Electromed, Inc.

Greetings. Welcome to the ElectroMed Fiscal Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I'll now turn the conference over to your host, Mike Cavanaugh.

You may begin. Good afternoon, and thank you for joining us today. Earlier today, ElectroMed Incorporated released financial results for the quarter-ended March 31, 2022. The release is currently available on the company's website at www.smartbest.com. Kathleen Scarvan, President and Chief Executive Officer, and Mike McCourt, Chief Financial Officer, will host this afternoon's call. As a reminder, some of the statements that management will make on this call are considered forward-looking statements including statements about the company's future operating and financial results and plans. Such statements are subject to risks and uncertainties that could cause actual performance or achievements to be materially different from those projected. Any such statements represent management's expectations as of today's date. You should not place undue reliance on these forward-looking statements. And the company does not undertake any obligation to update or revise forward-looking statements whether as a result of new information, future events, or otherwise. Please refer to the company's SEC filings for further guidance on this matter. We'll now turn the call over to Kathleen Scarvan, President and CEO of Electromed.

Thank you, Mike, and thank you to everyone joining the call today. As always, we appreciate your continued support of Electromed and look forward to updating you on our progress on the four key pillars in our strategic growth plan. continued Salesforce growth, direct-to-consumer marketing, infrastructure to support our anticipated sales growth, and clinical studies to further promulgate the body of evidence supporting SmartVest airway clearance and its ability to provide positive outcomes for bronchiectasis patients. I am incredibly proud of our team's hard work and results positioning ElectroMed as a leading provider of airway clearance devices. In the third quarter of fiscal year 2022, we recorded 15.4% year-over-year growth, which is a testament to our team's execution, managing through a highly challenging operating environment. During the months of January and February, we experienced a reduction in clinic access and patient flow due to COVID-19-related issues as the Omicron variant spiked across the United States. Additionally, we also observed longer approval timelines for our non-Medicare insurance payers, which resulted in fewer referrals being converted into approvals during the period, negatively impacting our home care revenue for the quarter. In March, we experienced a rapid pickup in referrals as Omicron cases declined, clinic access and patient flow improved, and we increased our number of direct sales representatives in the field. This culminated into March being the highest referral month in company history. We also maintained strong sales representative productivity in the quarter despite the headwinds from the ongoing pandemic. Home care direct annualized sales productivity during the quarter was $943,000 per sales representative, above our targeted range of $800,000 to $900,000. This is a direct testament not only to the hard work and dedication of the team, but also emphasizes the value that SmartVest offers to patients, providers, and payers. I would like to take a moment to comment on the progress we made in the third quarter expanding our sales force. As mentioned in prior updates, our goal is to staff 43 direct sales territories. At the close of the third quarter, we were staffed at 42 direct sales representatives, nearing our fully staffed level. We are pleased with the quality of our new sales reps and our efforts to grow the sales force in a difficult hiring environment. And we believe our decision to internalize the recruiting function and strengthen training and onboarding processes are paying off. Additionally, we were extremely pleased to announce the hire of Chris Holland, our new Chief Commercial Officer in February. Chris holds a fundamental role in our strategic initiatives and growth plans. He provides direct oversight and additional energy and focus to the sales and marketing initiatives that will directly increase Electromed's market share and support our revenue growth goals, ultimately enhancing shareholder value. He has onboarded quickly traveled extensively in the field visiting our key accounts, and is deeply engaged in assessing current revenue growth strategies. Chris is already adding significant value outlining our plan to accelerate future revenue growth, and we look forward to continued execution of our commercial initiative. Shifting gears to provide an update on our next generation product and clinical evidence to support the use of SmartVest as a key treatment for bronchiectasis, We remain on track to launch the new SmartVest airway clearance device in the first half of fiscal year 2023. As a reminder, the new SmartVest will have multiple value added innovations to enhance the patient experience. It will be smaller and lighter weight while maintaining the same performance differentiation as our current SQL model, which allows patients to breathe more easily during therapy and provides patients and physicians with more information about treatment outcomes through our SmartVest Connect technology. Data suggests that there is a significant untapped market for HFCWO therapy, and we strongly believe the next generation SmartVest will provide a competitive advantage as we seek to penetrate that market. As previously discussed, we continue to invest in clinical studies to generate clinical evidence to demonstrate the importance of our SmartVest airway clearance therapy to improve outcomes for patients diagnosed with bronchiectasis. Our multi-center bronchiectasis outcome study utilizing SmartVest continues to enroll patients, although at a slow pace due to patient concerns, with face-to-face follow-up visits. This is a concern that is impacting other observational studies, according to physicians at our study site. We are in the process of bringing on additional sites to address this issue. Our second study, a post-surveillance study with chronic obstructive pulmonary disease and bronchiectasis patients prescribed SmartVest, has reached its patient enrollment targets and completion of the follow-up assessment. A reminder, this study is utilizing quality of life questionnaires to measure outcomes prior to therapy and at two intervals following initiation of the therapy. We are now in the statistical analysis and review process. We believe we are the industry leader in advancing clinical studies, providing ElectroMed with further differentiation during the sales process and increasing physician awareness of HFCWO devices for effective treatment of bronchiectasis. Before I turn the call over to Mike, I want to comment on the CFO transition, announcing resignation and the appointment of Michelle Wertz, our controller to the position of interim CFO. On behalf of the entire Electromed team, I want to thank Mike for his contributions to the company and wish him well in his future endeavors. Over the past two years, Mike has been invaluable, working tirelessly to support our growth strategies and to successfully lead and manage the corporate finance role. I appreciate that he will remain through July 1st to facilitate a smooth transition. I look forward to collaborating with Michelle in her interim CFO role and leveraging her many years of experience in corporate finance, accounting and external reporting and in the healthcare industry. I cannot think of a better candidate with her intimate familiarity with ElectroMed strategies and business model as we explore options for a permanent replacement. And with that, I will now like to turn the call over to Mike, our Chief Financial Officer, to review our financial results.