Electromed at Canaccord Genuity Conference: Strategic Growth and Innovation

On Tuesday, 12 August 2025, Electromed (NYSE:ELMD) presented at Canaccord Genuity’s 45th Annual Growth Conference. The company offered a strategic overview, emphasizing growth, profitability, and innovation, while addressing challenges in the healthcare market. Electromed highlighted its robust financial health, with no debt, and its focus on expanding market penetration for its SmartVest product.

Key Takeaways

• Electromed is a $62 million company with a focus on airway clearance solutions.
• The SmartVest product addresses bronchiectasis, a chronic respiratory condition.
• The company maintains high gross margins and anticipates continued double-digit revenue growth.
• Electromed is expanding its sales team and direct-to-consumer outreach.
• The company is insulated from tariff concerns due to domestic manufacturing.

Financial Results

• Electromed is growing, profitable, and cash-generating with no debt.
• The company enjoys mid-70s gross margins and expects to sustain double-digit revenue growth.
• Half of its revenue comes from Medicare, with the remainder from commercial payers.
• Electromed has authorized two $5 million share repurchases, completing one and two-thirds of the second.

Operational Updates

• All manufacturing is conducted domestically, mitigating tariff risks.
• Electromed is expanding its coverage, especially in California, and investing in a direct-to-consumer team.
• The company has secured a contract with Visient, the largest group purchasing organization in the U.S.
• A partnership with Marathon Medical aims to penetrate the VA hospital market.

Future Outlook

• Electromed expects to maintain double-digit revenue growth and increased profitability.
• The company plans to reinvest in systems and sales channels to enhance efficiency.
• Shareholder value is a priority, with ongoing share repurchases.
• Medicare reimbursement is anticipated to rise annually, indexed to the urban CPI.

Q&A Highlights

• Electromed is addressing the 4.1 million patients with COPD and bronchiectasis overlap by focusing on awareness.
• The direct-to-patient model helps maintain margins and provides clinical support.
• The hospital market presents a longer sales cycle but offers growth opportunities.

Electromed’s presentation at the Canaccord Genuity Conference detailed a strategy focused on growth, innovation, and shareholder value. For a complete understanding, readers are encouraged to refer to the full transcript.

Full transcript - Canaccord Genuity’s 45th Annual Growth Conference:

Richard Close, Research Lead, Canaccord: Great. Good afternoon, Thank you for joining the conference over the next couple of days. I’m Richard Close. I lead research at Canaccord for digital and tech enabled health. I have a very interesting company with us today in the airway management area growing and profitable with their differentiated smart vest system.

From the company, we have CEO, Jim Cunniff, to tell the story and CFO, Brad Nagel as well. So with that, Jim, thanks for coming and turn it over to you.

Jim Cunniff, CEO, Electromed: Outstanding. Thank you, Richard. And thank you all for joining today. Good afternoon. Hope you’re enjoying your lunch.

And as Richard had mentioned, I’m Jim Kneff. I’m the CEO of Electromed and Brad is my partner in crime over here, who’s our CFO. But I’m here to talk to you today about SmartVest. We are an innovative company in the airway clearance space. I’m going get the disclosures over with, not go through that.

But a little bit about our company. We’re based in New Prague, Minnesota, which is about an hour Southwest of The Twin Cities. All of our manufacturing is done in The United States. So I was listening to the previous speaker and one of the questions was talking about tariffs. And we are basically immune from those.

All of our manufacturing is done domestically and all of our componentry that we use in the assembly of our product is also sourced domestically in The United States. We’ve been around for a little while. We’re about a $62,000,000 company and we’re a single product company. I’m going to talk more about that in a minute. A couple of financial highlights and I’m not going to go through every bullet that’s on here, but the short story is pretty compelling.

And that short story is that we are growing, we’re profitable, we’re generating cash, and we have no debt. And for a company that our size, that’s pretty unusual. The other thing that’s that’s unique about us is we’re in a space, which you’re going to see in a minute here, that has got fantastic tailwinds. And those tailwinds are really predicated on the disease state that we serve, which is called bronchiectasis. And again, I’ll talk more about that as well.

