ELMD - Earnings call transcript Q2 2020

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Operator

Greetings, and welcome to the Electromed, Inc.'s Second Quarter Fiscal 2020 Fiscal Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kalle Ahl of The Equity Group. Please go ahead.

Kalle Ahl

Thank you, Kevin, and good morning, everyone. XXXX were fiscal the yesterday quarter close. market second financial released results after Electromed's the can at earnings the of copy A release section the Investor be of company's website www.smartvest.com. Relations in found

uncertainties formality, I from statements Such and considered could financial future to the will that forward-looking As a including management risks are matter need remind subject about some materially that call you this be on performance plans. those operating statements actual results, statements or to to make statements, projected. and of that are and cause company’s of the achievements different

Any such represent expectations date. as of statements management’s today’s

whether You SEC events filings these refer this undertake as forward-looking of company's should new does or on matter. on to update not the reliance any company place not statements obligation otherwise. and statements or Please a for information, undue result future guidance the to further forward-looking revise

this we'll Mr. us Chief morning present and financial Jeremy and a Officer; are Electromed Skarvan, will Kathleen summary call Chief remarks, Executive Kathleen questions. Ms. will for after some begin Jeremy the then fiscal second which Joining XXXX the quarter opening from results, with company's President open Brock, of Officer. Financial and

over Now it's to turn my pleasure to it Kathleen.

Kathleen Skarvan

driven million X.X% improvement. nearly $X.X year, the Good discuss performance everyone in second Thank Electromed’s you, the We net Kalle. tripled compared period substantial by period the to and operating revenue driven for by $XXX,XXX for – to last income same growth X% another to you bottom-line margin strong morning in as second and results. joining us thank delivered quarter financial quarter our

the end the filling compared At year-over-year process to at of of compared business, employees open to XX XXXX prior net sales. Starting which we of territories quarter of our despite fewer employees approximately some year direct quarter were the sales referral with field contributing second despite XX of having end, are in sales to sales in direct period fiscal XX our revenue sales increased field flat growth. which care X.X% which the direct XX the XX totaled and were the home

plan XX direct fiscal approximately in XXXX. Our peak to sales remains at reps

revenue in some central this was territory January. moderated home in in our and throughout quarter care steadily in we and weakness rebound to were December see of November, pockets in growth but the Our this region country referrals pleased

payer longer We In the benefited second quarter, a driven mix home importantly produced per reps. higher we improved force per by from tenured $XXX,XXX selling to sales device approximately of revenue our average from performance from price productivity annualized sales due and strong direct care between of well and confident field meeting figure of of $XXX,XXX above the for XXXX the sales levels target year. our for the exceeding or employee, productivity We our comparable full fiscal ahead about and quarter $XXX,XXX target $XXX,XXX. of fiscal remain range

patients and strategies bronchiectasis. care of increasing increased promulgating on provide growth those to device home growth. for referrals pulmonology to with and customer and in focused adult clinical market growing specifically are the to support bronchiectasis. support utilization of Enhancing innovative Our patient best-in-class share Expanding Continuing institutional develop body to provider evidence SmartVest features care. or with

the bronchiectasis function drive that evidence expect of in therapy which study to and home published utilization Specifically Pulmonary for of BMC as launch initiation increase patients bronchiectasis its new revenue clinical further first body antibiotic our SmartVest exacerbations, severe concluded expanding the early to lung to SmartVest we with for Medicine, of growth, care independent kind stabilizes reduces last year of patients. study use of decreases validation

antibiotic their use using SmartVest. prospective will multi-site The of month SmartVest over tracking follow one-year enrollment outcome compare to algorithm including bronchiectasis this same function, begun an study a algorithm and In an hospitalizations patients these care of period, particular, we metrics as taken a employing and prior study have on care. lung

SmartVest experience. to user designed our our SmartVest offer seamlessly mobile connect and This planned and mobile, patients launch we Connect therapy for enhanced will monitoring. The to Connect with setting applications. Bluetooth quarter, more applications their allow patient personal reminders The new real-time therapy therapy enabled SmartVest capabilities including mobile

on Our our business average with quarter, the we to combined XX% with integrated call reflect with institutional logged institutional by year’s sales stronger the device. networks, Moreover, in rate SmartVest results strong performance higher our approximately first another revenue points, strategic training believe price. second primarily intensified last selling compared up focus delivery better relationships hospital driven

institutional growth is a high hospital often used frequency therapy described brand home the or discharging wall default oscillation chest augment business care brand our should the the in As when in our patient. a reminder, revenue as HFCWO

