Electromed(ELMD) - 2025 Q3 - Quarterly Report

Financial Performance - Net revenues for the three months ended March 31, 2025, increased by $1,813,000 or 13.1$15,684,000 compared to the same period in the prior year, while for the nine months, revenues increased by $6,723,000 or 16.9$46,607,000[60]. - Homecare revenue for the three months ended March 31, 2025, increased by $1,815,000 or 14.8$5,798,000 or 16.1%[61]. - Gross profit for the three months ended March 31, 2025, increased to $12,229,000, or 78.0$10,382,000, or 74.8% in the same period last year[65]. - Operating income for the three months ended March 31, 2025, increased by $299,000 or 16.2$2,140,000, while for the nine months, it increased by $2,374,000 or 55.9$6,620,000[72]. - Net income for the three months ended March 31, 2025, was $1,891,000, an increase from$1,493,000 in the same period last year, and for the nine months, it was $5,333,000 compared to$3,322,000[76]. Expenses - Research and development expenses for the three months ended March 31, 2025, increased by $110,000 or 65.9$214,000 or 44.6%[71]. - Selling, general and administrative expenses for the three months ended March 31, 2025, were $9,812,000, an increase of$1,438,000 or 17.2% compared to the same period last year[66]. Cash Flow and Financing - Cash flows from operating activities for the nine months ended March 31, 2025, were $7,534,000, consisting of net income of$5,333,000 and non-cash expenses of $3,184,000[77]. - Cash used for financing activities for the nine months ended March 31, 2025, was$8,228,000, primarily for share repurchase and taxes on stock awards[79]. - The company believes its working capital of approximately $35,684,000 will provide sufficient liquidity for the next twelve months[80]. - 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[81]. - As of March 31, 2025, there was no outstanding principal balance on the line of credit, and the interest rate on borrowings is set at 6.50% (prime rate of 7.50% less 1.0%)[81]. - For the nine months ended March 31, 2025, the company spent approximately $117,000 on property and equipment, a decrease from$265,000 in the same period of 2024[84]. - 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[84]. - 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[85]. - The company has a minimum tangible net worth covenant of not less than $10,125,000 as part of its credit facility agreements[82]. - Failure to comply with covenants could lead to an event of default, potentially resulting in accelerated debt maturity or refusal to renew the line of credit[83]. Regulatory and Market Risks - The company is focused on maintaining regulatory compliance and gaining future regulatory approvals for its products[88]. - The company anticipates ongoing availability of credit and intends to evaluate financing alternatives to meet cash requirements[85]. - The company faces risks including component shortages, adverse changes in healthcare regulations, and competition from new entrants in the market[88].