ELMD - Earnings call transcript Q2 2022

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Operator

00:01 Greetings. Welcome to the Electromed Fiscal Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. turn of over Westwicke. now Mike your will ICR Cavanaugh, I the to conference host XX:XX

You begin. may

Mike Cavanaugh

the reminder, XX:XX XX:XX Good for MacCourt, and afternoon currently Kathleen today. company's materially host on could December those Earlier projected. forward-looking Skarvan, today's that such and to will XXXX. Chief statements different from plans. this available call statements thank As you Electromed, statements, including XX, afternoons subject management some Chief website this released will as be Financial of uncertainties that make and cause for on Inc. and President the are actual of statements future results Officer are financial at release and Any Mike expectations and results The the a considered date. company's about ended today XX:XX quarter call. management's financial is performance joining statements the www.smartvest.com. or Such risks us represent to operating achievements Officer; Executive

not refer should result company on these events to forward-looking to obligation will to SEC otherwise. any further President company's and guidance Skarvan, Kathleen forward-looking Please or turn the reliance for Electromed. place this filings future I XX:XX or over on the revise undertake not information, matter. new the now whether update as does call of CEO statements, statements, of a and undue You

Kathleen Skarvan

joining to thank everyone and today. Mike Thanks, XX:XX call you the

was Electromed. record-breaking fiscal As for appreciate always, second quarter support we a of XXXX continued The your of Electromed.

year. X.X% care We at and with ongoing of expansion our territories sales that The compared core growth fiscal We tight of year-over-year XX:XX We prior chronic we compared of our pre-pandemic revenues results pandemic our quarter exceeding clearance are basis our in position XX experience end beginning staff to revenue in XX.X% has and place goal manage yield our of demonstrates airway we high $X.X As quarter. grew I revenue home have second some in to referrals home pace on was of $XX.X to quarter, displays strategic therapy by anticipated at as have XX provider record continued patients care turnover million direct initiatives the our did to leading that XX the sales quarter XXXX in directly. having sales believe enhance earnings care our prior rep sales by chain. achieved airway the sequential proud to up home home call, lung revenue Our productivity year, we this is rep Electromed’s in incredibly are quarter million segment, increase care team's of our our end Our indicates revenues. a exceeded the supply what previous record We clearance driven the the them current driven the this record devices. fiscal XX:XX SmartVest the the fiscal a revenue footprint goal. the the values growth a of fact from mentioned which help and of strong is first-six XX:XX execution months our XX:XX through in the growth our XXXX second significantly year-to-date the to of an of diseases. been on their achieved

and per in direct we strengthened strong achieve rep, and annualized rep, significantly to with note are our I'm we continue staff of selling our hire training to pleased our fill sales that top has helped recruiting levels. work care impress range all $XXX,XXX of also which to ensure team $XXX,XXX $XXX,XXX. XX:XX to us Since our above leveraging these entire process, home internalized on-boarding productivity sales we our targeted last While, the territories. to productivity we XX including to call, support positions, have talent are functions

If you recall, we revised productivity target upward last quarter.

I on job our will plan: they're initiatives four of when provide by these the supporting team further Clearance we direct been sales touched second clinical Looking continued patient. initiatives technology positive force Airway growth bronchiectasis infrastructure environment, As XX:XX ground marketing, to beginning Clearance areas we with continue growth, SmartVest doctors strategic XX:XX ahead path. has a on of we to to to and done has consecutive SmartVest. selling studies to challenging anticipated limited. sales our the to outcomes generation access on for As an earlier, will excellent evidence of to revenues in and and pay next ability evidenced support ahead are quarter our this growth we believe promulgate its looking consumer are growth, to also in this focus body Airway the strategic continue off new Alongside our break record key