Manager on of in direct execution Lastly, region, to complementary we of home intend distributor We opportunities channel where of a our country we under-recognized our the and quarter reported to lead care those supplemental the is brand United distributor areas our Western homecare we see sales $XXX,XXX. channel the believe core remain this is approximately the our SmartVest who States. distributor our care accelerating the a and channel for sales in manage reiterate, will business, basis. sales growth Sales direct particularly development home revenue for and Western channel. We hired To Regional reps recently primary

by achieved strong or bottom margin improvement Higher million we Shifting XX.X%. expenses higher per lower revenue, margin underscored second gross share, to $X.XX the quarter to SG&A these of to net significant income $X.X all contributed operating and diluted line, approximately results.

bring product revenue expenses bronchiectasis and count incur outcomes our of XX, to we SmartVest target staff to level disclosed for of next year, non-cystic of designed quality additional previously For to increase spend life anticipate the to R&D generation our physicians X% X% improving sales operating remainder we the fibrosis for on studies in direct of value costs clinical our higher patients. on educate and our total as fiscal

the and in leading a with where our for the growth expect real revenue makes expect large, continue and revenue patient of we our the expense in speaks Furthermore, market, follow feedback up receive providers to we our value growth improving investments, patients and quality to incremental and fiscal outpace improvement our and underpenetrated that long on will a to sales achieve difference in we growth these feedback term. feel expanding levels productivity is for We basis Underpinning the testimonials SmartVest operating bronchiectasis we our about low enthusiasm year. our target volumes Notwithstanding XXXX, double-digit life. – system proposition. regular and growth

health me tears, moved cannot Their life. the am and day-to-day not with me and example, shared of a highly "I company positive generosity I the speak to enough For with Pamela to us, my improvements crier. and

kept a me of improved My call nutshell, in the SmartVest The life So machine. as this well." with out them. significantly hospital has

thought been shared, work have had problems have as was I what respiratory and sound as about better I've like up my it. the to Shirley said website to went day used using well immediately now, SmartVest have would, rehab, with benefit. worse. I I and it to did my breathe days made for SmartVest. use it and of patients I easier to read appointment able get an me my said they not by I results. initial with therapy. shopping clear." oxygen. therapist XX if And the After I'm lungs grocery coughing we and is live I she with I little for longer, opportunity the been I doctor I helped even have was number When without to very about SmartVest noise. I "Lung We from Wow. everything gotten to pulmonary the that did bronchiectasis to treatment, immediately that help go Liked are we is more motivated miss fact steadily team Each saw to years. extremely of XX has and hospitalized. about It our read. see proud qualify. it, I went patients would the

In United four a and States. conservatively fibrosis represents excited remain first market a than we bronchiectasis at and wrapped growing our more closing, million significant Non-cystic individuals up estimated strong opportunity, in the future. about half

with our SmartVest be of and you population treated an XX,XXX we that could patients like the who The been diagnosis body clinical have combined Medicare For Electromed the a growing evidence, use in to those testimonials of XXX,XXX approximately new as today. a patient only powerful of bronchiectasis benefit that the of estimated with may therapy, the SmartVest HFCWO people with a system care device bronchiectasis. support hear, with individuals standard routinely believe we story, among from

it financial results. With over of discussion will a turn our now that, detailed to more for I Jeremy

Jeremy Brock

Good Kathleen. you, everyone. Thank morning,

allowable to improved average our home as second increased million, increased XXXX, Kathleen revenue to quarter fiscal revenue. in X.X% on $X.X the higher primarily our care our second increased fiscal in force. sales productivity of Home the As based net of the in $XXX,XXX Institutional $X growth direct to shared, of X.X% $XXX,XXX by in driven million payer to to quarter prior the XXXX – $X.X million mix XX.X% prior from revenue care from revenue period. year from and due year compared

And period. growth area international compared revenue, prior Electromed, for to which isn't a totaled strategic in year the $XXX,XXX approximately $XXX,XXX

from the profit variability second due of $X.X execute or revenue double-digit revenue the our net XX.X% $X.X expected or increased quarter-to-quarter low of of business, XXXX. growth to in strategy. of as quarter be XX.X% of to anticipate million fiscal the Although growth XXXX revenue fiscal Gross nature long-term, can second organic our we quarter sales million we XX.X% in net

selling the on revenue, our could the revenue average average historical increase gross net payer of prior this profit resulted was depending to The profit increase high in mix. on as primarily and gross driven care by range device in mix quarter home The and percentage at in per a end based the as moderate higher of a the allowable year. was compared increase from price

