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Under The Radar Stock ELMD Gains 52%

The stock, Electromed Inc. (ELMD), featured on our 'Under The Radar' on April 24, 2020, at an opening price of $12.96. On May 11, 2020, the stock touched a 52-week high of $19.73, representing a gain of 52% from our published price.

Why we published this stock?

Electromed Inc. (ELMD) addresses the underpenetrated and growing bronchiectasis market, by making products that provide airway clearance therapy. The company's flagship SmartVest Airway Clearance System helps patients with compromised pulmonary function.

The stock is relevant at a time like this, amid a pandemic that causes severe respiratory distress. Electromed said it provides uninterrupted support and product supply during the rapidly evolving COVID-19 situation to help patients and clinics with their SmartVest needs.

The company also increased capacity at its Minnesota manufacturing facility to meet the need for pulmonary hygiene in the treatment and recovery of patients with acute respiratory issues in the hospital, and from hospital to home.

Growth Drivers:

Electromed's High Frequency Chest Wall Oscillation or HFCWO device, SmartVest, is designed to improve patient comfort and compliance with prescribed treatment schedules.

The bronchiectasis market is growing an estimated 9% per year, driven by an aging U.S. Population developing higher incidences of chronic lung diseases.

The company's differentiated direct-to-patient distribution model drives high gross margins, positive operating cash flow and profitability.

Business Model:

The company is steered by a “patient centric” culture and call on three customers: physicians, patients and payers. Electromed generates revenue via sales to: patients for home use; institutions for inpatient use; patients when discharged from a hospital; and international distributors.

Electromed noted that it generates about 93% of its revenue from Home Care, about 5% of revenue from Institutions and the remaining 2% from International business.

Recent Happening:

Last month, the company launched its SmartVest Connect App for iOS and Android, a personalized high frequency chest wall oscillation or HFCWO therapy management portal for patients with compromised pulmonary function. The SmartVest Connect app securely connects to the SmartVest SQL through Bluetooth technology. This interface allows patients and healthcare teams to track therapy in real-time and collaborate on care decisions to improve therapy adherence and patient outcomes.

Long-Term Objectives:

The company claims that it is committed to delivering long-term profitable growth, while maintaining the highest standards of integrity, respect and privacy.

Financial Highlights:

The company's net income was $2.2 million or $0.26 per share in fiscal 2017, $1.8 million or $0.21 per share in 2018, and $2.0 million or $0.23 per share in 2019. Net revenue was $25.9 million in 2017, $28.3 million in 2018, and $31.3 million in fiscal 2019.

Q2 Numbers:

Net income jumped 211.4% to $1.2 million or $0.14 per share from $0.4 million or $0.04 per share in Q2 2019, driven by year-over-year revenue growth of 6.7% and significant operating margin improvement to 18.3%.

Net revenue increased 6.7% to $8.5 million from $8.0 million last year, largely driven by higher home care revenue.

Home care revenue rose 4.6% to $7.7 million, and Institutional revenue increased 22.8% to $494,000, while revenue from home medical equipment distributors totaled $131,000 during Q2 FY 2020.

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