Electromed, Inc.

Greetings, and welcome to the Electromed third quarter fiscal 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Mike Cavanaugh, Investor Relations. Thank you, Mike. You may begin.

Good afternoon, and thank you for joining the Electromed earnings call. Earlier today, ElectraMed Incorporated released financial results for the third fiscal quarter of 2025. The quarter ended March 31, 2025. The press release is currently available on the company's website at www.smartvest.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, Chief Executive Officer, and Brad Nagel, Chief Financial Officer. As on previous calls, Jim will provide color around 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.

Thank you, Mike, and welcome everyone to Electromed's third quarter earnings call. With me today is Brad Nagel, Electromed's Chief Financial Officer. As we usually do, I will share some comments and observations about our operational highlights for the quarter, and we'll follow with a detailed review of our financials, and we'll wrap up with a question and answer session. I am happy to report another strong quarter today, and I'm proud to share that the quarter ended March 31st, 2025, marked our 10th consecutive quarter of year-over-year revenue and net income growth, a rarity among small-cap medical technology companies. To be more specific, revenue for the third quarter came in at $15.7 million, a 13.1% increase from the same period a year ago. Operating income increased in the quarter 16.2% to $2.1 million, and net income increased 26.7% on a year-over-year basis to $1.9 million, or 21 cents per diluted share. As most of you are aware, ElectroMed is laser-focused on the airway clearance space, specifically bringing relief to thousands of patients who are being treated for the chronic disease of bronchiectasis. It is our mission to be the most trusted airway clearance solution for both patients and the healthcare providers treating and managing this awful disease. At a high level, we pursue this goal through a strategy consisting of multiple initiatives which taken together have proven to be cohesive and effective in delivering revenue growth. We continue to thoughtfully expand our team of direct sales reps who promote our SmartVest airway clearance technology and ended the quarter with 55 reps, up from 51 reps in the prior year. I say we do this thoughtfully as we want to ensure a good return on our investment in incremental hires while also avoiding the pitfall of hiring too many people too quickly, which has caused many companies to stumble operationally. To highlight another initiative on the marketing front, we recently launched a Veterans Administration Direct-to-Consumer Outreach Program in 11 cities designed to demonstrate the benefits of our technology to veterans whose breathing may improve from airway clearance therapy. We customized the initiative specifically for the veterans' experience and includes a web landing page, blog, and social posts. We've also created a VA-specific informational packet for those veterans who wish to explore our therapy beyond the website and social media. This program generated 1,200 clicks with 1,100 page views since being launched last quarter. We continue to invest in raising awareness of the widespread challenge of bronchiectasis And I will spend a few minutes sharing several examples with you today. Most people have heard of COPD and cystic fibrosis, but very few Americans have heard of bronchiectasis. In fact, the number of people suffering from bronchiectasis is many times larger than those suffering from cystic fibrosis and happens to be a common comorbidity with COPD. Furthermore, it is estimated that there are over 4 million Americans who have bronchiectasis but are undiagnosed. To address this knowledge gap, in late 2024, we launched the Triple Down on Bronchiectasis campaign, which is designed to raise awareness of the disease, as well as the important function our SmartVest therapy plays in successful, long-term disease management. The program highlights the three-pronged treatment paradigm of airway clearance with SmartVest to remove mucus from the lungs, along with treating infections and reducing inflammation, thereby helping break the vicious vortex. We have now generated over 27,000 views to our Triple Down on Bronchiectasis landing page, and we are confident these efforts will result in greater awareness and more prescriptions over time. And while the campaign has been successful thus far, we made a subtle yet important enhancement to the program by emphasizing that the three-pronged treatment should focus on clear airways first. We did this because clearing the airways of mucus plays a critical role in reducing the fuel for future infections and allows patients to breathe easier. Another example of our leadership in raising awareness around bronchiectasis is the presentation we made in March to the California Thoracic Society where we hosted a product theater breakfast presentation which highlighted the importance of airway clearance as an important part of the bronchiectasis treatment continuum. Similarly, in partnership with respiratory associates, our clinical team delivered a continuing education unit titled, Bronchiectasis Overlap Syndrome, What's the Big Deal?, that was approved by the American Association of Respiratory Care, or AARC. The session was attended by over 120 registered nurses and registered therapists, and the response was overwhelmingly positive, with 64% of the attendees saying that the information gained during the session would lead to an adjustment in their practice habits. Due to strong demand, we have two more presentations scheduled for fiscal Q4. In the spirit of continuous improvement, we refreshed the product page on our website to make it more user-friendly. We had over 1.3 million visits to our website this fiscal year, which shows the impact our market development initiatives are having on driving interest in SmartVest. Additionally, we upgraded our SmartVest luggage to make it more ergonomic and spacious to better accommodate the device, hose, and vest. Additionally, we are supporting our prescribing clinics and moving them from the dark ages of order submission to us via fax to the new age of submitting orders via our Smart Order ePrescribe solution. This is an efficiency enhancement for our clinics and provides ElectroMed with complete prescription documentation, enabling us to ship product to our patients sooner so they can breathe easier. In Q3, 35% of our orders were submitted through our Smart Order ePrescribe solution. Given our strong operational performance this fiscal year, we have a healthy cash position on our balance sheet. And as many of you know, we are always looking for ways to better utilize our cash and deliver value to our shareholders. To that end, on March 6, 2025, our board approved a share repurchase of up to $5 million worth of Electromed stock. In Q3, approximately $1.4 million worth of stock was repurchased through this latest authorization, bringing fiscal year to date repurchasing up to $6.4 million. Before I turn the call over to Brad, I'd like to comment on the current tariff situation, which has become an area of concern for many companies. Electromed is a U.S.-based company with all of our manufacturing operations located in the U.S., and 99% of our net revenues are generated in the U.S. Given the concentration of our business operations in the U.S., we feel we are well-positioned to maintain our strong track record of on-time delivery to our customers and maintain our mid-70s gross margins. However, this is a fluid situation, which we are monitoring with our primarily domestic suppliers who may have exposure within their upstream supply chains. With that, I will turn the call over to Brad to discuss our financials. Brad?