Electromed Soars: 15% Revenue Growth, 45% Net Income Surge

TL;DR

**ELMD is crushing it with double-digit revenue and profit growth, and they're buying back stock – this one's a buy!**

AI Summary

Electromed, Inc. (ELMD) reported a strong financial performance for the three months ended September 30, 2025, with net revenues increasing by 15.1% to $16,887,000 from $14,668,000 in the prior year. Net income saw a significant jump of 44.9%, reaching $2,136,000 compared to $1,474,000 in the same period last year. This growth was primarily driven by the homecare market, which generated $14,889,000 in revenue, up from $13,211,000. Operating expenses rose to $10,527,000 from $9,553,000, largely due to increased selling, general and administrative costs of $10,286,000. The company's cash and cash equivalents decreased by $1,174,000 to $14,113,000, mainly due to $1,003,000 spent on common stock repurchases. A new stock repurchase authorization of up to $10,000,000 was approved on September 9, 2025, with $1,003,000 already utilized. The company is also evaluating the impact of the One Big Beautiful Bill Act (OBBBA) on the deductibility of research and experimental expenditures, which may affect future income tax payments.

Why It Matters

Electromed's robust revenue and net income growth signal strong demand for its HFCWO therapy products, particularly in the homecare segment, which is crucial for investors seeking growth in the medical device sector. The company's strategic stock repurchase program, with $1,003,000 already spent, indicates management's confidence and could boost shareholder value, potentially making ELMD more attractive than competitors. For employees, this performance suggests stability and potential for continued investment in R&D, as evidenced by the $241,000 spent this quarter. Customers benefit from continued innovation in airway clearance products, while the broader market sees a healthy player in the pulmonary care space, potentially influencing competitive dynamics.

Risk Assessment

Risk Level: medium — While Electromed shows strong growth, its cash and cash equivalents decreased by $1,174,000 to $14,113,000, partly due to $1,003,000 in stock repurchases, which could impact liquidity if growth slows. Additionally, the company is evaluating the impact of the One Big Beautiful Bill Act (OBBBA) on future income tax payments, introducing uncertainty regarding its tax obligations.

Analyst Insight

Investors should consider initiating or increasing positions in ELMD, given the strong revenue and net income growth, especially in the high-margin homecare segment. Monitor the impact of the OBBBA on future tax liabilities and the ongoing stock repurchase program for continued shareholder value creation.

Financial Highlights

debt To Equity

0.20

revenue

$16.89M

operating Margin

15.8%

total Assets

$53.61M

total Debt

$8.87M

net Income

$2.14M

eps

$0.25

gross Margin

78.1%

cash Position

$14.11M

revenue Growth

+15.1%

Revenue Breakdown

Key Numbers

• $16.89M — Net Revenues (Increased by 15.1% from $14.67M year-over-year.)
• $2.14M — Net Income (Increased by 44.9% from $1.47M year-over-year.)
• $0.25 — Diluted EPS (Increased from $0.16 year-over-year.)
• $14.11M — Cash and Cash Equivalents (Decreased from $15.29M at June 30, 2025.)
• $10.29M — Selling, General and Administrative Expenses (Increased from $9.39M year-over-year.)
• $1.00M — Common Stock Repurchases (Amount spent under the new $10M authorization.)
• 23.8% — Effective Tax Rate (Decreased from 30.9% year-over-year.)
• $14.89M — Homecare Revenue (Primary driver of net revenue growth, up from $13.21M.)

