Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to Electromed’s Fiscal Second Quarter Earnings Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mike Cavanaugh, Investor Relations. Thank you.

begin. may You

Mike Cavanaugh

XX, thank Earlier and the joining Electromed website ended the fiscal available is Good the on Electromed you Inc. call. company’s December quarter the today, of www.smartvest.com. for The released earnings release quarter currently afternoon, at XXXX, for XXXX. financial second results

Brad today Officer. Financial the Joining Skarvan, and Chief me call on Chief Nagel, President Kathleen is Executive Officer; and

this and of management financial plans. achievements call that to subject future everyone date. today’s represent get considered projected. that to risks or could different some materially will and started, statements make from those statements the operating Such we including on uncertainties statements are Before statements, be remind Any that are performance company’s forward-looking as statements cause expectations results I’d of actual such to management’s the like about and

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

now turn and of over to the Kathleen CEO Skarvan, President call Electromed. will I

Kathleen Skarvan

at first cash of million. in fiscal million, compared fiscal everyone joining first increase resulted six in improved a year-over-year record to you, period same and Mike the a and were strong XX% Electromed’s hard work XXXX. also call the second Revenues the revenue from the a team’s $XX.X thank you flow months for for record fiscal today. quarterly It the XXXX quarter. an record Thank revenue $XX.X is me for the in to pleasure operating results report to margin The resulted quarter our of as net

efforts the anticipated in the and commercialization The Clearway macroeconomic quarter November, allowing next-generation December. device team’s certain this Airway with Clearance to limited on continue weigh in costs commence XXX(k) lingering pressures I’m highly clearance shipping record availability. for highlight FDA our despite the of to the component System inflationary receiving that of and especially proud component of SmartVest from

smaller, all the and are sacrificing easier benefits chest-wall than achieved comfortable on and efficacy. market oscillation high-frequency to is Clearway systems these The without more any use other

that of airway organization therapy antibiotics traction and bronchiectasis treatments. to We are confident growing clearance focused the gain percussive manual as market HFCWO turn solid who improved it legacy an will patients singularly to brings over our increasingly other therapy,

in estimate from extremely received beginning shipments patients during later three. our volume of our have fiscal positive Clearway We feedback quarter and limited commercialization

and we the SQL mix Although, year. Clearway expect of through the our previous generation fiscal

of to rep per the to fluctuate $XXX,XXX in we in get the to sales as year-over-year our was target generate our investment productivity Referrals a productivity. in quarter, range onboard their of were per $XXX,XXX solidly The return the continues force as quarter-to-quarter team rep. expanded our expect $XXX,XXX strong sales personnel We do on and within they team. ramp resolved level and new higher this that quarter

the long over we However, term. improve will continue productivity expect that to also

do impressive Chris team, Holland, their productivity. reach the referrals incoming sales hired converts the our improved overseeing into ended Chief Commercial staffed while fully XX per burden reps and We efficiently administrative remarkable sales productivity Officer, and newly expanding with take approvals also the and feat has team to as time done job an the in a and reimbursement the rep, targeted which quarter shipped a providers have patients reps from product. takes

tied patients. both end renewed to the set COVID-XX, public to CMS was again which Human Biden once The CMS volume some for hurdles, the again waiver, April May to easier previously making bureaucratic benefited benefits public they providers faster, through the public the and Referral was removes process health COVID-XX XX, emergency Services from prescription one expire. for and recently, the current after And waiver, XX. and month emergency health communicated emergency the Health health by plan administration which on that

action we devices, waiver typically CMS government, of expect from the indications for certain and waiver The May terminate XX HFCWO. the U.S. including further be to Without allowed the federal respiratory not required benefit documentation will enforced.

followed requirements of reimbursement. HFCWO not very waive most do we and these well, to health since and them requirements public plans So during emergency, emergency. termination revert upon commercial public most insurance understand health too, for these the will We pre-COVID they physicians did requirements the pre-COVID-XX, CMS

will average be expect submitted Medicare During our frame quarter referrals an like or pandemic, to we COPD, fiscal may with not covered canceled to time patient for and CMS pre-COVID-XX referral-to-approval four, appeal. extend, need the do be diagnosis the

plan have waiver place adding impact the temporary the We a reimbursement education which minimize extensive in capacity. of to includes the anticipated termination, on and change physician

being all ClearwayVest them Turning and among these to continued growth the initiatives. see of our of clearly We force finalizing an across and update [ph]. of is key on strategic to strong areas. development initiatives, extremely commercialization both the new sales the in progress our have It expansion the strategic beginning gratifying growth momentum

