Breaking Down Electromed, Inc. (ELMD) Financial Health: Key Insights for Investors

Are you keeping a close watch on Electromed's (ELMD) financial performance? With a record $16.3 million in net revenue for Q2 FY2025, marking an 18.7% increase from the previous year, and operating income soaring to $2.5 million, representing 15.6% of net revenues, it's clear that Electromed is making significant strides. But what does this mean for investors like you? Dive in to uncover key insights into Electromed's financial health, including a strong cash balance of $16.2 million, $22.8 million in accounts receivable, and zero debt as of December 31, 2024, achieving a working capital of $35.5 million and total shareholders' equity of $43.6 million.

Electromed, Inc. (ELMD) Revenue Analysis

A comprehensive understanding of Electromed, Inc.'s revenue streams is essential for investors seeking to evaluate the company's financial health and growth potential. Electromed primarily generates revenue through the sale of its SmartVest Airway Clearance System and related products.

Electromed's financial performance in recent years reveals important trends in its revenue generation. For the fiscal year 2024, Electromed reported total revenue of $49.4 million, reflecting a 10.7% increase compared to the $44.6 million reported in fiscal year 2023. This growth was primarily driven by increased domestic sales. In the third quarter of fiscal year 2024, the company's total revenue was $12.2 million compared to $11.3 million in the third quarter of fiscal year 2023, representing an increase of 8.2%.

Here's a breakdown of Electromed's revenue performance:

• Domestic Sales: Represented a significant portion of the total revenue, with an increase driven by market penetration and adoption of the SmartVest system.
• International Sales: Contribute to the overall revenue, although they may be subject to fluctuations based on global market conditions and regulatory approvals.
• Product Sales: The primary driver of revenue, including the SmartVest system and related accessories.
• Service Revenue: A smaller portion of the total revenue, potentially including maintenance and support services for the SmartVest system.

To illustrate Electromed's revenue trends, consider the following data:

Electromed's revenue streams have shown positive momentum, particularly with the growth in domestic sales. Investors should monitor these trends to assess the sustainability of the company's growth trajectory. For further insights, you can explore Breaking Down Electromed, Inc. (ELMD) Financial Health: Key Insights for Investors.

The growth rate from 2023 to 2024 was 10.7%, indicating a healthy upward trend in revenue generation. Electromed's revenue is heavily reliant on product sales, specifically the SmartVest system. Any shifts in market demand, technological advancements, or competitive pressures could impact this revenue stream.

Changes in revenue streams can be attributed to several factors:

• Market Penetration: Increased adoption of the SmartVest system in the domestic market.
• Regulatory Approvals: Expansion into new international markets can boost revenue.
• Product Innovation: Introduction of new or improved products can drive sales.
• Economic Conditions: Global economic factors can influence purchasing decisions.

Electromed, Inc. (ELMD) Profitability Metrics

Understanding Electromed, Inc.'s profitability involves examining several key metrics that reveal how efficiently the company generates earnings from its revenue and operations. These metrics include gross profit, operating profit, and net profit margins, each providing a unique perspective on the company's financial health.

Electromed, Inc. reported a gross profit of $23.3 million for the fiscal year 2024, marking a 12.9% increase compared to $20.6 million in the previous fiscal year. The gross margin improved to 74.8% in fiscal year 2024 from 74.2% in fiscal year 2023. This improvement reflects enhanced operational efficiency and cost management in producing and selling their SmartVest systems.

Here's a detailed look at Electromed's profitability metrics:

• Gross Profit Margin: Increased to 74.8% in fiscal year 2024.
• Operating Expenses: Total operating expenses for fiscal year 2024 were $18.9 million, up from $17.2 million the previous year.
• Net Profit: Net profit for fiscal year 2024 was reported at $4.5 million, a notable increase from $3.4 million in fiscal year 2023.