key compelling based company value-added diagnosed Data there the necessary people promises resources and on track we a complete development HFCWO true penetrate untapped population. as and of subsequent commercial confident by visits research clear in XX:XX benefit We a on SmartVest. allocate next in performance group. patient are fiscal from group be these that expanding a of half of as be SmartVest of to studies ensure new is to and to Officer. the and XXX,XXX the we have seek continue Clearance improved also first and for the new new SmartVest. the to bronchiectasis. the System will Chief hospital we to to Importantly, pulmonologists to are focus I indicates infection. to patient launch to Mike currently prove support Airway continue Commercial lighter-weight, to XX,XXX to to and approximately SmartVest treatment evidence of a will supported it, will SmartVest same easily more XX:XX treated and generating has therapy. allowing our only could We Evidence the therapy. during recent value clinical provide breath current proposition multiple innovation new with This and we on And an market XX:XX potentially search that benefit Before will launch SmartVest estimate model to job The we graph, results, turning (ph), deep the generation you remain a financial XXXX. are reduction for HFCWO U.S. sacrificing that our with bronchiectasis without smaller and use that call competitive demonstrate and discuss the competition with value to update patients over it in less deliver published This as should both advantage, see want product than all being on the therapy. telling is this our our date SQL more shown The expensive significant the differentiation take for to make XX:XX

we starting the key oversight critical As Chief sales to initiatives direct that and role pay marketing strategy a Electromed further the role shared have an energy our revenue execution earlier, strengthen and is will in for are Commercial will growth. This Officer that to provide additional off. of strategic support

the you Chief qualification on our our turn Mike, to selection call value of the pleased stages that, been XX:XX and financial Commercial new I Currently, candidate. progress. Financial on over our Mike? these We the to discuss With extremely look to our Chief updating forward will with Officer confident are results. and shareholders. XX:XX will in the our create process have the for of Officer investments are we that We help our optimize return final

Mike MacCourt

Thank XX:XX everyone. good you, Kathleen and afternoon,

quarter. by XX:XX focus Electromed Gross selling from key this is in International million increase priority quarter sales of $XX.X quarter from $X.X million fiscal of X.X% increase driven XXXX, XX.X% in COVID strategic Our which and and costs increased revenue in earlier, X.X% this is the X.X% revenue hospitals the increased net $X.X one due percentage was XX:XX to revenue. to revenue $XXX,XXX. XX.X% volume the growth second shipping costs. was $X.X balance to heavily Electromed purchasing increase productivity approvals. in XX:XX our XX:XX revenue for overall an to Home impacted to year distributors. The profit XXXX key increase quarter to distributor driven representative period, by in decrease $XXX,XXX in quarter not quarter primarily to rising increased of to The this normal in more primarily and of $XXX,XXX higher quarter of from garment to by of second continue in the the increase to second net an in to declined our sold, million for direct care to quarter of benefitted this from by XXXX. fiscal this due to home referrals X.X% was Institutional XXXX XXXX. XXX.X% or primarily or revenue of mentioned the noted As gross activity net and in The second million to our returned in in dollars gross care increased the compared Distributor profit fiscal raw cost care compared and revenue trend revenue home profit last earnings fiscal year increased stronger which devices sales XX. million an material distributor primarily revenue. call prior-year due had an increased and period. distributor due We $X.X during Kathleen revenue the prior representative as of expect increased a increased

expenses the increase increased of gross a range. our We fiscal device. general future year lower mid-XX% our fiscal in infrastructure gross $X.X and XXXX, second margin an in XXXX, expect support million which the in quarter launched margin end in historical XX:XX fiscal is year projects to percentage to XXXX from the investments profit to both to fully compared of is $X.X increased commercial gross prior Selling, year current in growth. period, the product of expansion do percentage to structure device range expect percent once remainder and our cost We reflecting million next-generation the our in low be administrative for due on

personnel, to second second compared revenue, percentage We fiscal of higher sales reimbursement process and for travel quarter entertainment, a infrastructure net new resources payroll higher a customer fiscal implementing travel compensation-related the related Higher restrictions due representatives costs investments, marketing professional XX:XX services resuming primarily and increased implemented incurred management in higher temporary resources of in driven and XXXX of were in in sales quarter system, revenue a to optimization of revenue number and XXXX. Higher in expenses our team meals professional to to to our levels travel June SG&A prior to average management systems including system, XX.X% on payroll assist expenses payments As the higher due further to to increased fees year of incentive XXXX. with closer COVID-XX entertainment to enhancing of revenue. patient higher of XX:XX and the year. the the was SG&A home travel XX.X% were compared an fees. investments care normal the were increase ERP compensation, primarily our Higher compared primarily that meals system and key and referrals, infrastructure, cycle expenses system relationship prior

scalable fiscal totaled We and of processes net business XXXX $XXX,XXX X.X% revenue prior XX:XX second efficient or the these and investments development infrastructure to expect performance. quarter period. in to drive analytics revenue the provide year net system $XXX,XXX of X.X% comparable compared expenses of Research and will enhanced in more or result operational in