margins in will our range to continue mid- expect gross XXs. long-term We high to the

from or a as second million $XXX,XXX totaled in or the sales which second period and of $X $X.X decreased fiscal the R&D expect of the new administrative due expenses compensation second in of increase compared do of R&D of quarter expenses, year to the revenue in the expenses expenses year, million in $X.X quarter to the of employees higher include X.X% We in quarter fiscal the half product to same of number second of XX.X% XXXX, the XXXX million well the to revenue quarter R&D due roles. fiscal in in fiscal lower prior decreased million in $XXX,XXX with second to SG&A XXXX. in to XXXX expenses, lower investment fiscal $X.X from of SG&A Operating and XX.X% primarily year. expenses payroll development. as prior

expense in effective tax quarter. the the totaled $X.X income prior XXXX to $X.X fiscal the of from quarter the of in the compared second Net $XXX,XXX period XXXX period. to And income before the to million was quarter of In rate in of of XXXX, in second tax quarter, totaled quarter increased in to the year income in XXXX. fiscal million tax in expense prior Operating second compared income $XXX,XXX second fiscal compared XX% the year same quarter XX.X% year. $XXX,XXX prior our $XXX,XXX the

stock stock year the rate exercised in options by effective unexercised, November quarter in year period, expired to were options XXXX. that the of current related XX.X%, during fully tax Our primarily negatively vested impacted to the prior rate was by benefited that X.X% while related

the $X.XX totaled per $X.XX or second the to in quarter year per diluted fiscal XXXX compared income in of net million $X.X diluted or period. share $XXX,XXX share prior Our

Now sheet flow. cash moving operating the balance to and

included Our equity quarter of compared in balance the of $XX.X fiscal debt, $XX.X and operations fiscal of $XXX,XXX cash cash XX, of from million XXXX, December million. the XXXX of $X.X and long-term million totaled in million, Cash equivalents capital XXXX. no second at shareholders' second $X.X quarter sheet working to flow

pleased sheet continue are strategies. debt-free to support growth long-term balance positioned be to Electromed's and We to our well strengthening

changes our updated. and Shortly, an strategic planning begin about shareholders value. annual long-term will maximize we also our we to plan. in our in-depth corporate leveraging to To cash the keep our will are and our of there will strategy, discussion lead review shareholder extent operations cycle strategy That plan

on who of the there. those direction BTIG’s and attending participating you we we'll remain the – business. in be Finally, of confident XXth see for focused in we Science March we and Diagnostic hopefully, will some Tools and of and MedTech. Overall, Digital Health be you XXth, Conference Life Utah, will

the And Operator, call. this prepared portion the concludes of start remarks. please our Q&A

Operator

Thank you. from today Company. question coming [Operator Kyle Instructions] Our is & Bauser first Dougherty from

Your live. line is now

Kyle Bauser

Hi. Good and morning, Kathleen Jeremy.

Jeremy Brock

Good morning.

Kathleen Skarvan

Kyle. morning, Good

Kyle Bauser

do based big mentioned trial? this? think And you the on is study, enrolling you enrolling, for the So study, which previous UAB larger prospective began when great. finish which you is this How could

Kathleen Skarvan

for Thanks the Kyle. question,

going patients of study. patients those So multisite enroll. upward a enrolled, for XXX following are a then We're be this once them to we'll And XX-month period. expecting is to time be

XXX length the the following on XX we enrollment, once depending of patients, for So months. reach then them that

So think this those see we're I may we two here, be to could before thinking long-term results. years three

Although it the it predict can't precisely could patients. be due sooner, take that I it time just frame these to enroll may to

Kyle Bauser

And multiple the it. investment in studies. Got okay. Sure, release press implies

beyond this else that's guess works? study, you prospective I can outline anything in So the

Kathleen Skarvan

care I Well, the evaluating economic be underway study springboard that And studies of the economics. a think will we're health for thinking great on prospective be and utilization. that to on be key one one currently going is through study would an

with people economic access as patient. in them we So bronchiectasis There are How that of care some share for other as benefiting databases to payers. benefit that an from we also data can for SmartVest how addition with can economic health standpoint, do well well. organizations, using

be, that areas thinking So of in one would we're the general, about.

