Electromed, Inc.

Good day and welcome to the ElectroMed fourth quarter fiscal year 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. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over 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 fourth quarter and fiscal 2025. The press release is currently available on the company's website at smartfest.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. As on previous calls, Jim will provide 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 thank you to everyone who's joining our call today to review our results for the fourth quarter and fiscal year 2025. As I complete my second year as ElectroMed's president and chief executive officer, I'm thrilled to share that the company had another exceptional quarter and year. As I look at our results, I'm reminded of a quote that captures our progress. Success is not a destination. It's a continuous journey of excellence. And that's exactly what we delivered, our 11th consecutive quarter of year-over-year revenue and profit growth. proving that our focused strategy and unwavering commitment to helping patients breathe easier continues to drive remarkable results. As usual, Brad will provide a thorough review of our financials, but I'd like to start with some of the numbers that tell our story. We achieved record quarterly revenue of $17.4 million, representing a robust 17% year-over-year growth, which brought our net revenues for the year to $64 million, also a record. This performance was driven by growth across all key markets in the quarter. Our core home care segment grew 15%, hospital surge 60%, and our distributor channel delivered 76% growth, fueled by strong demand from our carefully selected DME partners. While home care remains the core of our business, we believe the hospital and DME segments can add meaningful incremental revenues and contribute to overall profitability. Our profitability metrics are equally impressive. Operating income reached $3 million in Q4, marking a 30% increase year-over-year with improved operating leverage of 174 basis points over Q4 last year. Net income of $2.2 million was 21% higher than the same quarter last year, translating to a diluted earnings per share of 25 cents, a 24% increase versus the prior year. Once again during the fiscal year, our strong cash position enabled us to return excess capital to our shareholders. I'm pleased to report that in Q4, we successfully completed our second $5 million stock repurchase program of fiscal year 2025, demonstrating our confidence in the company's future and our commitment to enhancing shareholder value. We also achieved a significant milestone with the addition of our common stock into the Russell 2000 and 3000 indexes. which we believe should provide our stock with improved trading liquidity through broader institutional exposure. Closer to home, we were honored to be recognized by the Minneapolis St. Paul Business Journal as the seventh fastest growing public company in Minnesota, a notable achievement in a state known for its impressive roster of public companies, including many that are well-known medical technology leaders. Our growth initiatives are delivering exceptional results. A key component is the careful expansion of our direct sales team, and we ended the year with 55 representatives, up from 53 in the prior year, ensuring we can capitalize on the growing market opportunities ahead of us. Besides adding headcount, we also realized incremental revenue growth through productivity gains from our reps. During the year, productivity exceeded $1 million per rep, which was at the high end of our target range at the beginning of the year. Just three years ago, productivity was in the $850,000 range, which shows a meaningful improvement. Also, to support our rapid growth during the year, we bolstered our team with new leadership roles in marketing, payer access, and information technology. As we have mentioned many times in the past, one of the opportunities for ElectroMed is penetrating the large, unrecognized market for bronchiectasis treatment. It is estimated that today in the United States, there are approximately 923,000 patients diagnosed with bronchiectasis, and of those, only 148,000 are using HFCWO therapy, which suggests a patient opportunity of nearly 800,000 patients with bronchiectasis who could benefit from our smart vest. Even more eye-opening, it is estimated that over 4 million more people have bronchiectasis but are undiagnosed. To address this knowledge gap, our Triple Down on Bronchiectasis campaign is designed to bring awareness of both the disease and the important role HFCWO therapy can play in improving the quality of life for patients with bronchiectasis. The campaign has already generated over 31,000 views to our dedicated landing page and is succeeding in not only raising awareness about bronchiectasis, but also highlighting how our SmartVest therapy plays a crucial role in successful long-term disease management. This is done through a three-pronged treatment approach of airway clearance, infection treatment, and inflammation reduction. We're also targeting industry events for medical professionals who diagnose and treat bronchiectasis through the generation of clinical evidence supporting the use of SmartVest as a key component of effective treatment. An example is our recent presentation at the World Bronchiectasis Conference in Australia, which showcased compelling data from the Bronchiectasis Research Registry demonstrating the clinical value of HFCWO therapy and suggesting opportunities for earlier intervention in the disease process. Specifically, the study analyzed a cohort of 5,673 bronchiectasis patients, and while only 9% of patients had been prescribed HFCWO at baseline, 58% of non-HFCWO users at baseline met CMS guideline criteria for HFCWO therapy. This analysis suggests the need for education on HFCWO prescribing indications and guidelines earlier in the disease process. We're actively working on the manuscript now with anticipated completion in Q1 of fiscal year 2026. We also continue to raise the bar on our operational performance. As a US-based company with 99% of our revenues generated domestically in all manufacturing operations located in the United States, we feel we are well insulated from tariff-related turbulence and are therefore well positioned to maintain our strong track record of on-time delivery and preserve our healthy mid-70s gross margins. However, tariffs are a fluid situation, which we're continuing to monitor with our primarily domestic suppliers who may have exposure within their upstream supply chains. In Q4, we maintained zero back orders with a first pass yield of 99%, while inventory levels remain lean. We initiated our manufacturing optimization plan to add new capacity with completion expected in early fiscal year 2026, and just implemented a new CRM system in July, which we expect will enhance sales productivity while providing incremental market insights. Another important effort is supporting our prescribing clinics by moving them from the dark ages of inefficient order submission to our fulfillment team via fax and into the new age of submitting orders via our smart order e-prescribe solution. This significant efficiency enhancement for our clinic seamlessly provides ElectroMed with complete prescription documentation, enabling us to ship SmartVest to our patients sooner so they can breathe easier. In Q4, 38% of the orders we received were via our smart order e-prescribed solution. As we look ahead, I'm optimistic about our prospects to deliver meaningful results. As the only pure play HFCWO therapy provider with a convenient direct-to-patient model, we're taking market share and expanding our reach through sales team growth, improved productivity, investments in clinical education, and innovation. Our focus remains on helping patients with bronchiectasis breathe easier while delivering exceptional value to our shareholders. That concludes my prepared remarks, and I'd now like to turn the call over to Brad Nagel for a review of our financials. Brad, over to you.