So what is bronchiectasis? Bronchiectasis is the primary disease that our technology serves and it’s one of several including cystic fibrosis and ALS but this is the primary disease state that we serve. And if you’re not familiar with bronchiectasis, it’s kind of a unique respiratory disease in that it’s chronic and it’s irreversible. And so once you have bronchiectasis, you’re not going to get cured for it. And essentially what our device does is it improves the patient’s quality of life and helps them breathe easier.

The disease is misdiagnosed. It is also underdiagnosed and the mechanism of action of our device which is called HFCWO or high frequency chest wall oscillation is under prescribed and we feel like that’s the big opportunity that we have. This disease is really a function of mucus that is pooling within a patient’s lungs that causes infection and because of that mucus pooling, the patient has a hard time breathing. We’re in a really, really large growing and underpenetrated market and I want to unpack this iceberg for you. In The United States, there’s eight hundred and twenty four thousand patients that have been diagnosed with bronchiectasis.

Of that, only one hundred and twenty seven thousand of those patients have actually been prescribed our technology or one of our competitors. And so the remaining seven hundred thousand patients, and that’s just above the waterline in that iceberg, Thirty five percent of them are actually seen by a pulmonologist and we have a direct sales team and that’s their primary call point is pulmonologists. That’s about two hundred and thirty thousand patients. Now if each and every one of those patients was put on our technology, that represents a 2,300,000,000.0 with a b revenue opportunity. And that doesn’t even include the four point one million people population in The United States that has COPD bronchiectasis overlap that could benefit from our technology.

So this is the prevalence rate is growing by about twelve percent annually and there’s again some fantastic tailwinds to continue that trend. So how is it treated? Well, first and foremost, you need to clear the airways first and that’s really where our product comes into play and I’m going share with you the mechanism of action of that. Then you want to treat the infection. So, you know, typically that’s done with antibiotics.

And then also you want to do everything that you can to minimize the inflammation because it’s the inflammation of the large airways within the patient population that causes that mucus to build up and the infection to occur in the first place. That cycle, that kind of roller coaster of having an infection, clearing your lungs out, treating with antibiotics, we’re really the first mode of defense for that because if you can clear out the mucus then you’re clearing out the fuel for future infections. So how does our device work? On the left hand side, there’s a bit of a cartoon depiction. We have a generator that’s attached to a hose that’s then attached to a vest.

The vest is very lightweight. Most of our patients are over 65 years of age or older. They typically get on this technology later within their disease state. And essentially what our garment does is it inflates and deflates and that mechanism of action where you have the air pulsing technology forces the mucus from the large airways so that the patient can either cough it up or swallow it, but again to breathe easier. A lot of times we get questions, well, how often does somebody need to use this device?

And the reality is since this is a chronic irreversible condition, they need to use this device twice a day. It’s usually for a therapy session of thirty minutes at a time forever for the rest of their lives. And again, it doesn’t cure the disease, what it basically does is it improves their quality of life. This is a when you wonder in okay, is there anybody else that’s in this market? It is a competitive market space.

We’re one of four companies that has an HFCWO type product, but we really have the newest technology in the market. Our vest is the lightest weight. Most of our patients are frail. Many of them have arthritis and so you want to have something that’s comfortable so that you get patient compliance. We’re also the only company in the market with a single hose.

So you want this to be ergonomic. All of our competitors have two hoses. And we feel like the industrial design on the product is pretty nice. That’s really important because this is a product that is used in the patient’s home You know, it’ll be sitting in their living room or in their bedroom and we want to make sure that it’s something that is attractive and actually it’s incredibly intuitive. There’s no on off button on this device.

There’s only a few buttons that they need to activate in order for them to get the therapy. The other thing that we do that’s unique is with this type of device, want to make sure that there’s patient compliance. And so we have respiratory therapists that we basically contract with. So when we get a prescription for this product, we deliver it to the patient’s home. We actually will train the patient on the product and a respiratory therapist is actually the one who does the training.

