Electromed, Inc.

Hello and welcome to the Electromed first quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw from the queue, please press star then two. As a reminder, this conference is being recorded. I would now like to turn the call to Mike Cavanaugh, Investor Relations. Please go ahead.

Good afternoon, and thank you for joining the ElectroMed earnings call. Earlier today, ElectroMed Incorporated released financial results for the first fiscal quarter of 2025. The quarter ended September 30, 2024. The press 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. Joining me on the call today are Jim Kniff, ElectroMed's President and Chief Executive Officer, and Brad Nagel, Chief Financial Officer. Jim will provide some operational highlights from the quarter. Brad will then review the financials, and we will close with a question and answer session. With that, I will now turn the call over to Jim Kniff, President and Chief Executive Officer of ElectroMed.

Thanks, Mike, and welcome, everyone, to ElectroMed's first quarter earnings call. Continuing our momentum from a record-setting fiscal year 2024, I'm pleased to report another strong quarter for Electromed to kick off fiscal year 2025. It was our eighth consecutive quarter of year-over-year revenue and profit growth. In the quarter, we generated net revenue of $14.7 million, representing year-over-year growth of 19%, albeit against a lower prior year revenue comparison. For the fifth consecutive quarter, all of our revenue categories increased, demonstrating that our strategic growth initiatives have continued to yield impressive results. Notably, home care revenue grew 18.5% year-over-year, while revenue from our hospital business, where we see a market expansion opportunity for ElectroMed, grew 36.1%. As is our normal practice, Brad will provide an in-depth review of our financials, so I will only touch on some of the high points in the quarter. In addition to the strong net revenue growth in the quarter, operating income came in at $1.9 million compared to $0.1 million in the same quarter of fiscal year 2024. Earnings before taxes was $2.1 million, and we generated diluted earnings per share of $0.16. Overall, very robust results. I want to thank the entire Electromed team for delivering on our company's operational and financial initiatives in the quarter. As I mentioned, fiscal 2024 was record setting on many levels, and we are continuing our quest to improve our operational and financial results. The management team's incentive compensation is largely based on our ability to grow profitably, and it's noteworthy that our share price has more than doubled in the past 12 months. With that in mind, we spent a lot of time developing our goals for the year and have entered fiscal 2025 with a focus on growing, raising awareness of our airway clearance technology and improving operational efficiencies, thereby building further shareholder value. Among other things, we took step towards our goals of a continued but thoughtful expansion of the sales team, investments in our direct-to-consumer business, and our plan to overhaul our manufacturing process that is designed to reduce waste, improve productivity, and result in increased product supply to meet our accelerating growth trajectory. Let's review our commercial initiatives in more detail, starting with the sales team. During the quarter, we continued to add direct sales reps and ended the quarter with 53 in total. We have a near-term target of 57 sales reps, which we intend to achieve by the end of the second fiscal quarter. Our approach to the sales team is to hire reps who have the skills and experience to be successful in what is largely a clinical sale and who can make a positive impact to our growth in the near term. We're not simply hiring reps for the sake of a larger team and our hiring will continue to be measured. For our reps to be more successful, we invested in route optimizing software in the quarter, so they can better plan their call schedules and be more productive. In a related move, we also invested in optical character recognition software for our reimbursement team. This investment has already improved their ability to help ensure patients meet insurance criteria for our technology so they get our life-changing technology sooner. Our direct sales and fulfillment model has been a real differentiator for Electromed, and we're always striving to make the fulfillment process more streamlined, which directly benefits patients getting our therapy sooner and ultimately improves our revenue. In another move designed to improve efficiency, reduce the time to delivery, and support future growth, we plan to make investments to increase our manufacturing capacity by optimizing our production floor, which we believe will improve flow and reduce product movements during the manufacturing process. We expect this initiative to reduce the time to manufacture product, reduce operating expenses, and ensure we have the adequate supply of product to feed our accelerating growth. In addition to improving operational efficiencies, we continue to work hard to raise awareness of bronchiectasis, which, despite being widespread, is often underdiagnosed. Bronchiectasis is a chronic, irreversible condition. To help improve physician and patient awareness of the disease, we successfully launched our Triple Down on Bronchiectasis campaign. The campaign focuses on the recommended three-pronged bronchiectasis treatment protocol to manage a patient's vicious vortex of repeat infection, inflammation, and mucus buildup, which often leads to irreversible lung damage. Specifically, our campaign highlights the need for a comprehensive treatment approach for patients with bronchiectasis to treat their infections, to reduce their inflammation, and to use our SmartVest clearway technology to clear their airways of mucus. Antibiotics are prescribed to control infections, and there's promising new drugs coming to the market to help those suffering from bronchiectasis, which target inflammation. SmartVest Clearway is the third component of the three-pronged treatment protocol to clear mucus. Removing mucus from a patient's airway via SmartVest Clearway technology is a critical treatment step as it removes the fuel for future cycles of inflammation and infections. The awareness campaign has included the launch of a landing page, digital advertisements, and sales tools. The campaign is off to a tremendous start, with over 6,000 clinicians engaging with the content on our landing page in the first three weeks post-launch. I'd also like to mention that we recently completed our annual ISO 13485 Notified Body Surveillance Audit. These audits are important because they verify that an organization continues to meet the quality management system standards and regulatory requirements for medical devices. Our audit was focused on production, record control, complaints, CAPAs, and internal audits. The audit was very thorough, and we were very pleased with the positive results. Lastly, before I turn the call over to Brad to review our financials, I want to welcome Peter Horwich as the new VP of Marketing. His hiring was announced in late October, and we are excited to have him join our dynamic team. He is an experienced marketing executive, and his expertise in medical technology market development is perfectly suited to help lead LectureMed through its next stage of growth. Peter's position is a strategic role for LectureMed that will strengthen our marketing team and provide leadership in driving therapy adoption for SmartVest Clearway in support of our revenue growth goals. We look forward to leveraging Peter's talent for further market expansion and to strengthen our commercial efforts. Overall, I'm very pleased with our results this quarter. We are off to an excellent start to fiscal 2025, and I look forward to future updates on our continued positive operational momentum over the remainder of the year. Lastly, I would once again like to thank the entire ElectroMed team for their contributions and hard work that culminated in another successful quarter. With that, I'd like to hand the call over to Brad to discuss our financials in more detail. Brad?