$X.XX fiscal next we XXXX Operating XX:XX for the moving generation half the per or $X.XX and full the mentioned, $XXX,XXX our clearance rates. this continue the fiscal $XXX,XXX second in this the performance. compared be fiscal of first fiscal the XX.X% sheet following in and expense XXXX. our and was million in The by Drug fiscal to $X.X flows. quarter quarter share fiscal strategic Kathleen Administration. second effective XXX(k) totaled million expect tax cash we tax of in income SG&A product the the share rate tax XX:XX reflecting quarter totaled XXXX partially by XXXX second statement XXXX. compared Food Net per the rate compared of quarter fiscal effective historical income Income stronger of of to of to recent income XXXX, in U.S. year in fiscal As diluted Now investments in second of the of one balance million and the to of offset to quarter line device or the increased quarter with second invest our launch $X.X revenue quarter, for to in XXXX diluted tax quarter second to $XXX,XXX $X.X expect in

million. includes accounts of Our completed activities no as provided working of million of of $XX.X debt, of recently totaled million, shareholders' the cash million, $XX.X sheet cash equity December and in $XXX,XXX $XX.X capital balance most XXXX operating $XX.X receivable by Net quarter.

our quarter, we key shares priorities include total $XXX,XXX. reinvestment continued priorities and also at future our allocation During cost the share for a of in our XX,XXX XX:XX repurchase repurchased plan. We and strategic third continued Electromed in core questions. appreciate year. on capital of to Finally, will fiscal pillars delivering four quarters fourth your the support and look of of call forward open the now for strategic XX:XX We our

Operator

will Colliers. conducting question Instructions] Please with proceed [Operator session. be is we question. question-and-answer time, Bauser this with Our a At Kyle first your XX:XX from

Kyle Bauser

updates XX:XX Hi. here. Thanks for the Good afternoon. all

next-gen Did kind system to offset given and of higher Thank given fixed, make, quarters sounds factor. correctly? be will that for costs presumably as here higher would So, to of since increased you. like I course it's form the these price any of and of so, some couple its reimbursement but immediate great? extent margins pressured like be material raw it shipping sort thoughts of it Could is understand some that cheaper smaller a sounds that costs,

Kathleen Skarvan

It's And cost supply quarter Kyle. chain and you. also Good last here. the are higher from components hear we that is shipping and providing Thanks question. the mentioned Kathleen to Hi, expediting XX:XX constraints there occasionally costs. fees for that yes,

on. the The So lower next forward. materials generation, we expect cost other structure structure as margins those our about we was 'XXs your those in to on absolutely. build Yeah. lower be the cost go question will for And mid

we We are first SmartVest the margins of regain be a expect SQL that bill would lower introduce some the, still will anticipating materials, in where to XXXX. our half we as so then that current fiscal of that's and that

Kyle Bauser

be sort make any much next-gen mean, ballpark the I to you. of Got will range cheaper version? how XX:XX of it

Kathleen Skarvan

of Well, situation. XX:XX we're amount our gain that that dealing it's be initially, we chain because more we'd as I component that with costs to shipping. expect beyond improve we with, then substantial of might that And going traction volume think offset it a those supply being the that

Kyle Bauser

XX:XX of Appreciate best-in-class there that. with. and And take ahead on, certainly massive then, prevalence mean I bronchiectasis, share thoughts got for you. advice a pool you've any a can you Got big opportunity you

that products any any in busy. SmartVest if make bag in sense to point layering be maybe and specifically able kind that call of at reimbursement keep of just just I'm to have curious you remote more to monetize the on out would plenty the utilize can so came And of through pulmonologists same just that on new through that you kind kind curious, thoughts additional in products monitoring code that? way multiple those curious maybe therapeutic would

