Electromed, Inc. (ELMD)·Q2 2025 Earnings Summary

Executive Summary

• Record Q2 revenue and earnings: net revenue $16.3M (+18.7% y/y) and diluted EPS $0.22, with gross margin 77.7% and operating margin 15.6%; ninth consecutive quarter of y/y revenue and net income growth .
• Growth diversified beyond core homecare: hospital +16.8% y/y to $0.72M and homecare distributor +188% y/y to $0.81M; homecare +15.2% y/y to $14.6M; annualized homecare revenue per rep reached $1.077M (above the $900K–$1.0M target) .
• Management reiterated FY25 objectives for double-digit top-line growth and expanded operating leverage; sales force expansion accelerated to target 57 direct reps by end of Q3 FY25 (vs prior plan by FY25 year-end) .
• Estimate comparison: S&P Global consensus was unavailable at time of request, so we cannot quantify beat/miss; operational momentum (mix, higher net revenue per device, and sales force productivity) remain primary stock catalysts near-term .

What Went Well and What Went Wrong

What Went Well

• Broad-based growth and operating leverage: revenue +18.7% y/y to $16.3M; operating income a record $2.5M (15.6% margin), driven by higher volumes and higher average net revenue per device .
• Channel expansion traction: hospital +16.8% y/y to $0.72M; DME/homecare distributor +188% y/y to $0.81M from a small base, reflecting curated DME partnerships .
• Management execution and focus: “another excellent quarter… record revenues… record net income,” with inventory down 35% vs Q2 FY24 and CRM investment to further enhance sales productivity .

What Went Wrong

• SG&A grew 20.3% y/y to $9.8M, driven by accelerated non-cash share-based comp and higher personnel costs as the organization scales .
• Gross margin ticked down sequentially (77.7% in Q2 vs 78.3% in Q1) despite y/y improvement, reflecting normal variability and channel mix; still supported by higher net revenue per device .
• DME/homecare distributor channel inherently volatile by timing of purchases, creating quarterly fluctuations (management caution) .

Financial Results

• Q2 vs prior year: revenue +18.7% y/y; gross margin +70 bps to 77.7%; operating income +12.3% y/y; diluted EPS $0.22 vs $0.19 .
• Q2 vs prior quarter: revenue rose to $16.3M from $14.7M and EPS to $0.22 from $0.16, reflecting volume and mix (implied from cited figures) .

Segment revenue breakdown

Key KPIs and balance items

Non-GAAP adjustments: None disclosed; results discussed on a GAAP basis .

Guidance Changes

Note: We searched for an 8-K 2.02 filing for Q2 FY2025; none appeared in the document catalog. The company reported results via press release and the earnings call .

Earnings Call Themes & Trends

Management Commentary

• “Another excellent quarter… record revenues… ninth consecutive quarter [of] year-over-year revenue and net income growth.” – CEO Jim Cunniff .
• “We… improved our working capital by reducing inventory 35% compared to Q2 of fiscal 2024… initiated an investment in a new CRM system to further enhance our commercial team’s productivity.” – CEO .
• “When putting all these Q2 results together, we are thrilled to have executed a record earnings quarter… EPS… $0.22 per diluted share.” – CFO Brad Nagel .
• On competition: “Hill-Rom did upgrade… but… it really hasn't impacted our business… we still feel like we've got a best-in-class portfolio.” – CEO .
• On bronchiectasis drug landscape: “Priority review by the FDA for August… [drug] will be complementary to airway clearance and won't be a replacement for it.” – CEO .

Q&A Highlights

• Competitive dynamics: Hill-Rom refresh not impacting results; Clearway’s single hose design, comfort, and lifetime warranty highlighted as differentiators .
• Bronchiectasis drug developments: Potential FDA priority review in August; management expects complementarity, not substitution, for airway clearance therapy .
• Per-rep productivity sustainability: Management optimistic but non-committal; attributes gains to improved hiring, onboarding “2.0,” and broader productivity across the rep base .

Estimates Context

• Wall Street consensus (S&P Global) for Q2 FY2025 EPS and revenue was unavailable at time of request due to a data access limit; therefore, we cannot quantify beats/misses versus consensus. Operationally, the company delivered record revenue and EPS with broad-based growth and maintained FY25 qualitative guidance .

Key Takeaways for Investors

• Momentum intact: Record Q2 revenue ($16.3M) and EPS ($0.22) with y/y growth across homecare, hospital, and DME channels supports the double-digit-growth thesis for FY25 .
• Mix and pricing underpin margins: Gross margin 77.7% (down 60 bps q/q; up 70 bps y/y) aided by higher average net revenue per device; watch channel mix variability .
• Go-to-market investments are working: CRM deployment, optimized onboarding, and broader D2C/education (10K+ clinician engagements) are raising sales productivity (per-rep annualized $1.077M) .
• Channel expansion is additive: Hospital (+16.8% y/y) and DME (+188% y/y) are growing from small bases and can smooth growth over time despite inherent quarterly volatility .
• Capital discipline with capacity to invest: Cash $16.2M, no debt, working capital $35.5M; supports continued commercial and systems investments to scale efficiently .
• Competitive and regulatory setup favorable: No adverse impact from competitor refresh; potential bronchiectasis drug approval could expand disease visibility and complement airway clearance .
• Near-term trading lens: Without published consensus, focus on sustained double-digit growth, margin discipline, and sales force acceleration to 57 reps by Q3 as likely stock catalysts into H1 CY2025 .

Additional source documents referenced:

• Q2 FY2025 earnings press release (full)
• Q2 FY2025 earnings call (full)
• Q1 FY2025 press release and call (for trends)
• Q4 FY2024 press release and call (for trends and prior guidance)
• Q2 FY2025 call scheduling PR