Sign in

You're signed outSign in or to get full access.

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)

MetricQ1 FY2025Q2 FY2025Q3 FY2025
Revenue ($USD)$14,668,000 $16,255,000 $15,684,000
Net Income ($USD)$1,474,000 $1,968,000 $1,891,000
Diluted EPS ($USD)$0.16 $0.22 $0.21
Gross Margin (%)78.3% 77.7% 78.0%
Operating Income ($USD)$1,938,000 $2,542,000 $2,140,000
Operating Margin (%)13.2% 15.6% 13.6%

Year-over-Year Comparison (Q3 FY2025 vs Q3 FY2024)

MetricQ3 FY2024Q3 FY2025
Revenue ($USD)$13,871,000 $15,684,000
Net Income ($USD)$1,493,000 $1,891,000
Diluted EPS ($USD)$0.17 $0.21
Gross Margin (%)74.8% 78.0%
Operating Income ($USD)$1,841,000 $2,140,000
Operating Margin (%)13.3% 13.6%

Segment Breakdown (Q3 FY2025)

SegmentRevenue ($USD)YoY Change
Direct Homecare$14,100,000 +14.8%
Non-Homecare (Total)$1,600,000 Flat
— Homecare Distributor$696,000 +32.8%
— Hospital$724,000 −7.5%
— Other$162,000 −41.5%

KPIs and Balance Sheet Highlights

KPIQ3 FY2025Notes
Field Sales Reps55 Total sales force employees 62
Annualized Homecare Revenue per Rep$1,028,000 Above $900k–$1,000k target
e‑Prescribe Order Share35% of orders Efficiency and faster time-to-therapy
VA Outreach Metrics1,200 clicks; 1,100 page views 11-city program
Website Traffic (FY to-date)1.3M visits Campaign-driven interest
Cash$15,237,000 No debt
Accounts Receivable$23,442,000
Working Capital$35,700,000
Shareholders’ Equity$43,940,000
Share Repurchases~$1.4M in Q3; $6.4M FYTD $5M authorization on 3/6/2025

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue GrowthFY2025“Double-digit top line growth” “Double-digit top line growth” reiterated Maintained
Operating LeverageFY2025“Expanded operating leverage” “Expanded operating leverage” reiterated Maintained
Formal Numerical Guidance (Revenue, EPS, Margins, OpEx)FY2025None providedNone providedN/A
Capital DeploymentFY2025Share repurchase authorization $5.0M (3/6/2025) Active buybacks ($1.4M in Q3; $6.4M FYTD) Implementing authorization

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 FY2025)Previous Mentions (Q2 FY2025)Current Period (Q3 FY2025)Trend
Sales force expansion & productivity53 reps; route optimization; OCR for reimbursement; revenue/rep $985k 54 reps; record revenue; distributor +188%; hospital +17% 55 reps; revenue/rep $1.028M; cautious, “thoughtful” additions Improving productivity with measured expansion
Bronchiectasis awareness campaignLaunch; 6,000 clinicians in first 3 weeks 10,000 clinicians engaged 27,000 landing page views; continued education events Expanding reach and engagement
Reimbursement/payer relationsFocus on private payers; CMS annual ASP tailwinds Noted macro benefits; strong execution New payer relations leader; expanding coverage; limited risk seen Improving coverage; low current risk
Technology/CRMManufacturing/process optimization; planned investments New CRM investment initiated CRM go‑live early FY2026; user training emphasized Execution phase, near-term launch
Supply chain/tariffs/macroNot highlightedNot highlightedU.S.-centric ops; maintaining mid‑70s gross margins; monitoring suppliers Monitoring; currently insulated
Hospital/distributor channelsHospital +36% YoY; Cleveland Clinic order noted later Distributor +188% YoY; hospital +17% YoY Distributor +32.8% YoY; hospital −7.5% YoY; timing effects Volatile quarter-to-quarter timing

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 $0.07M; ~−0.4%)
    • Primary EPS – # of Estimates: 2*; Revenue – # of Estimates: 2*
      Values retrieved from S&P Global.
MetricConsensus*ActualSurprise ($)Surprise (%)
Revenue ($USD)$15,750,000*$15,684,000 −$66,000−0.4%
Diluted EPS ($USD)$0.20*$0.21 +$0.01+5.0%

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.