Electromed, Inc. (ELMD) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings report shows strong financial metrics with revenue, operating income, and EPS all increasing significantly. The company's strategic focus on expanding its sales force and product awareness has paid off, particularly in the homecare segment. The approval of a stock repurchase plan and actual buybacks signal confidence in future prospects. While SG&A expenses have risen, the overall financial health remains robust. The Q&A session highlighted growth opportunities and strategic initiatives. Despite minor concerns about rep productivity, the strong financial performance and strategic initiatives suggest a positive stock price movement.
Key Financial Performance
Revenue $18.9 million, a 16.3% year-over-year increase. Growth driven by strong performance in the core homecare business (18.4% increase) and distributor channel (12.1% increase). Decline in hospital channel revenue (9.4%) due to prioritization of shipments to home patients and timing of capital orders.
Operating Income $3.6 million, a 42.4% year-over-year increase. Growth attributed to increased revenue and gross profit.
Earnings Per Share (EPS) $0.32 per diluted share, compared to $0.22 per diluted share in the prior year, reflecting a 40.3% increase. Driven by higher revenue and operating income.
Gross Profit $14.8 million, 78.4% of net revenues, up from $12.6 million or 77.7% of net revenues. Increase due to higher overall revenue and net revenues per device.
SG&A Expenses $10.8 million, a 10% year-over-year increase. Increase due to higher salaries and incentive compensation from increased sales headcount and overall compensation costs.
Net Income $2.8 million, a 40.3% year-over-year increase. Growth driven by increased revenue and operating income.
Cash Balance $13.8 million, reflecting a decrease of $1.5 million over six months due to $3.2 million positive operating cash flow offset by $3.8 million in share repurchases.
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Operating Highlights
SmartVest Airway Clearance Solution: Achieved 13th consecutive quarter of year-over-year revenue and profit growth. Promoted as part of a 3-pronged treatment paradigm for bronchiectasis, focusing on airway clearance, infection treatment, and inflammation reduction.
Smart Order e-Prescribe solution: Improved prescription submission process, replacing outdated fax-based methods. Over 1/3 of orders now come through this platform, enhancing clinic workflow and patient experience.
Bronchiectasis market: Targeting approximately 923,000 diagnosed patients in the U.S., with only 16% currently benefiting from high-frequency chest wall oscillation therapy. Potential to address over 4 million undiagnosed cases.
Payer contracts: Executed 25 new contracts in the first half of fiscal year, adding 2.9 million covered lives to the existing 270 million.
Sales team expansion: Increased direct sales representatives to 58, with plans to grow to 61 by fiscal year-end. Annualized homecare revenue per sales representative exceeded target range.
Manufacturing optimization: Redesigned manufacturing layout to improve production efficiency and support future growth. Maintained U.S.-based operations with mid-70% gross margins.
Triple-down on bronchiectasis campaign: Launched a 3-pronged treatment paradigm to address bronchiectasis, focusing on airway clearance, infection treatment, and inflammation reduction. Participated in trade shows and educational events to raise awareness.
CRM system implementation: Enhanced field sales productivity, market insights, and communication with fulfillment teams, leading to improved sales productivity and patient experience.
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Risk or Challenges
Hospital Channel Revenue Decline: The hospital channel experienced a 9.4% year-over-year decline in revenue due to strategic prioritization of shipments to high-demand home patients and the unpredictable timing of capital orders. This could impact overall revenue growth if the hospital demand does not rebound as anticipated.
Tariff Exposure: While the company benefits from U.S.-centric operations, there is a potential risk from tariffs affecting domestic suppliers' upstream supply chains, which could increase costs or disrupt supply.
Underserved Market Challenges: Despite the large market opportunity in the bronchiectasis segment, only 16% of diagnosed patients are currently benefiting from high-frequency chest wall oscillation therapy. Additionally, 58% of qualifying patients are not prescribed the therapy despite meeting clinical criteria, indicating challenges in market penetration and awareness.
Supply Chain and Manufacturing Risks: Although the company has optimized its manufacturing layout, any disruptions in the supply chain or inefficiencies in production could impact its ability to meet demand and maintain gross margins.
Increased SG&A Expenses: Selling, general, and administrative expenses increased by 10%, primarily due to higher salaries and incentive compensation. This could pressure operating margins if revenue growth does not keep pace with rising costs.
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Guidance & Outlook
Bronchiectasis Market Opportunity: Electromed aims to address the underserved bronchiectasis market, with approximately 923,000 diagnosed patients in the U.S., of which only 16% currently benefit from high-frequency chest wall oscillation therapy. The company sees potential to help nearly 800,000 diagnosed patients and over 4 million undiagnosed individuals.
Triple-Down on Bronchiectasis Campaign: Launched in 2025, this campaign promotes a 3-pronged treatment paradigm: 1) Clear Airways First with SmartVest, 2) Treat infections with antibiotics, and 3) Reduce inflammation. This approach aims to break the cycle of chronic infection and inflammation in bronchiectasis patients.
Sales Force Expansion: Electromed plans to increase its direct sales representatives from 58 to 61 by the end of fiscal year 2026 to enhance market reach and clinician engagement.
Smart Order e-Prescribe Solution: The company is implementing a digital prescription platform to replace fax-based processes, improving order efficiency and patient experience. Over one-third of orders in Q2 were processed through this platform.
Manufacturing Optimization: Electromed completed a manufacturing layout redesign to improve production efficiency and support future growth.
Revenue Growth: Electromed expects to continue delivering double-digit top-line growth in the coming quarters and full fiscal year 2026.
