11.12.14
New Prague, Minn.-based Electromed Inc. has had its best quarter yet with net revenues for first quarter 2015 rising 40 percent from the same quarter last year. Net revenues for the first quarter of fiscal 2015, which ended Sept. 30, rose to $4.8 million, compared to $3.4 million in the first quarter of fiscal 2014. The company reported net income of $378,000 for the first quarter of fiscal 2015, compared to a net loss of $335,000 for the same period of fiscal 2014.
“The first quarter results are further evidence that we have made significant progress on our strategy to strengthen and grow the company’s core business, as demonstrated by our strong revenue growth which resulted in improved profitability and cash flow,” said CEO Kathleen Skarvan.
Growth in total net revenues was attributable to strong results in the home care market where sales increased by approximately 35 percent, or $1 million, compared to the same period of fiscal 2014. Home care sales increased due to continued improvements in the company’s reimbursement operations, including new third party payer contracts and process improvements, which led to faster approval cycle times, higher average selling price and greater referral to approval percentage. International sales increased by 168 percent, or $250,000, due primarily to the favorable timing of orders placedby international distributors. Institutional sales increased 25 primary, or $105,000, compared to the first quarter of fiscal 2014.
Gross margins in the first quarter of fiscal 2015 improved to 69.1 percent from 68.9 percent in the first quarter of fiscal 2014 as stronger revenues offset the higher manufacturing costs for the SmartVest SQL product as compared to the predecessor product, SV2100. Over time, the company expects to bring manufacturing costs for the SQL product roughly in line with previous products. Operating expenses, which include selling, general and administrative (SG&A) and research and development (R&D), declined to 61 percent of sales compared with 86 percent of sales in the first quarter of fiscal 2014. The decline resulted from the higher level of net sales in the first quarter of fiscal 2015. Operating expenses rose slightly due to higher sales commission expense and additional personnel in the reimbursement area, offset by a reduction in R&D expenses.
The company generated $945,000 of cash flow from operations in the first quarter and finished the quarter with over $2.2 million of cash on hand.
“The fundamentals of the quarter are encouraging, including the market’s acceptance of our newest generation device, the SQL, and I believe there are opportunities for us to expand our market share,” said Skarvan. “Amidst the challenging reimbursement environment, we have streamlined our reimbursement and enhanced the customer services processes and are having more referrals approved resulting in higher net revenues. We are continuing to upgrade our sales team to maximize their productivity and effectiveness and improve domestic home care lead generation, our highest opportunity for sales growth. I am very pleased with the way the Electromed team is delivering against our operating plan and our progress toward delivering profitable growth that is sustainable beyond fiscal 2015.”
Electromed makes products that provide airway clearance therapy to patients with compromised pulmonary function.
“The first quarter results are further evidence that we have made significant progress on our strategy to strengthen and grow the company’s core business, as demonstrated by our strong revenue growth which resulted in improved profitability and cash flow,” said CEO Kathleen Skarvan.
Growth in total net revenues was attributable to strong results in the home care market where sales increased by approximately 35 percent, or $1 million, compared to the same period of fiscal 2014. Home care sales increased due to continued improvements in the company’s reimbursement operations, including new third party payer contracts and process improvements, which led to faster approval cycle times, higher average selling price and greater referral to approval percentage. International sales increased by 168 percent, or $250,000, due primarily to the favorable timing of orders placedby international distributors. Institutional sales increased 25 primary, or $105,000, compared to the first quarter of fiscal 2014.
Gross margins in the first quarter of fiscal 2015 improved to 69.1 percent from 68.9 percent in the first quarter of fiscal 2014 as stronger revenues offset the higher manufacturing costs for the SmartVest SQL product as compared to the predecessor product, SV2100. Over time, the company expects to bring manufacturing costs for the SQL product roughly in line with previous products. Operating expenses, which include selling, general and administrative (SG&A) and research and development (R&D), declined to 61 percent of sales compared with 86 percent of sales in the first quarter of fiscal 2014. The decline resulted from the higher level of net sales in the first quarter of fiscal 2015. Operating expenses rose slightly due to higher sales commission expense and additional personnel in the reimbursement area, offset by a reduction in R&D expenses.
The company generated $945,000 of cash flow from operations in the first quarter and finished the quarter with over $2.2 million of cash on hand.
“The fundamentals of the quarter are encouraging, including the market’s acceptance of our newest generation device, the SQL, and I believe there are opportunities for us to expand our market share,” said Skarvan. “Amidst the challenging reimbursement environment, we have streamlined our reimbursement and enhanced the customer services processes and are having more referrals approved resulting in higher net revenues. We are continuing to upgrade our sales team to maximize their productivity and effectiveness and improve domestic home care lead generation, our highest opportunity for sales growth. I am very pleased with the way the Electromed team is delivering against our operating plan and our progress toward delivering profitable growth that is sustainable beyond fiscal 2015.”
Electromed makes products that provide airway clearance therapy to patients with compromised pulmonary function.