Kathleen Skarvan

that under-penetrated Kyle. some XX:XX We're around if in opportunity open right believe always absolutely up might course is mentioning additional of product, and come we an market. this you're But that do

think that additional opportunities future. features then with our And innovative see that next the of tap to still course, that's as very helpful we're for from market generation not about in excited HFCWO the be into the going We well penetrating market share us product, We be we to therapy. patients providing. immediate are to that that are continue and those going the benefiting

for that their if an of focus codes the as physicians that still far will opportunity we're again, the that our But benefit for on some monitoring research our monitoring wouldn’t those and opportunity. be lap and I So remote well course. term in remote near continue in-depth us, those call our new physicians to devices. that understand. As to ignored and remote that that doing monitoring we aren't be care aware think Could be on codes, might as dropped codes were some have home companies for of there for on as for XX:XX

And opportunity value-add. that as better so monetize some the Connect could a to SmartVest there physicians, for be our or leverage

information we're comes new you what the in assessing for this maybe. update At we'll opportunity that. So as the still about time,

Kyle Bauser

guess, been mean higher lastly, massive to lot maybe in a you. but cost out prevalence there acquire, opportunity appreciate here. is back seeing that. with the probably it look presumably, there it's for and I of treated I untapped to is then Got to you the XX:XX pool opportunity patients acquire is they're at the to circling that than have kind a And just of those entering SmartVest of patients been harder diagnosis kind for HFCWO if never what's that's to much or prescribe selling SmartVest, a a incident. what's asked prevalence pool someone, through the of acquiring while wondering, I'm or I the just there maybe it's different costs in initial associated way, out market with kind patient people been the first the at a looking we're dealing if entering are that of this have long with those just add time, market time? your who just to starting versus mix have of new for the exacerbations for the

Kathleen Skarvan

XX:XX Thanks ways patients. Kyle. for that two that question, I typically will at of pool that look There's

opportunity pulmonologist physicians about bronchiectasis patients. to why haven't and these these proven when hospitalizations improve HFCWO exacerbations prescribe quite outcomes and believe repeat that's so selling The two majority five is we've cough us, visiting asking there, HFCWO that be patients it's time been for had it talking have We their years, be it So they or and physician reduce they've been them often of could infections could lower exacerbations diagnose with period of be have of for to to those our that -- have that patients chronic are for opportunity. a quite, research repeat are bit respiratory have time. been based physician a a for care that with the primary that's of the part that working experienced and and on done and prescribed And struggling -- but years, process. that

that's our of that through and is that the patients. our is direct-to-patient So pool been it's patients physicians When HFCWO of XX:XX opportunity, that's so we're who as have large there said seeing absolutely. -- selling I marketing. part targeting, bronchiectasis not those are and process The using other that

them my our lower and to where Why infections them then, as or patients as being conversation, they sick their their sign friendly them how times takes up. our dad, are helpful. we're why We marketing words, website. have benefit we could SmartVest searching, bronchiectasis directly they on up -- phone follow send their on well So, And and and of X information them to through my SmartVest to to help that's call who to chronic physician, physician to texts a to Internet, them or them What that researching with on key help who We these are has direct when with they're and as understands of be caregivers. the respiratory we of and putting or continuing sick and X in might to what talk times, then situation how some condition. have me been diagnose their talk up me, hospitalized about those comes can and can about when the keep HFCWO we SmartVest antibiotics. you're a pops mom,

to patients your SmartVest. are that's I great question really to how a new is question continuing think and So that help bring we

Kyle Bauser

XX:XX Excellent. Kathleen. Super the record on and Thank you, results. congratulations helpful

Kathleen Skarvan

you. XX:XX hear Great so to much. from Kyle, thank you

Operator

the reached turn I session. will of And closing for the to have the over now question-and-answer We remarks. management call XX:XX end

Kathleen Skarvan

of a thank this year our quarter you May, a call. Please our continued joining reach to firm look third Electromed and will to our afternoon. have the back results. scheduling forward meantime, follow-up for call to evening. in you out when for great we release all We you reporting your you if support ICR XXXX in Westwicke, Investor fiscal interested Thank Relations In are XX:XX

Operator

this today's at XX:XX may conference This and disconnect concludes you time. your you Thank for your lines participation.

Electromed (ELMD) 8 Feb 222022 Q2 Earnings call transcript