Operating Leverage: The company anticipates expanded operating leverage, supported by increased revenue and gross profit.
Hospital Channel Recovery: Electromed expects hospital demand to rebound in the coming quarters after a decline in Q2 due to strategic prioritization of homecare shipments.
Sales Representative Productivity: The company targets annualized homecare revenue per sales representative in the range of $1 million to $1.1 million, with Q2 performance exceeding this range at $1.2 million per representative.
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Shareholder Return Plan
Stock Repurchase Authorization: The Board approved a $10 million stock repurchase authorization in Q1, reflecting confidence in Electromed's future and commitment to delivering shareholder value.
Share Repurchases: Electromed repurchased $3.8 million of its common stock during the 6 months ended December 31, 2025.
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Key Q&A
Q:What contributed to the strong performance in the homecare Medicare segment this quarter?
A:The strong performance was attributed to the execution of the company's strategy, an improved sales force, increased awareness about bronchiectasis, and efforts by sales reps and clinicians to identify patients who could benefit from high-frequency chest wall oscillation (HFCWO) technology.
Q:How has the launch of Brinsupri impacted the business and awareness around HFCWO?
A:The launch of Brinsupri, the first FDA-approved drug for bronchiectasis, has helped raise awareness about the disease. While Brinsupri addresses inflammation, HFCWO technology like SmartVest is essential for clearing airways. The complementary nature of these treatments has positively impacted the business.
Q:What is the significance of the registry data showing 58% of patients qualifying for HFCWO therapy not receiving it?
A:The data highlights a significant opportunity to improve patient care. Many patients who meet treatment guidelines for HFCWO therapy are not receiving it, often due to lack of awareness or delays in adopting the technology. The company aims to promote these findings to encourage earlier adoption of HFCWO technology.
Q:What is the current status and future outlook for the home care direct sales reps and territories?
A:The company currently has 58 home care direct reps across 61 territories and plans to maintain this number. Productivity per rep is expected to stabilize at $1 million to $1.1 million annually, as new reps require training and time to build relationships.
Q:Why is there a projected decline in rep productivity from $1.2 million to $1 million-$1.1 million?
A:The decline is due to factors such as the onboarding of new reps who require training, variations in payer mix, and pricing dynamics. Despite this, the company remains confident in its productivity guidance.
Q:What trends have been observed in the growth of government versus commercial payers?
A:The company has seen strong growth among government payers in the first half of the fiscal year, but there are no significant trends favoring one payer type over the other. The company continues to focus on driving referrals regardless of payer mix.
Q:How often does the Board revisit the share buyback program?
A:The Board monitors the share buyback program regularly, considering factors like cash position and share pricing. Last year, $10 million was authorized and repurchased evenly, and another $10 million was authorized this year.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the question about why rep productivity might decline more than the 5% growth in rep headcount. They cited various factors like payer mix and pricing dynamics but did not provide a clear explanation for the potential discrepancy.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Airway Clearance
Airways SmartVest
Clear Airways
Clearance Solution
Clearance bronchiectasis
Conference Instructions
Cunniff Electromed
Electromed future
Instructions event
Number Clear
Order solution
Smart Order
SmartVest Airway
SmartVest marketing
Solution highlight
Tariffs news
ability patient
achievement strength
afternoon today
capacity
channel
clinic
contract
criterion
demand home
education
individual
order fulfillment
patient technology
platform
progress
quality life
sale productivity
tariff
ELMD Transcript
Electromed, Inc. (ELMD) Q2 2026 Earnings Call Transcript
Positive2-10
The earnings report shows strong financial metrics with revenue, operating income, and EPS all increasing significantly. The company's strategic focus on expanding its sales force and product awareness has paid off, particularly in the homecare segment. The approval of a stock repurchase plan and actual buybacks signal confidence in future prospects. While SG&A expenses have risen, the overall financial health remains robust. The Q&A session highlighted growth opportunities and strategic initiatives. Despite minor concerns about rep productivity, the strong financial performance and strategic initiatives suggest a positive stock price movement.
Electromed, Inc. (ELMD) Q1 2026 Earnings Call Transcript
Positive11-12
The earnings call highlights strong financial performance with a 15% revenue increase and 38% rise in operating income. The strategic expansion of sales territories and focus on the bronchiectasis market are promising. The $10 million stock repurchase program indicates confidence in the company's value. However, economic uncertainties and unclear management responses about hospital sales create slight concerns. Overall, the sentiment is positive due to strong growth metrics, strategic initiatives, and shareholder returns.
Electromed, Inc. (ELMD) Q4 2025 Earnings Call Transcript
Positive8-26
The earnings call highlights strong financial performance, with significant revenue and net income growth, improved gross margins, and efficient cash management. Positive developments include successful sales team expansion, effective CRM implementation, and promising hospital channel growth. The Q&A section reveals favorable analyst sentiment and market expansion opportunities, despite some management vagueness. The company's proactive strategies, including share repurchases and manufacturing optimization, support a positive outlook. Overall, the combination of strong earnings, optimistic guidance, and strategic initiatives suggests a positive stock price movement over the next two weeks.
Electromed, Inc. (ELMD) Q3 2025 Earnings Call Transcript
Positive5-13
Electromed reported strong financial performance with record revenues, a significant increase in net income, and high gross margins. The share repurchase program and positive cash flow are favorable for shareholder returns. Despite concerns about tariffs and competitive pressures, the company maintains a strong cash position and plans to expand its sales team. The Q&A revealed some vagueness in management's responses, but overall sentiment remains positive due to optimistic guidance and strategic initiatives like the CRM system and marketing campaign.
ELMD Report
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