The following table summarizes Electromed's key financial figures for fiscal years 2024 and 2023:

Electromed's operational efficiency is evident in its ability to maintain a high gross margin. The company's effective cost management and pricing strategies contribute significantly to its profitability. By keeping the cost of goods sold low relative to sales, Electromed maximizes its gross profit, which is a critical factor in funding operating expenses and generating net income.

To gain more insights into the investors and stakeholders of Electromed, Inc., consider exploring this resource: Exploring Electromed, Inc. (ELMD) Investor Profile: Who’s Buying and Why?

Electromed, Inc. (ELMD) Debt vs. Equity Structure

Understanding how Electromed, Inc. (ELMD) finances its operations and growth is crucial for investors. This involves analyzing the company's debt levels, debt-to-equity ratio, and recent financing activities. Electromed, Inc. (ELMD) uses a combination of debt and equity to fund its initiatives; a closer look reveals the specifics of this balance.

As of the quarter ended March 31, 2024, Electromed, Inc. (ELMD) reported the following debt situation:

• Short-term debt: $0.
• Long-term debt: $0.

This indicates that Electromed, Inc. (ELMD) currently carries no short-term or long-term debt on its balance sheet.

The debt-to-equity ratio is a key metric for assessing a company's financial leverage. It indicates the proportion of debt and equity used to finance a company's assets. Electromed, Inc. (ELMD)'s debt-to-equity ratio can be calculated using its total liabilities and total equity. As of March 31, 2024:

• Total Liabilities: $4.488 million
• Total Stockholder Equity: $47.226 million

Based on these values, the Debt-to-Equity Ratio is approximately 0.095, calculated as ($4.488 million / $47.226 million). This low ratio suggests that Electromed, Inc. (ELMD) relies more on equity than debt to finance its assets, indicating a conservative financial structure.

Electromed, Inc. (ELMD) has not engaged in any recent debt issuances, credit ratings, or refinancing activities, according to the latest information available. This is reflected in the absence of both short-term and long-term debt on the balance sheet as of March 31, 2024.

The balance between debt and equity financing is a strategic decision for Electromed, Inc. (ELMD). The company's current financial structure indicates a preference for equity funding, which can provide stability and reduce financial risk. However, debt financing can offer tax advantages and potentially increase returns on equity if managed effectively. Electromed, Inc. (ELMD)'s choice to operate with minimal debt reflects a cautious approach to financial leverage, aligning with its overall financial strategy.

For more insights into Electromed, Inc. (ELMD)'s mission, vision, and core values, you can visit: Mission Statement, Vision, & Core Values of Electromed, Inc. (ELMD).

Electromed, Inc. (ELMD) Liquidity and Solvency

When evaluating Electromed, Inc.'s financial health, it's crucial to assess its liquidity and solvency positions. These metrics provide insights into the company's ability to meet its short-term obligations and long-term financial stability. Here’s an overview based on the most recent fiscal data:

Assessing Electromed, Inc.'s Liquidity:

• Current and Quick Ratios:

Electromed, Inc. has a current ratio of 5.10 as of December 31, 2024. The company's quick ratio is not explicitly mentioned in the provided context.

• Analysis of Working Capital Trends:

As of June 30, 2024, Electromed had working capital of $36.5 million. As of December 31, 2024, the working capital was $35.5 million.

• Cash Flow Statements Overview:

For the six months ended December 31, 2024, Electromed's cash balance increased by $0.2 million driven by $5.5 million of positive operating cash flow, offset by share repurchases of approximately $4.5 million of Electromed common stock and $0.8 million of taxes paid from net share settlement of vested stock. For the six months ended December 31, 2023, the cash increased by $3.1 million.

• Potential Liquidity Concerns or Strengths:

Electromed, Inc. has $16.2 million in cash as of December 31, 2024. The company has no debt. Electromed's credit facility provides a revolving line of credit, with the maximum available under the line of credit being $2.5 million as of March 31, 2024.

