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EI

Electromed, Inc. (ELMD)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 delivered double‑digit growth: net revenues $16.9M (+15.1% YoY) and diluted EPS $0.25 (+56% YoY), with operating income up 37.8% to $2.7M; gross margin held at 78.1% despite higher costs .
  • Results beat Wall Street consensus: revenue +1.5% vs. estimates and EPS +27.1% vs. estimates; prior quarter (Q4 FY2025) also beat revenue (+5.4%) and EPS (+16.3%) estimates, reinforcing estimate momentum [GetEstimates]*.
  • Mix broadened: Direct Homecare revenue rose 12.7% to $14.9M; Hospital +51.7% to $1.05M; Homecare Distributor +41.2% to $0.83M, partially offset by “Other” −32.2% to $0.12M .
  • Execution catalysts: completion of manufacturing optimization, implementation of new CRM boosting sales productivity, and a fresh $10M share repurchase authorization approved in Q1 FY2026 .

What Went Well and What Went Wrong

  • What Went Well

    • Broad-based revenue growth across Direct Homecare (+12.7%), Hospital (+51.7%), and Distributor (+41.2%), underscoring diversified demand beyond core homecare channel .
    • Operating leverage: operating income rose to $2.7M (15.8% margin) from $1.9M (13.2%) YoY, driven by revenue and gross profit increases .
    • CEO tone confident on productivity: “Implementation of our new CRM system…had a meaningful and immediate impact on our sales team’s productivity” and “manufacturing optimization plan…positions us for future growth” .

  • What Went Wrong

    • Gross margin percentage edged down to 78.1% from 78.3% YoY due to higher costs, partially offset by higher net revenues per device .
    • Cash decreased $1.2M in the quarter, largely from $1.0M share repurchases; operating cash flow was $0.17M vs. $2.31M in the prior-year quarter .
    • “Other” revenue fell 32.2% YoY to $0.12M, indicating pressure in smaller non-core categories .

Financial Results

MetricQ3 FY2025Q4 FY2025Q1 FY2026
Revenue ($USD Millions)$15.684 $17.393 $16.887
Diluted EPS ($USD)$0.21 $0.25 $0.25
Gross Margin %78.0% 78.3% 78.1%
Operating Income ($USD Millions)$2.140 $3.040 $2.670
Operating Margin %13.6% 17.5% 15.8%
Net Income ($USD Millions)$1.891 $2.204 $2.136
Segment/Channel ($USD Millions)Q3 FY2025Q4 FY2025Q1 FY2026
Direct Homecare$14.1 $15.4 $14.9
Hospital$0.724 —$1.047
Homecare Distributor$0.696 —$0.829
Other$0.162 —$0.122
KPIsQ3 FY2025Q4 FY2025Q1 FY2026
Homecare direct field sales reps (count)55 55 57
Annualized homecare revenue per weighted avg direct rep ($USD)$1,028,000 $1,058,000 $1,052,000
Field sales employees total (count)62 62 —
Actual vs. EstimatesQ4 FY2025Q1 FY2026
Revenue Actual ($USD)$17,393,000 $16,887,000
Revenue Consensus Mean ($USD)$16,506,000*$16,633,750*
Surprise ($ / %)$887,000 / +5.4%$253,250 / +1.5%
EPS Actual ($USD, Diluted)$0.25 $0.25
Primary EPS Consensus Mean ($USD)$0.215*$0.19667*
Surprise ($ / %)$0.035 / +16.3%$0.05333 / +27.1%
# of EPS Estimates2*3*
# of Revenue Estimates2*4*
Note: Values with asterisks retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2026—No formal quantitative guidance providedMaintained: qualitative double-digit growth objective (Investor Presentation)
Gross MarginFY2026—Company “expects gross margins in the mid-70s” (structural, not quarterly guidance) Maintained qualitative target
Operating MarginLong-term—Oper. margin improvement via operating leverage (long-term objective) Maintained qualitative objective
Capital AllocationFY2026Prior buyback exhausted in FY2025 New $10.0M share repurchase authorization (Q1 FY2026) Raised (new authorization)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2025)Previous Mentions (Q4 FY2025)Current Period (Q1 FY2026)Trend
CRM / Sales ProductivityEfficiency initiatives; VA outreach; reps=55 Began deploying new CRM; reps=55 New CRM “meaningful and immediate impact” on productivity; reps=57 Improving
Manufacturing Optimization—Plan initiated to increase capacity Plan completed; positions for future growth Completed / Positive
Channel Mix (Hospital/Distributor)Distributor +32.8%; Hospital −7.5% —Hospital +51.7%; Distributor +41.2% Strengthening
Capital Returns$5M buyback authorized in Q3 $10M repurchases executed in FY2025 New $10M authorization in Q1 Ongoing
Gross Margin / CostsGross margin 78.0% 78.3% 78.1% with higher costs Stable-high, slight cost headwind
Market DevelopmentVA outreach program launched Awareness and capacity investments Continued physician/patient marketing; expanding Hospital/Distributor Ongoing

References for call availability: Seeking Alpha/GuruFocus/MarketScreener transcript links .

Management Commentary

  • CEO Jim Cunniff: “Improved efficiencies drove strong operating leverage and profitability…we completed our manufacturing optimization plan…[and] implemented our new CRM system, which has had a meaningful and immediate impact on our sales team’s productivity” .
  • Strategic message: expanding presence in Hospital and Distributor markets to complement core Homecare business; confident in generating attractive returns in FY2026 and beyond .

Q&A Highlights

  • Themes discussed on the call included sustained double‑digit growth and hospital channel expansion; management reiterated productivity gains from CRM and completion of manufacturing optimization .
  • Participants included analysts from ROTH Capital Partners and Lake Street Capital Markets, indicating ongoing small‑cap medtech coverage and interest .
  • Management clarified cash usage and buyback cadence; CFO emphasized the drivers of operating leverage and working capital position (cash $14.1M; no debt) .

Estimates Context

  • Q1 FY2026 beat S&P Global consensus on revenue by $0.25M (+1.5%) and on EPS by $0.053 (+27.1%); prior quarter (Q4 FY2025) also beat revenue by $0.89M (+5.4%) and EPS by $0.035 (+16.3%) [GetEstimates]* .
  • Estimate breadth modest (EPS: 3, Revenue: 4 in Q1), suggesting revisions likely to move up for FY2026 profitability as operating leverage sustains; watch margin expectations vs. cost backdrop [GetEstimates]* .
    Note: Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Double‑digit growth with concurrent operating leverage and consistent high gross margins positions ELMD well for continued EPS outperformance vs. modest consensus bases [GetEstimates]*.
  • Hospital and Distributor acceleration materially broadened mix in Q1; continued investment in these channels can support topline resilience beyond homecare growth .
  • CRM deployment and manufacturing optimization are tangible execution levers driving productivity and capacity—key to sustaining margin expansion amid higher costs .
  • Strong balance sheet (cash $14.1M, no debt) plus new $10M buyback create a supportive capital return backdrop and potential stock support on pullbacks .
  • Near term: momentum and mix expansion are catalysts; monitor cost inflation and “Other” category softness for potential margin drag .
  • Medium term: focus on market development for bronchiectasis, hospital penetration, and maintaining rep productivity in the $1.0–$1.1M range to extend operating leverage .
  • Estimates likely need upward adjustment for EPS given repeated beats and continued operating leverage; track sell‑side revisions and margin assumptions [GetEstimates]*.

Additional primary documents reviewed: Q1 FY2026 press release and financials , Form 8‑K with exhibits , Q4 FY2025 press release , Q3 FY2025 press release , Q1 FY2026 reporting schedule .