Electromed first quarter net revenues increase 29.1% to $5.38 million

Electromed, Inc. (NYSE Amex: ELMD) today announced financial results for the three-month period ended September 30, 2011. Net Revenues for the three months ended September 30, 2011 were approximately $5,379,000, a 29.1% increase compared to Net Revenues of approximately $4,165,000 for the same period last year. The Company also announced Net Income of approximately $246,000, or $0.03 per basic and diluted share, for the three months ended September 30, 2011, compared to Net Income of approximately $112,000, or $0.02 per basic and diluted share, for the same period last year. Net Revenues increased in correlation with the expansion of the sales force. Net Income results were attributable to higher Net Revenues, offset by increased expenses related to increases in sales force. Research investments, additions to senior management, and additional facilities have all added to expenses in the first quarter.

“In very uncertain times, Electromed, Inc. continues to execute successfully on its business plans. The Company is committed to building a platform in sales, product innovation, and patient services sufficient to assure its expanding position in airway clearance therapy.”

Robert Hansen, Chairman and CEO, commented on the Company, saying,
"In very uncertain times, Electromed, Inc. continues to execute successfully on its business plans. The Company is committed to building a platform in sales, product innovation, and patient services sufficient to assure its expanding position in airway clearance therapy."

Gross Profit increased to approximately $4,058,000, or 75.4% of Net Revenues, for the three months ended September 30, 2011, compared to $2,934,000, or 70.4% for the same period in Fiscal 2011. The increase in Gross Profit dollars resulted primarily from the increase in Sales volume. The change in Gross Profit percentage for the three-month period ended September 30, 2011, was primarily the result of higher reimbursement from the mix of referrals and approvals compared to the three-month period ended September 30, 2010. Factors such as diagnoses that are not assured of reimbursement, along with insurance programs which present lower allowable reimbursement amounts (for example, state Medicaid programs) affect average reimbursement received on a short-term basis and tend to cause margins to fluctuate on a quarterly basis.

Operating Expenses, which consist of Selling, General, and Administrative Expenses and Research and Development expenses, were approximately $3,605,000 for the three months ended September 30, 2011, an increase of approximately 34.2% over total Operating Expenses for the same period last year. These planned increases resulted from higher payroll and marketing expenses related to increasing the size of the sales team, increases in reimbursement, administration, patient services staff, and patient training costs related to the higher Sales volume, increased expenses relating to being a new public Company, and increased Research and Development expenses.

Total cash was approximately $2,946,000 as of September 30, 2011. For the three months ended September 30, 2011, cash used in financing activities was approximately $86,000, consisting of primarily $110,000 on payments of Long-term Debt and capital lease obligations offset by proceeds from a warrant exercise and subscription notes receivable of approximately $24,000. An aggregate of $237,000 was used for investing activities during the three months ended September 30, 2011, including $22,000 in payments for patent-related costs and $215,000 in expenditures for property and equipment. The Company used approximately $823,000 in operating activities composed primarily of an increase in the Company's receivable position, which increased approximately $807,000, or 8.4% to approximately $10,400,000 during the three months ended September 30, 2011.