Here is a table summarizing key financial data for Electromed, Inc. from fiscal year 2024:

In summary, Electromed, Inc. demonstrates a strong liquidity position with a healthy cash balance, no debt, and substantial working capital. The company's ability to generate positive operating cash flow further supports its financial stability. Here is the link to read the entire blog post: Breaking Down Electromed, Inc. (ELMD) Financial Health: Key Insights for Investors

Electromed, Inc. (ELMD) Valuation Analysis

Determining whether Electromed, Inc. (ELMD) is overvalued or undervalued requires a multifaceted approach, incorporating several key financial metrics and market analyses. These include relative valuation ratios, stock price trends, and analyst opinions.

Relative Valuation Ratios:

These ratios provide insight into how the market is pricing Electromed, Inc. relative to its earnings, book value, and operational cash flow.

• Price-to-Earnings (P/E) Ratio: This ratio compares Electromed, Inc.'s stock price to its earnings per share (EPS). A high P/E ratio might suggest overvaluation, indicating investors expect higher future earnings growth, or it could simply reflect that the stock is expensive. Conversely, a low P/E ratio could indicate undervaluation or reflect investor concerns about future growth.
• Price-to-Book (P/B) Ratio: This ratio compares Electromed, Inc.’s market capitalization to its book value of equity. A lower P/B ratio may suggest undervaluation, implying that the stock is trading at a discount to its net asset value. A high P/B ratio could indicate overvaluation or reflect intangible assets and growth opportunities not captured on the balance sheet.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio compares Electromed, Inc.'s enterprise value (market capitalization plus total debt minus cash) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It provides a valuation measure independent of capital structure and accounting decisions. A lower EV/EBITDA ratio might suggest undervaluation, while a higher ratio could indicate overvaluation.

Stock Price Trends:

Analyzing Electromed, Inc.'s stock price movements over the past year (or longer) can reveal market sentiment and potential overvaluation or undervaluation. For example, a consistent upward trend might suggest growing investor confidence, potentially leading to overvaluation if not supported by fundamentals. Conversely, a downward trend could indicate undervaluation if the market has overreacted to temporary challenges.

Dividend Yield and Payout Ratios:

For companies that pay dividends, the dividend yield (annual dividend per share divided by stock price) and payout ratio (percentage of earnings paid out as dividends) can offer additional insights. A high dividend yield relative to peers might suggest undervaluation, attracting income-seeking investors. However, a high payout ratio could also indicate unsustainable dividend payments, especially if earnings are volatile.

Analyst Consensus:

Monitoring analyst ratings and price targets can provide a consensus view on Electromed, Inc.'s valuation. A majority of 'buy' ratings with price targets above the current market price might suggest undervaluation, while a preponderance of 'sell' ratings with lower price targets could indicate overvaluation. However, it's essential to consider the source and track record of the analysts, as their opinions can vary.

For additional insights into Electromed, Inc.'s strategic direction, see: Mission Statement, Vision, & Core Values of Electromed, Inc. (ELMD).

Electromed, Inc. (ELMD) Risk Factors

Electromed, Inc. (ELMD) faces a variety of risks that could impact its financial health. These risks span internal operational challenges, external market pressures, and strategic considerations that require careful navigation.

Here's a breakdown of key risk areas:

• Industry Competition: The medical device industry is highly competitive. Electromed faces competition from larger companies with greater resources, which could impact pricing and market share.
• Regulatory Changes: Medical device companies are subject to strict regulations by bodies such as the FDA. Changes in these regulations can increase compliance costs and delay product approvals.
• Market Conditions: Economic downturns or changes in healthcare spending can reduce demand for Electromed's products, affecting revenue and profitability.

Operational, financial, and strategic risks are often highlighted in Electromed's earnings reports and filings. These can include:

• Sales Fluctuations: Electromed's sales can vary significantly from quarter to quarter, impacting revenue projections and financial stability.
• Technological Obsolescence: The rapid pace of technological advancement in the medical field means Electromed must continually innovate to avoid its products becoming outdated.
• Supply Chain Disruptions: Disruptions to the supply chain can increase production costs and delay product delivery, affecting financial performance.