a our goals key of treatment strategic for supporting other use is of HFCWO therapy the to data and One SmartVest bronchiectasis. further generate the as

enrolled bronchiectasis three. site begin total enrollment will an been XX% Our enrollees. patients the fiscal prospective with has XXX additional at and for approved multi-site enrollment, To outcome in increase study intended is quarter

quality-of-life International we quality-of-life recently Our was outcome presentation patients completion, and Society at outcome COPD the paper were as that an American near bronchiectasis is accepted our oral May analysis informed with XXXX study Conference. study Thoracic

therapy, supporting data with are active generate and space. who to awareness leaders, to opinion which clearance in is the airway designed are SmartVest key physicians intended raise HFCWO studies Our

initiative demonstrating in full Our direct-to-consumer designed beginning at bronchiectasis. to synergistic the final is final targeted approach approval the impact are working. focused efforts fulfillment with physician and to to the therapy our patient push who a initiatives that cycle is all are of the strong treatment, our and well and order marketing as four device HFCWO These awareness results The on as as through of growth sales vital treat pulmonologists way are patient.

And the consistent address have an leading sales to had appointments future expanded that and and and of since Chair is prepared I afterwards, senior and X, profitability key and recently step tripling nonemployee the away. to for of since CEO With XXXX, for remain support of a qualified that identify in for pending revenue will assured To targeted successor. the remarks, I closely made, achieving being work of to Electromed the next-generation of experience and member your Board Board is I rest company and want Directors. the a effective retirement my date announced to XXXX. like all and shipped, time place July years. force well I recent XXXX, wonderful a The over approved you the overseeing positioned as transition. my our long-term success, close I I’d product thank retirement CEO is my with concluded now a will highly

I’d the of a call that, to our for Brad financials. over hand review to With like

Brad Nagel

a direct the in quarter Thank an year. operations you, supply in in $XX.X same slightly and Kathleen. the were year-over-year primarily sales over due offset increase approvals, XX% the and by from Net same for interruption revenues the of made associated growth chain revenue increase a for the prior by the temporary $XX.X in was period the million, prior was were which the referrals XX% representatives million, Homecare quarter period possible and increase to in This in was our year. increase quarter. a

distributor basis, XX% in revenue. our and at revenue waiver affected that Homecare can As $XXX,XXX, XX%, year. our benefit the Homecare purchases Medicare a the of the distributor from portion in quarterly fiscal referral by Kathleen Homecare distributor mentioned, sales of decrease year of year-to-date the period growth to the of the was quarter year-over-year are significant on at midpoint same continues the cause fluctuations revenue XXXX. for our reported CMS prior a timing remains

Institutional revenue was increased for due customers. or revenue increased sales was to XX% the the decreased by by $XXX,XXX quarter. institutional primarily International and XX% capital $XX,XXX $XXX,XXX to quarter, for or and $XX,XXX

FY to increased of million XX% or $X.X to revenues compared million gross of Gross XX% net The in the of profit QX XXXX. net for or in revenues quarter $X.X decrease net prior same to costs expedite by due was inventory a year expenses primarily shipping purchases. to material as the revenues and the of to compared in percentage higher period increased profit

While these gross in percentage we improvement the saw higher of QX, anticipated, significant mid-XXs additional rate rate half as costs sales. December of our back up profit margin in back were than with a above

or QX, departments, an The in representing expenses Selling, $XXX,XXX period of same representing compared primarily increase prior headcount general growth. and in investments year. in and our to additional XX% due sales to the increase the $X,XXX,XXX was were reimbursement our for administrative

to $XXX,XXX the of of year entertainment or The of compared expenses higher of XXXX. $XXX,XXX were was sales Travel, increase impact direct pressure. representing meals QX, average to and for representatives increase an due number QX fiscal XX% inflationary and

Operating XXXX increase $X,XXX,XXX income primarily in in to revenue due for the prior year. was operating QX $X,XXX,XXX, offset headcount compared partially same quarter The our growth, in growth by increased FY for $XXX,XXX year. same operating in and the QX Net for was prior the period for income income the other $XXX,XXX the of was FY reflecting expenses, period to expansion compared initiatives. XXXX to

of of increase XX, QX. the over XXXX, $X December $X of an position about in cash, cash had at of million $X million As end Electromed our million

capital working $XX $XX We $XX and with of of equity total in receivable, million accounts million. also closed shareholders’ QX million

of please that, call With to the we’d Q&A to call. to open Operator, the the like move questions. portion

Operator

question. Instructions] Lake Brooks [Operator you. Our the your line comes with with O’Neil from first question of Street. proceed Please Thank