Kyle Bauser

you hit know territories And that allows want helpful. force peak And the at sales are quarter can four XX. but in that productivity that at That's added another plans all pace expect full when with I to at you after to approaching goal, the two than the Okay. on have and you that number filled? have reps layer you will you this a peak do a to differently – reps addition in past? and you hit the how

Kathleen Skarvan

be would plan. then second year. of the of half XX be should course, And planning quarter. that, I for but So in for the think year, that the reaching this our That's realistically, our start plans next our we'll,

with peak that be with Bud's recruiter of this planning our operations way, most that'll But planning here our our that of pleased this our we're what color, the understanding the that mentioned, like. I look with Jeremy quarter. certainly, has rep our quality start expansion in a year add kicking be the understanding the in experience just successful next very for might can be the in we've been we'll to And should quite in hires. product As the process, market, strategic market, that profile pleased. our think sales And – and off leadership with we've the little this understanding and been by culture, sales and and

Kyle Bauser

the Can Medicare I you coming was Okay. quarter. again patients just faster some of And dynamics of about age a Or reimbursement the function really it looks strong population? like mean in of talk the bucket turnaround? XX-plus in bolus from here? was this a that

Jeremy Brock

Kyle. morning, Good

seeing is in continue So XX-plus larger are focus we on bronchiectasis to what that grow number as we're a bucket. and

the cover those So patients and of up and having end we're seeing to with supplements lot Medicare their co-pays allowable. a

the continues, quarters, may from well. from But we also in there So we quarter-to-quarter see helps from that. will benefit also are is then as margin we gross seeing well a To that as variability that the the we see and expect benefit that future but a extent benefit that. ASP standpoint to from that do as

Kyle Bauser

just Okay. then quick And two ones.

know your allocation allocate and wondering future opportunities. per grow So cash at $X to here? cash about here, But about wanting you've been that thinking for to continues just in position growth million talking you're how or share, the $X I

Kathleen Skarvan

want growth. cash now, strategy. we ensure our strategy is to opening very allocation carefully our on linked to Kyle, commented Jeremy in focused right his As remarks, that is our And

That long-term into time share are entering year. used strategic So continue we our time at of for we that to we the process we that's want that growth that every this strategies. why enter said, planning to be

in the take are look going for deeper opportunity cash improve dig a to provide for a what shareholder other and at little we're value. growth also here but And so the use that's of opportunities when to best our to

on I our share we we and that reach assure shareholders. carefully with financial for we that take as here So our will opportunity a that can the And at will cycle. shareholders conclusions our look community this in very that cash,

Kyle Bauser

you XX% lastly, long plus. margin additional that really just over so saw margin improvement operating you term. nice And some And great. expansion, note Okay, the you obviously anticipate

a Just Thanks is margin? idea for of I sense, mean, goal so to what operating your much. get long-term a

Jeremy Brock

Yes. Thanks, Kyle.

hit teens long-term hitting, we be we're As points upper our that is different margin mid- from period. growth projects an in as our our standpoint to through different to goal the operating through continue we

Kyle Bauser

Got Thanks questions. it. Okay. for talking the

Kathleen Skarvan

Kyle. Thanks,

Jeremy Brock

Kyle. Thanks,

Operator

Thank you.

Globus Group[ph]. Our Generation next coming question from Globus[ph] from today Stephen is

Your line is now live.

Unidentified Analyst

and be Jeremy, Question your study competition? One the Kathleen congratulations. is, can your one and question that comment. by results currently and you're used morning, on, Good

Kathleen Skarvan

can study the be clinical Stephen. competition. used in marketplace you Any Hello, Thank the Absolutely. for question. by

that say using only study our device. will I be Although clinical a will this

volumes of And our so that us an that therapy SmartVest that speaks I that the as from are the patients for care. think results receiving using they're that, and and for algorithm

Unidentified Analyst

of the and you to reach in positioning it to to bit think thank you appropriate. or these work. the And financial have as Is at is conference morning, calls an potential afternoon it's A the think very evening the more companies busy a call evening investors this possible convenient. about of Well, where Okay. I state-of-the-art talk results? your in investors, more is I programs in out for And PM. industry It's X:XX releasing the getting that after comment. for little lot you

Kathleen Skarvan

Well, for thank your on you input that, Stephen.

at… looked have We

Unidentified Analyst

this morning. early You’re

Kathleen Skarvan

Yes.

of course, into but morning evaluation. comments companies it's have looked take of not do at well, to your as We And call unusual and do calls. calls a evening number that, the morning definitely we'll

Unidentified Analyst

I right? and X:XX, the guess, keep up early congratulations Anyway, work. Okay. there, – you're it's But good it's

Kathleen Skarvan

much. Thank you so

Operator

you. Thank

a Rue, Investor. Howard from Our next question Private is coming

line Your is alive.