Key Players & Entities

• Electromed, Inc. (company) — registrant
• NYSE American LLC (regulator) — exchange where common stock is registered
• U.S. Securities and Exchange Commission (regulator) — regulatory body for financial statements
• One Big Beautiful Bill Act (regulator) — new U.S. law impacting tax deductibility
• $16,887,000 (dollar_amount) — net revenues for three months ended September 30, 2025
• $2,136,000 (dollar_amount) — net income for three months ended September 30, 2025
• $10,000,000 (dollar_amount) — total stock repurchase authorization
• $1,003,000 (dollar_amount) — amount of common stock repurchased as of September 30, 2025
• 8,340,538 (dollar_amount) — shares of common stock outstanding as of November 5, 2025
• 500 Sixth Avenue NW New Prague , Minnesota 56071 (person) — Address of principal executive offices

FAQ

Risk Factors

• Impact of One Big Beautiful Bill Act (OBBBA) [medium — regulatory]: The company is evaluating the potential impact of the OBBBA on the deductibility of research and experimental expenditures. This could affect future income tax payments and the company's effective tax rate.
• Supply Chain and Inventory Management [medium — operational]: Inventories increased by $472,000 to $3,771,000 from $3,299,000 year-over-year. This increase, alongside a rise in accounts payable ($3,138,000 from $2,667,000), suggests potential inventory build-up or supply chain pressures that warrant monitoring.
• Stock Repurchase Program [low — financial]: The company has authorized up to $10,000,000 in stock repurchases, with $1,003,000 already utilized, leading to a decrease in cash and cash equivalents. While intended to return value to shareholders, aggressive buybacks could impact liquidity if not managed carefully.

Industry Context

Electromed operates in the pulmonary care market, specifically focusing on High Frequency Chest Wall Oscillation (HFCWO) technology. The market is driven by the need for effective airway clearance solutions for patients with compromised pulmonary function. Key trends include the development of more user-friendly and technologically advanced devices, and increasing adoption in homecare settings.

Regulatory Implications

The company faces regulatory oversight from the FDA for its medical devices. The potential impact of the One Big Beautiful Bill Act (OBBBA) on the deductibility of R&D expenditures is a notable regulatory risk that could affect future tax liabilities.

What Investors Should Do

1. Monitor the impact of the OBBBA on tax expenses.
2. Analyze the sustainability of revenue growth drivers.
3. Evaluate the company's cash management strategy.

Key Dates

• 2025-09-30: End of Q1 Fiscal Year 2026 — Reporting period for the strong financial results, including 15.1% revenue growth and 44.9% net income increase.
• 2025-09-09: New Stock Repurchase Authorization Approved — Authorized up to $10,000,000 in stock repurchases, with $1,003,000 already utilized, impacting cash position.
• 2022-11-01: SmartVest Clearway 510(k) Clearance — Received FDA clearance for a key product, contributing to the company's product portfolio and market presence.

Glossary

HFCWO

High Frequency Chest Wall Oscillation. A technology used in airway clearance devices. (The core technology behind Electromed's SmartVest Airway Clearance System.)

510(k) clearance

A process by which the U.S. Food and Drug Administration (FDA) determines that a proposed medical device is 'substantially equivalent' to a legally marketed device. (Indicates regulatory approval for new or modified medical devices, like the SmartVest Clearway.)

Contract assets

Represents the company's unconditional right to receive consideration for goods or services that have been transferred to a customer. Similar to accounts receivable but may arise from different contract terms. (An increase in contract assets ($1.17M from $1.04M) suggests growing revenue or changes in payment terms.)

Retained earnings

The cumulative amount of net income that a company has retained over time, rather than distributing to shareholders as dividends. (An increase in retained earnings ($22.31M from $21.19M) reflects the company's profitability.)

Share-based compensation expense

The cost recognized for employee stock options, restricted stock units, and other equity-based awards. (Decreased from $697,000 to $458,000, positively impacting net income.)

Year-Over-Year Comparison

Electromed reported a significant improvement in performance compared to the prior year's comparable period. Net revenues increased by 15.1% to $16.89M, driven by the homecare segment. Net income saw a substantial jump of 44.9% to $2.14M, aided by a lower effective tax rate of 23.8% (down from 30.9%) and a decrease in share-based compensation expense. Operating expenses rose, primarily due to higher SG&A costs, but the revenue growth outpaced this increase, leading to improved operating income. Cash and cash equivalents decreased due to stock repurchases, a new risk factor to monitor.

