Electromed(ELMD) - 2025 Q2 - Quarterly Report

Financial Performance - Net revenues for the three months ended December 31, 2024, increased by 18.7% to $16,255,000 compared to$13,689,000 for the same period in the prior year[60]. - Homecare revenue increased by $1,925,000 or 15.2$12,627,000, representing 77.7% of net revenues, up from 77.0% in the same period last year[66]. - Operating income increased by $279,000 or 12.3$2,542,000 for the three months ended December 31, 2024, compared to the same period in the prior year[74]. - Net income for the three and six months ended December 31, 2024, was $1,968,000 and$3,442,000, respectively, compared to $1,674,000 and$1,829,000 for the same periods in the prior year[79]. Expenses - Research and development expenses increased by $144,000 or 134.6$1,659,000 or 20.3% for the three months ended December 31, 2024, compared to the same period in the prior year[67]. Cash Flow and Financing - Cash flows from operating activities for the six months ended December 31, 2024, were $5,460,000, consisting of net income and adjustments for non-cash expenses[80]. - The company reported cash used for financing activities of$5,010,000 for the six months ended December 31, 2024, primarily for share repurchase[82]. - The company believes its working capital of approximately $35,522,000 will provide sufficient liquidity for the next twelve months[83]. - The company maintains a credit facility with a maximum borrowing limit of$2,500,000, which is secured by a security interest in substantially all tangible and intangible assets[84]. - As of December 31, 2024, there was no outstanding principal balance on the line of credit, and the interest rate on borrowings is set at 6.5% (prime rate of 7.5% less 1.0%)[84]. - For the six months ended December 31, 2024, the company spent approximately $270,000 on property and equipment, compared to$180,000 for the same period in 2023, indicating a 50% increase in capital expenditures[87]. - The company expects to finance planned equipment purchases through cash flows from operations or borrowings under the credit facility, with potential additional debt if unforeseen capital needs arise[87]. - The company believes its cash, cash equivalents, and cash flows from operations will be sufficient to meet working capital and capital expenditure requirements for fiscal 2025 and the foreseeable future[88]. - The company has a minimum tangible net worth covenant of not less than $10,125,000 as part of its credit facility agreements[85]. - Failure to comply with financial covenants could result in an event of default, potentially leading to accelerated debt maturity or restricted access to additional funds[86]. Regulatory and Compliance - The company is focused on maintaining regulatory compliance and gaining future regulatory approvals, which are critical for its operations[90]. - The company anticipates ongoing availability of credit and the ability to renew its line of credit, which is essential for its liquidity[89]. - The company is evaluating financing alternatives to satisfy its working capital and other cash requirements amid macroeconomic uncertainties[88].