EI
Electromed, Inc. (ELMD)·Q3 2025 Earnings Summary
Executive Summary
- Q3 FY2025 delivered the tenth consecutive quarter of year-over-year revenue and net income growth; Net revenues were $15.68M (+13.1% YoY), Diluted EPS $0.21 (+$0.04 YoY), and Operating Income $2.14M (13.6% margin) .
- Versus consensus, EPS beat by $0.01 while revenue was essentially in line to slightly below (−$0.07M); two analysts covered both metrics (Consensus from S&P Global)*.
- Sequentially, revenue declined vs record Q2 due to typical quarterly timing in non-homecare channels, while gross margin remained strong at 78.0% (higher average net revenue per device), and SG&A grew to support sales, marketing, and reimbursement capacity .
- Strategic initiatives (sales force expansion, CRM implementation, e‑prescribe adoption, VA outreach, bronchiectasis education campaign) and a $5M buyback authorization underpin confidence; post-quarter, ELMD was added to the preliminary list to join Russell 2000/3000 effective June 27, 2025, a potential liquidity and ownership catalyst .
What Went Well and What Went Wrong
What Went Well
- Strong topline and profitability: Net revenue +13.1% YoY to $15.68M, Net income +26.7% YoY to $1.89M, Diluted EPS $0.21; gross margin expanded to 78.0% (higher net revenue per device) .
- Sales execution: Direct homecare revenue +14.8% YoY to $14.1M; annualized homecare revenue per rep at $1.028M, above the $900k–$1.0M target; field sales team at 55 reps, with thoughtful expansion strategy .
- Management tone and initiatives: “Tenth consecutive quarter of year-over-year revenue and net income growth,” and optimism on sustaining mid‑70s gross margins given U.S.-based operations; expanding payer coverage and CRM go‑live planned for early FY2026 .
What Went Wrong
- Sequential revenue pullback vs Q2’s record: Q3 revenue $15.68M vs Q2 $16.26M; non-homecare revenue timing drove volatility (hospital −7.5% YoY to $724k; Other −41.5% YoY to $162k) despite distributor +32.8% YoY to $696k .
- SG&A inflation: SG&A rose 17.2% YoY to $9.81M due to higher headcount and incentive comp to process increased referrals; operating margin at 13.6% (vs 15.6% in Q2) .
- Limited formal guidance: Management reiterated goals (double-digit top-line growth, operating leverage) without numerical ranges, leaving estimates anchored to external consensus and requiring investors to gauge trajectory from execution signals .
Financial Results
Core P&L (Quarterly progression: Q1 → Q2 → Q3 FY2025)
Year-over-Year Comparison (Q3 FY2025 vs Q3 FY2024)
Segment Breakdown (Q3 FY2025)
KPIs and Balance Sheet Highlights
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- “I am happy to report another strong quarter… tenth consecutive quarter of year-over-year revenue and net income growth” – Jim Cunniff, CEO .
- “Operating income increased… and net income increased 26.7%… $0.21 per diluted share” – Jim Cunniff .
- “We continue to thoughtfully expand our team of direct sales reps… ended the quarter with 55 reps” – Jim Cunniff .
- “Gross profit increased to $12.2M or 78.0%… due to higher net revenue per device” – Brad Nagel, CFO .
- “We feel we are well positioned to maintain… on-time delivery… and maintain our mid‑70s gross margins” – Jim Cunniff on tariffs .
- “Share repurchase of up to $5M… ~$1.4M repurchased in Q3; $6.4M FYTD” – Jim Cunniff .
Q&A Highlights
- Sales force additions: Management will continue to add reps “thoughtfully” to avoid over-hiring; plans to add hospital-focused rep given growth opportunity .
- Revenue per rep: Exceeded $1M two of three quarters; may revise target higher; balancing expansion with productivity .
- Reimbursement environment: Viewed as stable/insulated currently; new payer relations leader expanding coverage; monitoring volatility .
- CRM implementation: On track for launch early FY2026 with user acceptance testing and systems integration; expected to enhance commercial productivity .
- Campaign impact: 27,000 page views; referrals trending positively though direct conversion attribution is complex; continued education and awareness efforts .
Estimates Context
- Q3 FY2025 Consensus vs Actual:
- Primary EPS Consensus Mean: $0.20* (Actual: $0.21; Beat $0.01)
- Revenue Consensus Mean: $15.75M* (Actual: $15.68M; Miss $0.07M; ~−0.4%)
- Primary EPS – # of Estimates: 2*; Revenue – # of Estimates: 2*
Values retrieved from S&P Global.
Key Takeaways for Investors
- Execution remains robust with consistent YoY growth, high gross margins, and disciplined operating leverage; EPS beat vs consensus supports near-term estimate stability .
- Sequential softness from Q2 reflects expected timing volatility in non-homecare channels; direct homecare engine continues to drive growth (revenue/rep > $1.0M) .
- Structural initiatives (CRM, e‑prescribe, payer relations, education campaigns) should enhance throughput and conversion, reinforcing medium-term growth visibility .
- Capital allocation is shareholder-friendly (active buybacks under $5M authorization); balance sheet strength (cash $15.2M, no debt) provides flexibility .
- Index inclusion (Russell 2000/3000 effective June 27, 2025) may broaden ownership, improve liquidity, and support valuation multiples .
- Watch hospital/distributor timing and SG&A trajectory; near-term estimate revisions likely modest: EPS nudged higher, revenue maintained given pipeline/referral momentum (consensus coverage limited at two estimates)*.
- Near-term trading: modest positive bias on EPS beat and index catalyst; medium-term thesis centers on sustained double-digit homecare growth, margin resilience, and operating leverage .
Notes:
- We searched for a Q3 FY2025 8‑K 2.02 and did not find a distinct filing in the catalog; the earnings press release was read in full and used as the primary source .
- All financials and segment data are sourced from the company’s Q3 FY2025 press release and call transcript; estimates are from S&P Global as noted.