Howard Rue

results. really quarters in row, a Congratulations on this you've Kathleen excellent just Good quarter the and three but had really where not morning, last Jeremy.

Kathleen Skarvan

Hello, Howard.

Howard Rue

of which in area two talked I of but One Hi, short and is guidance, term, talked questions. about long More the term. before. have you've about Kathleen. terms before, in know this the we've both I

set only I'm you from double-digit it in look way XX% in be opportunity, that at market, place growth. should second where what's in company do some next the you as third growth, to continues using place advantage of of can million that this year. much a forecasting about maybe point? still But this – into with this market revenue us, as you're lay goes get market it, saying trajectory Can opportunity, at Electromed? order higher $XXX million you change this these that? Where time. you to a you the grow, a out a XX% a share inflection you're point around $XXX With what's it not $X see billion for But out or not in growth jumps the but share talk gaining little to the bit studies a of really you and

Kathleen Skarvan

great will that Inflection that question. we about thank I about is to on here an you I talk happy term, about ongoing a a and an a basis. term think talk point, for key Howard, and that think and opportunity

you Dr. So I in chance if listen a on don't know had to

with Dr. call here But this week. Dougherty conference Solomon’s

even looking scan and appropriately. talked to those is in an high-resolution inflection CT that awareness care that symptoms bronchiectasis bronchiectasis physicians, about and in he market a their the patients stages in still Solomon this diagnose chronic point it of have as ordering pulmonologists exacerbation a about that chronic the then cough, and of of for primary development And early talked still really we're well.

aren't which enough confident and of sites is information of pulmonologists the that go that so are and when XX, and talking they think the registry they're what care that about will be particular, patients. we for believe standard important. point XX, sure very a to of about to bronchiectasis about, evidence part those gathering about care that soon for could that And be States, is creating would pulmonologists to clinical that are they're So standard bronchiectasis looking in United we we come, talk throughout but we what what inflection I about

are momentum clearance And we And airway like Care think of the inflection. part that American the that and comfortable start going of reach pulmonologists where belief, some physician But groups those to momentum seeing start my growing. the of that with Society is setting always that that standard in When of would be you once up Thoracic associations Association about American you part when through as that Dr. or Respiratory therapies, that's we're care.

his that of prescribing Solomon's sickest he's XX% high sick. oscillation. chest seeing he's frequency patients He's the of from anywhere wall seeing, the patients,

So I is that think momentum growing.

but I for don't we have coming sure. think unfortunately, frame, So an exact it's time

Howard Rue

Yes.

encourage grow XX% you of show and I'd team the that have that focused you existing numbers the to newly share should is on million sales with to share. growth put year. would I you market, your And sales able also because think where just be is to it around team, – $X new that a only a or your

story, You great if ought which do than be can that. better able much works, you explain can benefit you'll to from And you if that it. it to should, sell how get that

mean, second Jeremy, But the for The at looking stocks is asked. future I've I question the for wouldn't following $X what gone, of less up have probably on And balance over unfortunately, share allocation, $XX the a the would and repurchase pristine for had Kyle bank, sheet, about hopefully there. where sheet, you range, you're with I today, have. a I dividend could I forever. said the strategy. mean clean in $X call kind of what that $X that X% call at got we the is now, you million opportunity we you it million, is still on what bought advocated to balance that just than capital

you've as cash when operating growth And many you. looking your at I comes about can encourage growth, from flow. you're talk that, the mentioned times, you Because but would

market at you great acquisitions because You're opportunity. not looking doing a have

invest operating because with more more it you're of capital You gross making margins. don't great into need to

have. comfortable something comments that? And Any start would what be that as I'd shareholders should small strongly that dividend not be encourage. to spend a on a So going you process to you're to result, have

Kathleen Skarvan

so And will are Howard, comments. going the appreciate that our of be consideration. all on your part table, to be I options

Howard Rue

a Okay, thanks great congrats quarter. and on

Kathleen Skarvan

Howard. Thank you,

Operator

the Thank end like session. floor the reached comments. further over any turn I'd back for We've you. to or of closing question-and-answer our

Kathleen Skarvan

right. look third we reporting on you call fiscal you good results. quarter a our XXXX all back forward we Have Thank All May our day. and for in to this when to participating release morning,

Operator

Thank you. today's teleconference. That does conclude

You thank may this line a disconnect participation your your at have day. wonderful time, you for We and today.

Electromed (ELMD) 12 Feb 202020 Q2 Earnings call transcript