Mitigation strategies are crucial for addressing these risks. Electromed may implement plans such as:

• Diversification: Expanding into new markets or product lines to reduce reliance on existing products.
• Cost Management: Implementing strategies to control costs and improve efficiency.
• Innovation: Investing in research and development to stay ahead of technological advancements.

Understanding these risks and mitigation strategies is essential for investors. For more insights into Electromed, Inc. (ELMD), check out Exploring Electromed, Inc. (ELMD) Investor Profile: Who’s Buying and Why?

Electromed, Inc. (ELMD) Growth Opportunities

Electromed, Inc. (ELMD) is a medical device company specializing in airway clearance therapy using High Frequency Chest Wall Oscillation (HFCWO) technology. Their flagship product, the SmartVest Airway Clearance System, is designed to help patients with compromised pulmonary function. The company's growth prospects are influenced by several factors, including product innovations, market expansions, strategic initiatives, and competitive advantages.

Here's a detailed look at the key growth drivers for Electromed, Inc. (ELMD):

• Product Innovations: Electromed consistently introduces new and improved versions of its SmartVest system. Recent innovations include the SmartVest Clearway, featuring a touchscreen, lighter weight, and smaller footprint. The company has a history of innovation, including the first portable HFCWO device in 2000, the first machine-washable vest garment in 2001, and the first programmable HFCWO vest in 2003. In 2023, Electromed developed the smallest, lightest, and first touchscreen HFCWO device.
• Market Expansions: Electromed is focused on expanding its market share through strategic sales and market development. The company believes the domestic market for HFCWO devices is largely untapped, with fewer than 15% of the approximately 824,000 patients diagnosed with bronchiectasis in the U.S. currently using this non-invasive therapy. Electromed is also expanding into international markets.
• Strategic Initiatives: Electromed is implementing several strategic initiatives to drive growth:
  • Sales Force Expansion: Increasing the sales force to drive revenue growth. In Q2 FY 2025, the company expanded its sales force to 54 representatives and aimed to reach 57 by the end of Q3 FY 2025.
  • Direct-to-Patient Model: Electromed employs a direct-to-patient and provider model, managing the entire insurance claim, product delivery, and training processes. This model drives high gross margins, positive operating cash flow, and profitability.
  • Partnerships: Electromed has entered into a distribution agreement with Marathon Medical Corp. to expand access to the SmartVest system for veterans, federal employees, and Native American communities.
  • E-prescribing: Enhancing its e-prescribing solution to streamline the prescription process.
• Competitive Advantages: Electromed has several competitive advantages that position the company for growth:
  • Technology: Electromed's SmartVest system utilizes HFCWO therapy, which is clinically proven to clear the lungs of excess secretions.
  • Direct Sales Model: The company's direct sales model offers a competitive edge over larger, diversified rivals.
  • Customer Service: Electromed provides best-in-class customer care and support through its SmartAdvantage program.
  • Market Position: Electromed holds an estimated 23% market share in the HFCWO market.

Here is a summary of Electromed's key financial data from Q2 FY 2025 (ended December 31, 2024):

Electromed's revenue growth is also supported by increasing awareness of the benefits of HFCWO therapy and a focus on market development to improve diagnosis rates and support the adoption of the SmartVest system.

For more insights into Electromed, Inc. (ELMD), see: Exploring Electromed, Inc. (ELMD) Investor Profile: Who’s Buying and Why?

Analysts project robust double-digit revenue and earnings growth for Electromed, supported by a strong balance sheet and market opportunities. Revenue growth is estimated at 17.9% in 2025, 11.7% in 2026 and 10.4% in 2027. The consensus EPS estimate for the fiscal year 2025 is $0.81.

Electromed's strategic initiatives, product innovation, and market expansion efforts, combined with its strong financial health, position the company well for continued growth and market leadership in the airway clearance therapy market.