Electromed, Inc.

Greetings and welcome to ElectroMed's fourth quarter fiscal year 2023 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce Mike Cavanaugh, Investor Relations. Thank you. You may begin.

Good afternoon, and thank you for joining the ElectroMed earnings call. Earlier today, ElectroMed Incorporated released financial results for the first year and fourth fiscal quarter of 2023. The quarter ended June 30, 2023. The release is currently available on the company's website at www.smartbest.com. Before we get started, I would like to remind everyone that 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 any undue reliance on those 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. I would like to take a minute to introduce you to a new name on today's call, Jim Kniff. Jim will be joining Brad Nagel, Electromed's Chief Financial Officer, to provide the Q4 fiscal year 2023 corporate update. Jim joined Electromed as President and Chief Executive Officer on July 1, 2023. He brings over 30 years of executive leadership in the med tech and broader healthcare industry, with demonstrated success in general management, sales and marketing, finance, manufacturing, distribution, mergers, and acquisitions. Previously, Jim was the President, Chief Executive Officer, and Board Director of ProVista, a Vizient company where he consistently grew revenue, executed two acquisitions, and shaped the strategic plan for the company. Prior to that, Jim was the President, Chief Executive Officer, and Board Director for Leiters, the Senior Vice President of Americas for Kinetics Concepts, and the President of Emerging Markets for Stryker Corporation. I am delighted to introduce him to the participants on this call. With that, I will now turn the call over to Jim. Jim, please take it.