Key Financial Figures

• $0.01 — ection 12(b) of the Act: Common Stock, $0.01 par value ELMD NYSE American LLC

Filing Documents

• elmd20250930_10q.htm (10-Q) — 601KB
• ex_859450.htm (EX-31.1) — 12KB
• ex_859451.htm (EX-31.2) — 12KB
• ex_859452.htm (EX-32.1) — 4KB
• ex_859453.htm (EX-32.2) — 4KB
• 0001437749-25-034445.txt ( ) — 3582KB
• elmd-20250930.xsd (EX-101.SCH) — 36KB
• elmd-20250930_cal.xml (EX-101.CAL) — 32KB
• elmd-20250930_def.xml (EX-101.DEF) — 237KB
• elmd-20250930_lab.xml (EX-101.LAB) — 237KB
• elmd-20250930_pre.xml (EX-101.PRE) — 267KB
• elmd20250930_10q_htm.xml (XML) — 404KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements 1

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 16

Controls and Procedures

Item 4. Controls and Procedures 16

– OTHER INFORMATION

PART II – OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 16

Risk Factors

Item 1A. Risk Factors 16

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 17

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 17

Other Information

Item 5. Other Information 17

Exhibits

Item 6. Exhibits 18 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. Electromed, Inc. Condensed Balance Sheets September 30, 2025 June 30, 2025 (Unaudited) Assets Current Assets Cash and cash equivalents $ 14,113,000 $ 15,287,000 Accounts receivable (net of allowances for credit losses of $ 45,000 ) 24,756,000 24,660,000 Contract assets 1,170,000 1,036,000 Inventories 3,771,000 3,299,000 Income tax receivable 206,000 408,000 Prepaid expenses and other current assets 543,000 392,000 Total current assets 44,559,000 45,082,000 Property and equipment, net 4,978,000 4,714,000 Finite-life intangible assets, net 389,000 371,000 Other assets 1,226,000 1,173,000 Deferred income taxes 2,462,000 2,462,000 Total assets $ 53,614,000 $ 53,802,000 Liabilities and Shareholders' Equity Current Liabilities Accounts payable $ 3,138,000 $ 2,667,000 Accrued compensation 2,731,000 5,079,000 Warranty reserve 1,737,000 1,645,000 Other accrued liabilities 1,153,000 1,077,000 Total current liabilities 8,759,000 10,468,000 Other long-term liabilities 110,000 125,000 Total liabilities 8,869,000 10,593,000 Shareholders' Equity Common stock, $ 0.01 par value per share, 13,000,000 shares authorized; 8,356,847 and 8,349,176 shares issued and outstanding, as of September 30, 2025, and June 30, 2025, respectively 84,000 83,000 Additional paid-in capital 22,353,000 21,941,000 Retained earnings 22,308,000 21,185,000 Total shareholders' equity 44,745,000 43,209,000 Total liabilities and shareholders' equity $ 53,614,000 $ 53,802,000 See Notes to Condensed Financial Statements (Unaudited). 1 Table of Contents Electromed, Inc. Condensed Statements of Operations (Unaudited) Three Months Ended September 30, 2025 2024 Net revenues $ 16,887,000 $ 14,668,000 Cost of revenues 3,690,000 3,177,000 Gross profit 13,197,000 11,491,000 Operating expenses Selling, general and administrative 10,286,000 9,387,000 Research

Management ' s Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management ' s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Financial Statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and our audited financial statements and related notes thereto included in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 ("fiscal 2025"). Overview Electromed, Inc. ("we," "our," "us," "Electromed" or the "Company") develops and provides innovative airway clearance products applying High Frequency Chest Wall Oscillation ("HFCWO") technologies in pulmonary care for patients. We manufacture, market and sell products that provide HFCWO, including the SmartVest Airway Clearance System ("SmartVest System") that includes our newest generation SmartVest Clearway Airway Clearance System ("Clearway"), previous generation SmartVest SQL, and related garments and accessories to patients with compromised pulmonary function. The SmartVest Clearway, which received 510(k) clearance from the U.S. Food and Drug Administration in November 2022, provides patients with proven quality of life outcomes while offering a state-of-the-art patient experience with a simple touch scr

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