Electromed, Inc. (ELMD) Earnings Call Transcript
November 13, 2020
Earnings Call Speaker Segments
Good morning, and welcome to Electromed's Fiscal 2021 Annual Meeting of Shareholders. Most shareholders have already voted by proxy, and the proxies have been tallied. If you are a shareholder of record or a beneficial owner in possession of a legal proxy from your bank, broker or nominee and you want to vote your shares now or change your vote, you may do so by -- during the meeting by clicking on the Vote Here button at the bottom-right corner of the webcast screen. Shareholders are also able to submit questions electronically during the meeting by typing the question in the box located at the bottom-left corner of your webcast screen. Your question will not be visible to other attendees. Representatives of the company will have an opportunity to respond to questions received during the meeting at the conclusion of all prepared remarks to the extent that time permits. I would now like to introduce Steve Craney, Chair of the Company's Board of Directors. Please go ahead.
Thank you, Deborah. Good morning, ladies and gentlemen. Welcome to the Annual Meeting of Shareholders. It is now 9 a.m., and the meeting is called to order, and the polls are now open. I will serve as Chair of the meeting. Joining us virtually are Kathleen Skarvan, our President and Chief Executive Officer and a member of the Board; and Mike MacCourt, our Chief Financial Officer, who also will serve as Secretary of the meeting. All our current directors and nominees are in attendance electronically as well. In addition to myself and Ms. Skarvan, we have Stan Erickson, Greg Fluet, Lee Jones, Andrea Walsh and George Winn with us today. Also present is a representative of RSM, the company's independent registered public accounting firm; and Tony Carideo, who has been appointed to act as inspector for the meeting. Mike, will you now present to you the details of today's meeting.
Good morning. The record date for the determination of the holders of the company's common stock entitled to receive notice of and to vote at this meeting was fixed by the Board of Directors to be September 16, 2020. An affidavit of mailing has been received from Broadridge attesting that a notice of Internet availability or a full set of proxy materials was distributed to each holder of the company's common stock as of the close of business on that record date. The affidavit will be attached to the minutes of this meeting. As of the close of business on the record date, there were 8,601,234 shares of common stock issued and outstanding, and each share is entitled to one vote. The inspector of election has informed us that on a preliminary count that are represented at this meeting, either in person or by proxy, holders of at least a majority of the outstanding shares of common stock, constituting a majority of the votes entitled to be cast at this meeting. Therefore, a quorum is present for the transaction of business, and the meeting can proceed.
Thank you, Mike. Please note that the polls will be closed shortly. We will now take up the business of the meeting, which consists of 3 proposals: the first, election of the directors named in the proxy statement, thereby setting the number of directors at 7; secondly, ratification and the appointment of RSM as the company's independent registered public accounting firm; and third, approval on a nonbinding and advisory basis of the executive compensation disclosed in the company's proxy statement. The polls are now closed, and a final report of election will be prepared.
Thank you, Steve. A preliminary report of the inspector of election indicates that each of the 7 Director nominees received the affirmative vote of plurality of the outstanding shares present at this meeting and entitled to vote. Accordingly, each has been elected to serve until the next annual meeting of shareholders or until a successor is duly elected. Additionally, the size of the 7-member board is confirmed. The proposal is to ratify the appointment of RSM US LLP and to approve our executive compensation on a nonbinding advisory basis, each received the affirmative vote of a majority of the outstanding shares of common stock present at the meeting and entitled to vote, and therefore, each is also approved. The company plans to report the final voting results on our current report on Form 8-K.
Thank you. There being no further business before this meeting, I declare the business portion of this meeting adjourned. Our President and CEO will now make a brief presentation. Kathleen?
Thank you, Steve. First, however, I want to caution all in attendance that my remarks and those of any other Director or officer of the company may contain forward-looking statements that involve risks and uncertainties. These forward-looking statements are not a guarantee of our company's financial performance. Actual results could differ materially from those projected in any such forward-looking statement. Additional information concerning important factors that could cause results to differ materially from those indicated in any such forward-looking statement is contained in the company's reports on file with the Securities and Exchange Commission. Good morning, and welcome to Electromed's Annual Meeting of Shareholders. I have a short presentation prepared, followed by a question-and-answer session. Please be advised that -- of our forward-looking statements in the presentation. First, a few financial highlights from our fiscal year 2020. This was the sixth consecutive year of revenue growth, although this past year, our quarter 4 revenue was significantly impacted by the COVID-19 pandemic. Despite this impact, we still grew revenue 3.7%, a new record for the company. We improved on profitability with $4.2 million in net income and an increase in our cash position to $10.5 million. In support of continued revenue growth, we also wanted to share how we're working to increase market share and influence more physicians to use HFCWO therapy with their patients. And one of our key progress areas was the significant improvement in our home care sales productivity as measured by our home care revenue per direct sales rep of $839,000. Also, we had results of 25% year-over-year institutional revenue growth. We kicked off a prospective bronchiectasis outcome study, strengthened our digital marketing to consumers to lead in the direct-to-consumer channel, completed a building expansion, launched work on our next-generation product, and launched our home care distribution channel while successfully transitioning our CFO position to Mike McCourt. Turning now for an update on our response to COVID-19 pandemic. The COVID-19 pandemic did dampen face-to-face interaction