Thanks, Mike. It's a pleasure to be here today. My first earnings call is the CEO of Electromed, and I'm grateful for everyone joining the call. I look forward to presenting a business update on our fiscal year 2023 fourth quarter and full year results. Moreover, I'm thrilled to be joining such a dynamic team with the mission of improving the quality of life for millions of patients. I'd be remiss not to mention my deep gratitude for Kathleen Skarban, the former president and chief executive officer of ElectraMed and current board chair. Thanks to her exceptional leadership for over a decade, the company is in a strong position to continue to deliver against our strategic initiatives, and I look forward to building upon the business's strong foundation. I am pleased to report another strong quarter as we achieved record quarterly revenue of $13.6 million, a robust year-over-year growth rate of 21%. Total revenues for fiscal year 2023 were $48.1 million, a 15% increase from fiscal year 2022. In the key home care segment, the results were even more impressive, generating $43.9 million in home care revenue, which represents a 16% increase year-over-year versus fiscal 2022. Brad will discuss the financial results in more detail, but I wanted to underscore that these results clearly demonstrate that our strategic growth investments are yielding the results we anticipated. Our commercial team delivered sales growth, we hired key talent, expanded our direct-to-consumer marketing, and navigated the impact of the CMS waiver expiration. And at last point, I want to remind everyone about the CMS waiver, which was implemented during and tied to the public health emergency for COVID-19. As we discussed in our last business update, the CMS waiver for respiratory devices expired in May 2023. The waiver allowed indications and documentation typically required for HFCWO to be bypassed, allowing for an easier and faster approval for patients on Medicare. It's also worth noting that commercial plans, by and large, never waived the documentation requirements, meaning that the waiver benefited only a subset of our referrals and approvals. All that being said, our sales and reimbursement teams did a great job focusing on provider education regarding patient eligibility requirements to mitigate the impact of the waiver expiration on our fourth quarter results. Turning to an update on our strategic growth initiatives, it's gratifying to see the progress across all our growth, strategic growth plans. Key among them being the continued expansion of the Salesforce, which includes 46 direct reps in the field as of the end of fiscal year 2023. Our Salesforce experienced high referral flow and the productivity of the team continues to be impressive. We ended the year on the high end of our previously disclosed productivity target of 850 to 950,000 coming in at $945,000 in revenue per rep for the full year. We continue to make strategic investments in our commercial team expansion as they consistently deliver excellent top-line growth. In fiscal year 2024, we are budgeting for 54 direct sales reps, which will enable us to support a larger pool of physician prescribers. We anticipate having all our open positions filled by the end of Q1. I want to take a moment to turn to the SmartVest Clearway launch, a strategic milestone for ElectroMed, which was first offered into the key home care segment. As Kathleen mentioned in our third quarter business update, the SmartVest Clearway therapy device has received rave reviews from clinicians and patients, highlighting Clearway's ease of use, state-of-the-art touchscreen user interface, and its lightweight, sleek, and sophisticated design. This is the first new HFCWO device offered to the market in years. We have targeted approximately 1,000 of the top prescribers of HFCWO therapy in the U.S. for initial launch of Clearway. However, historically, not all these physicians have been ElectroMed prescribers. The new device is a door opener for existing prescribers of HFCWO and a commercial opportunity to expand adoption of the device to new customers. In a related vein, I'm excited to announce that we are currently underway with the launch of Clearway for hospital customers. We launched the product in the first quarter of fiscal year 2024 and are looking forward to leveraging our new state-of-the-art product to gain share in the hospital market. As we have said in the past, our primary goal is to enhance the patient therapy experience. With the new Clearway hospital device, ElectraMed has made significant advances in HFCWO technology that we believe gives us a tangible advantage over the competition. The Clear Away device is an accelerant for our sales team to continue our growth and momentum. I look forward to updating you on the progress of the Clear Away product for hospitals in our first quarter fiscal 2024 business update. Turning to operating income, operating income for the fourth quarter was $1.5 million, a 204% increase versus prior year. a result of operating leverage derived from the investments we have made in people, systems, and our innovative new Clearway device. I've already touched on the expanded sales force, which, despite having a ramp time for new personnel, is achieving productivity at the high end of our targeted range. In another example of the investments we have made, ElectroMed implemented a new enterprise resource planning, or ERP, system in the corridor, to help improve efficiency in our supply, fulfillment, and financial processes. The integration went very well. We are already yielding benefits from the new ERP system and improved operational rigor and data insights into the business. Another key component of the election business model is fulfillment. This is the team that converts referrals into approvals and devices shipped to patients. We continue to focus and refine our client servicing as we handle larger referral volumes and mitigate the impact of the CMS waiver expiration. Next, I wanted to take a minute to update you on another strategic goal of ElectroMeds, growing the body of evidence in support of HFCWO. We have multiple published clinical outcome studies demonstrating a significant improvement in quality of life and reduction in exacerbation rates, hospitalizations, emergency department visits, and antibiotic prescriptions in bronchiectasis patients using the SmartVest system. As a reminder, we designed and ran a quality of life study for COPD patients using SmartVest, which we shared at the 2023 American Thoracic Society International Conference and published in the American Journal of Respiratory and Critical Care Medicine. The study's results demonstrated statistically significant favorable response to HFCWO as add-on therapy for patients with a primary diagnosis of COPD. We've also shared data from our bronchiectasis quality of life trial at the 2023 World Bronchiectasis and NTM Conference, highlighting the effects of HFCWO on clinical symptoms of patients with bronchiectasis. We will continue to generate additional clinical evidence to support the SmartVest system as a preferred treatment for bronchiectasis patients, and we will promote our new sponsored continuing medical education course aimed squarely at prescribers of the HFCWO therapy. The purpose of the CME program is twofold. First, to focus on early identification of bronchiectasis and HFCWO treatment to pulmonologists, and secondly, to make it easier for pulmonologists to obtain necessary CME credits. These credits are important to physicians because some states require a specified number of credits annually to maintain medical licenses, and because most hospitals require a specified number of credits for their physicians to remain credentialed to see patients. Lastly, before I hand the call over to Brad, another key growth initiative for 2024 will again be direct-to-consumer and physician marketing, intended to raise awareness of the SmartVest Clearway, HFCWO therapy, and drive demand. With that, I'd like to hand the call over to Brad for a review of our financials. Brad?