Brooks O’Neil

and But in the on and noticed afternoon are congratulations lot than website at always known – no, was a Yes, on the right CNBC taking same life, good much we’re thank of retirement. website, everyone. so congratulations I looking smarter me and Yahoo! you you that. the here you’re steps terms I very age. or I’ve the your Kathleen, your

Kathleen Skarvan

That’s thank Brooks. Well, very kind. you,

Brooks O’Neil

me response. acceleration we expect here. that and the rate growth. let I’m guessing you of some couple questions I reasonable just Is SmartVest the continue ask positive that, new overwhelmingly a sales the the expectation? first, limited as in of So mentioned guess, of you commercialization a rollout, should that you

Kathleen Skarvan

lighter of are excited limited a that, that certainly we and ease overwhelmingly really the use. but We commercialization that around revolves primarily the and receiving the maybe initial positive what call feedback release we it weight, are from

and our We interface, have innovative with user a patients. and that’s very really resounding unique well

be So patients preferred well. so our on share could growth growth. us market it our that to and our Absolutely. great yes, important as we our that’s device device, ongoing as will contribute it and a expect it work as the physicians to do be, a far that And with Clearway will product for sales for

Brooks O’Neil

Absolutely.

a had really expire the any waiver effect we during with chance of mentioned maybe CMS see, you you it the on later maybe health place? this expiration patients the positive waiver, pandemic, leave inevitable So that do it’s the the should of emergency waiver they’d think that will the in spring? termination Or a, almost or

Kathleen Skarvan

I we spring. that that, CMS. think important. you’re been really Society studies study challenged with And American I sharing is do to the toward have be many health do receive mind so with the like have this presented is going that And COPD comments, previously I we’re are patients, The share it could will – in is although is at of mentioned SmartVest that the patients we the very change for to serving might comment that it my relevant. leaning emergency, that expire a idea Thoracic more public that reimbursement

minimal right. to prepare assure absolutely will sure. I happen? expire business. Do But to if that Not on we’re think that’s going if know that’s impact You’re to quite possible? as has it I going it Yes. Do

Brooks O’Neil

sense. Makes Absolutely.

extent, should do supplies. those just by chain better me as two that One, sounds we to begin like some yet? the Is your moderate the that some were more things disruptions getting and, see of disruptions, add out you ongoing to with to year? Or expect the same inflation we expectation going it quick will through Let extent more disruption, it ones. affected supply access to rest there are the of forward. you go Or any evidence

Brad Nagel

the for question, Thanks Yes. Brooks.

You’re experience did supply intermittent right; certain components. delay we some on

Fortunately, had minimal impact our it quarter to overall.

into add year. our impact minimize So, fiscal have in and to that increasingly of place landed. half we’re monitor to to we of better suppliers happy the continue And as and manage suppliers closely we’ll with with move where our we feel customers those that back really like plans all we we’ve our

Brooks O’Neil

Sure. Makes sense.

seeing in by there structure you The space. me what relates two? or one in right Can one, ownership bit I Let appreciate the just last to been your year particularly your competitors the over in there’s quite marketplace ask the and of all consolidation have competitive on changes comments. out affected some now, last you’re comment or a of who as been it environment,

Kathleen Skarvan

position highly efficacious and very continue device SmartVest awareness gain really be market. throughout to airways. and with We brand to States pleased as a United continues the in with high-frequency clearing our for chest-wall oscillation physicians the

as We forward for are not and to certainly we’re us for that competitors, much issue continue about being attention to going grow. paying us thinking but too to an

So it’s not that issue concerned right now, an totally we’re really about.

visit think Hill-Rom access continue with to those for going well. vulnerable, that’s We and to Clearway, share a to competitive we opportunity to are brand. think great continue our accounts those physicians And to that RespirTech to as we and continue also be

Brooks O’Neil

going questions is to my congratulations taking Great. what sure and a again, Well, you I’m future. be on great thank for

Kathleen Skarvan

Brooks. you, Thank

Operator

questions the for closing Kathleen further queue. the are hand to back I’d Skarvan There no like to remarks. in call

Kathleen Skarvan

thank for always, and for much very interest you us today Electromed. joining in As your

our to excited we’re scaling XXXX beyond. to growth in We of Clearway continue and plans, we execute against look calendar the of as strategic and distribution forward

you reach to please partners out good call, If much, and schedule have Thank at you a so a Relations Westwicke. follow-up Investor ICR to like evening. would our

Operator

does this you Ladies and for gentlemen, participation. your teleconference. conclude today’s Thank

You and day. time, may have wonderful this at disconnect a your lines

Electromed (ELMD) 14 Feb 232023 Q2 Earnings call transcript