industry-wide among clinicians and patients. We acted quickly, though, to adjust to selling and delivering our therapy safely and within state restrictions. That response included at accelerating virtual sales and patient training efforts. We boosted our direct-to-patient marketing and generated awareness for the Centers for Medicare and Medicaid System waivers that temporarily relaxed those rules for prescribing SmartVest. As we entered fiscal 2021, we did experience an upward trend in physician offices reopening and clinic activity and our home care referrals approach near pre-COVID-19 levels. For those shareholders that may be newer to our story, let me summarize who Electromed is. We are a profitable, growing medical device company with innovative airway clearance products. Our primary model is direct-to-patient and provider, and we do provide a very key and proven therapy, high frequency chest wall oscillation. We improve quality of life and reduce risk for infection for those patients that use SmartVest, and we're guided by an unwavering passion for our patients and those customers we call on. Our value proposition is our promise to our patients and physicians and is paramount to our success. First, our therapy takes the pressure off patients, proven in an independent engineering comparison test with our competitor products. We have the -- and we have that pressure that's taken from the patients because of the release of more air between compressions with SmartVest. Second, and as important to our physicians, is that comprehensive patient support, providing patient training virtually and in their home and where a patient can speak directly to a respiratory therapist any time a question arises, and of course, our lifetime warranty. I so appreciate this testimonial from Nancy, who states that she has 2 pulmonologists. One didn't think SmartVest could make a difference. The other insisted that she try it. And after using it for less than 2 weeks, she was able to sleep through the night, and she says that's a life changer for her. Additionally, our third promise is taking the pressure off of our clinicians. Our team is an extension of the clinic, and we step in the moment that SmartVest product is prescribed for that patient. We order -- we attempt to continue to implement an order process that is simple at every step. I also want to share another testimonial, but with you when we think about how well this therapy helps patients to live better and breathe easier. This is from Diane, and Diane says, "I was constantly in the hospital with lung infections. My doctors at the Cleveland Clinic prescribed SmartVest. Totally turned my life around, and I haven't been hospitalized in 7 years." We also take an evidence-based approach to marketing, particularly focused on those patients -- those physicians who currently don't prescribe HFCWO. We are the only HFCWO company with multiple published studies showing that bronchiectasis exacerbation rates drop significantly when you use high frequency chest wall oscillation therapy. And we're very proud of the BMC Pulmonary Medicine's published independent outcome study, where it was demonstrated that SmartVest patients will improve their symptom scores and quality of life. Our 2 internal studies through our registry earlier also then were validated by the BMC published outcome study, reducing exacerbations after using SmartVest and also significantly reducing those hospitalizations even 18 months after their first use of the product. The bronchiectasis market opportunity is large and under-penetrated. And we've talked to all of our shareholders about the bronchiectasis disease and condition in that it is a irreversible lung condition characterized by those abnormal widening of one or more of the bronchi. Based on studies, there are approximately 4.2 million people in the United States with bronchiectasis. We believe only about 77,000 of those patients use high frequency chest wall isolation, leaving a large under-penetrated market for SmartVest. Keys to our growth are on the following slide here, and I want to emphasize that these are our key growth strategies for the next fiscal year. In -- we want to be focusing on home care referrals in that largest, fastest-growing segment, adult pulmonology and bronchiectasis. We're also targeting competitive accounts for market share and our prescribing clinics to go deeper and help more patients. We plan to continue to enhance patient and provider support with that best-in-class customer care. Promulgate the body of clinical evidence to influence physicians not prescribing consistently and also continue to develop innovative device features, which we've talked about with our shareholders based on our increase in R&D over the last few quarters and which will continue over the next few quarters as we're working on that next-generation therapy. And finally, continue to grow that institutional market to support the home care growth. Our long-term objectives are clear: low double-digit revenue growth while continuing operating margin improvement. In conclusion, despite the impact of COVID-19 pandemic, we achieved record profitability in revenue in fiscal 2020. While the macro scenario remains highly fluid and uncertain, as we emerge from the crisis of COVID-19, I believe Electromed is very well positioned for long-term, profitable growth and greater share of that large under-penetrated bronchiectasis market, supported by a strong balance sheet, an outstanding team, world-class customer care and, of course, best-in-class product in SmartVest. This ends my prepared remarks, and we will begin the question-and-answer period. [Operator Instructions] Seeing that there are no questions being presented, I would like to conclude with personally thanking each of you for your investment in Electromed, and I'm looking forward to reporting back to you in February when we release our second quarter fiscal year 2021 financial results. Stay safe and healthy.
Thank you, Kathleen.
Ladies and gentlemen, this does conclude today's conference. Thank you for your participation. You may now all disconnect.
Read the full transcript via the API
You're viewing the first half of this call. Get the complete Electromed, Inc. transcript - plus 251,000+ transcripts from 12,000+ companies, speaker segments and full-text search - through the EarningsAPI REST API or hosted MCP server.
Get an API key View API docs →For developers and AI pipelines
Programmatic access to Electromed, Inc. earnings transcripts and 251,000+ others is available through the
EarningsAPI REST API and the hosted MCP server.
Quarterly plans from $105 - full transcripts, speaker segments, full-text search,
and the /api/v1/transcripts/recent polling endpoint for ETL pipelines.