty reserve, beginning | $ 1,256,000 | $ 940,000 |
Accrual for products sold | 290,000 | 494,000 |
Expenditures and costs incurred for warranty claims | (213,000) | (178,000) |
Warranty reserve, ending | $ 1,333,000 | $ 1,256,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 147,000 | $ 224,000 | $ 418,000 | $ 576,000 |
Effective tax rate | 12% | 25.80% | 16.40% | 23.10% |
Discrete current tax benefit - non-qualified stock options exercised | $ 176,000 | $ 22,000 | $ 219,000 | $ 43,000 |
Financing Arrangements (Details
Financing Arrangements (Details Narrative) - USD ($) | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 30, 2023 | Jun. 30, 2022 | |
Line of Credit Facility [Line Items] | |||
Basis spread on rate | 1% | ||
Minimum tangible net worth to be maintained | $ 10,125,000 | ||
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | 2,500,000 | ||
Line of Credit, Current | $ 0 | $ 0 | |
Available borrowing capacity | $ 2,500,000 | ||
Available borrowing capacity | 5,700% | ||
Line of credit facility, expiration date | Dec. 18, 2023 | ||
Revolving Credit Facility [Member] | Prime Rate [Member] | |||
Line of Credit Facility [Line Items] | |||
Interest rate | 8% |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Dec. 31, 2022 | Sep. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2023 | Jun. 30, 2022 | May 26, 2022 | |
Class of Stock [Line Items] | |||||||
Common stock, authorized | 13,000,000 | 13,000,000 | |||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||||
Number of share repurchased | 239,995 | ||||||
Repurchase of common stock | $ 2,725,000 | ||||||
Board of Directors Chairman [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, authorized | 3,000,000 | ||||||
Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, authorized | 13,000,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||||
Number of share repurchased | 800 | 14,568 | 24,551 | 55,687 | |||
Capital Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, authorized | 15,000,000 | ||||||
Authorized Shares Undesignated Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, authorized | 2,000,000 |
Stock option transactions durin
Stock option transactions during the nine months ended March 31, 2023 are summarized as follows: (Details) - $ / shares | 9 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Options outstanding, beginning | shares | 502,084 |
Options outstanding, beginning | $ / shares | $ 5.82 |
Granted | 104,325 |
Granted | $ 9.93 |
Exercised | (90,351) |
Exercised | $ 1.82 |
Cancelled or Forfeited | (47,930) |
Cancelled or Forfeited | $ 11.19 |
Options outstanding, ending | shares | 468,128 |
Options outstanding, ending | shares | $ 6.96 |
The following assumptions were
The following assumptions were used to estimate the fair value of stock options granted: (Details) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Jun. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | ||
Risk free interest rate - minimum | 2.88% | 0.89% |
Risk free interest rate - maximum | 4.23% | 2.52% |
Expected term (years) | 6 years | 6 years |
Expected volatility - minimum | 53% | 55% |
Expected volatility - maximum | 54% | 64% |
Share-Based Compensation (Detai
Share-Based Compensation (Details Narrative) - USD ($) | 9 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Share-based compensation expense | $ 506,000 | $ 703,000 |
Share-Based Payment Arrangement, Option [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Weighted average contractual term outstanding stock options | 5 years 10 months 24 days | |
Options outstanding, intrinsic value | $ 1,802,672 | |
Outstanding exercisable | 339,342 | |
Options exercisable, intrinsic value | $ 1,762,445 | |
Unrecognized compensation expense | $ 328,218 | |
Weighted average period | 2 years 2 months 12 days | |
Share-Based Payment Arrangement, Option [Member] | Employee [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Vesting period | 2 years 8 months 12 days | |
Restricted Stock [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 244,063 | |
Weighted average period | 1 year 4 months 24 days | |
Fair value on grant date | $ 9.92 | |
Restricted Stock [Member] | Employee [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Restricted stock issued | 32,400 | |
Restricted stock - vested (shares) | 21,000 | |
Weight average fair value -vested restricted stock (per share) | $ 9.86 | |
Restricted stock - unvested (shares) | 57,818 | |
Weight average fair value - unvested restricted stock (per share) | $ 10.32 |