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Electromed, Inc. Reports 2012 Second Quarter Results

Electromed, Inc. (NYSE Amex: ELMD) today announced financial results for the three-month period ended December 31, 2011. Net Revenues for the three months ended December 31, 2011, were approximately $4,790,000, a 2.2% increase compared to Net Revenues of approximately $4,686,000 for the same period last year. The Company also announced Net Income of approximately $25,000, or $0.00 per basic and diluted share, for the three months ended December 31, 2011, compared to Net Income of approximately $292,000, or $0.03 per basic and diluted share, for the same period last year. The reduction in Net Income results was attributable to missed sales goals reflecting underperformance by a number of former Clinical Area Managers. This resulted from termination-driven turnover of approximately 16% of the sales force. Management continues to believe that planned increases in the Company’s sales force, reimbursement and production personnel, coupled with the expansion of marketing and research and development efforts, will provide strong impetus for continued solid annual sales growth.

Robert Hansen, Chairman and CEO, commented on the Company, saying,

“When some employees fail to achieve planned goals, the performance of all the employees is compromised. In Sales, this fact is especially relevant. When momentum falters, the solution is to make summary changes and to replace weakness with strength. The Regional Sales Managers of Electromed, Inc. and I have acted swiftly to recruit new, highly-trained, and experienced sales staff to succeed the sales staff who failed to keep pace with the growth needs of the Second Quarter. New and exciting successors have replaced underperformers. I remain confident that the balance of Fiscal Year 2012, and the First Half of FY2013, beginning July 1, 2012, will reflect strong sales growth accompanied by continued profitability.”

Gross Profit decreased to approximately $3,480,000, or 72.6% of Net Revenues, for the three months ended December 31, 2011, compared to $3,540,000, or 75.6% for the same period in Fiscal 2011. The decrease in gross profit percentage was primarily the result of a change in average reimbursement from the mix of referrals during the three month period. Factors such as diagnoses that are not assured of reimbursement and insurance programs with lower allowable reimbursement amounts (for example, state Medicaid programs) affect average reimbursement received on a short-term basis. These factors tend to fluctuate on a quarterly basis. However, management does not believe the results of the quarter ended December 31, 2011, are indicative of a long-term trend in decreasing margins.

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