At that point in time what we’ll do is we’ll do a baseline assessment of how that patient is doing. We’ll then come back five days later, we’ll do another assessment and then we’ll come back an additional thirty days later and do a final assessment. And then what we do is we compile all that information and we provide actually to the provider or in this case the pulmonologist with what’s called a SmartNote. And that does a couple of things. It shows them that not only did we get prescription, we delivered the product, the patient is progressing as hoped.

And we will also then compile smart notes not only for single patients, but we’ll put together another a mosaic for the clinic as well so that they can see all the different patients that they have on our technology and the benefit it’s providing to them. And again, it’s improving their quality of life, it’s not curing them. We also have great clinical evidence for this product. So on the left hand side of the slide, basically our customer testimonials, most of them would recommend this to others. 97% of patients report feeling better or the same after Smart Fest and ninety eight percent, I know this is right after lunch, of patients report an increase in sputum production.

That’s really important because really what we’re trying to do is get the mucus out of the airways. And as you can see on the right hand side of this slide, one of the key things that we are trying to do with this technology because the patient is getting treated in the home is we want to keep them out of the emergency department. We want to minimize their use of antibiotics, and we want to reduce the amount of hospitalizations that they have. And as you can see from our clinical evidence, you know, the device has been very successful in doing that. The other thing that’s really unique about us is we’re not only a manufacturer but we’re also a durable medical equipment distributor.

And what that means is we not only make the product but we actually deliver the product to the patient’s home as I mentioned before. But the other thing that we do is we have payer contracts. So we have Medicare contract, we have contracts with most if not all of the commercial payers. In fact, we have over two seventy five million lives that we have covered. And so what that enables us to do is, you know, top end of this slide, I think it’s important if you’re not familiar with the home space, the home care space, most manufacturers what they’ll do is they’ll make the device and then what they do is they sell and market that product to a durable medical equipment distributor.

That distributor is really the one with the feet on the street. They’re the ones who have all the payer contracts and they’re the ones who are getting prescriptions for the product and then delivering it to the patient’s home. Our model is different because we’re not only the manufacturer but we’re also a DME. And so when we do get a prescription, we deliver it directly to the patient’s home, we do all the billing to the payers. And a consequence of that is we get to maintain more of that margin.

So as a medical device company within the space, we’ve been successful in having mid-70s margins on our product. Where’s our revenue coming from? Most of our revenue comes from the home, although we do have a nascent international as well as hospital business. The hospital business is a little bit different because it’s more of a capital equipment sell And that is an area where we see potential to grow even further because we believe that the hospital is a gateway to the home. So if you get the patient on the product in the hospital, they transition to the home, you know, we want to put them on our technology.

From a payer standpoint, about half of our revenue comes from Medicare, the other half is from commercial payers. And as I mentioned before, the majority of the disease state that we serve with our product is called bronchiectasis and again just fantastic tailwinds with that symptomology. How are we going to grow? You know, we continue to invest in feet on the street. We believe that one of the big opportunities in the space, most of the pulmonologists are used to seeing COPD and asthma patients, but more and more they’re getting enlightened to their patient population that has bronchiectasis.

So there’s a big investment that we make in driving commercialization and market development. We also have a fantastic direct to consumer team because as you can imagine, if you have this disease state and you’re having a hard time breathing, people are looking for solutions. So they go online, they contact us directly. We can’t prescribe our technology but we can refer them to pulmonologists who can. And the people who are taking the calls on our end and responding to patients directly are all respiratory therapists.

You know their clinicians can provide great feedback to those patients. The last thing that I’ll mention on this is in the home space, the clinics that are out there, they mostly will send their prescriptions through fax, which I know is kind of the dark ages. And in the last twelve months, we’ve been bringing them along to what we believe is the light and having them send us their prescriptions through our e prescribe solution. And what that does is when we get an e prescribe prescription, then it mitigates us having to review all the documentation. And we can send that documentation directly to the payer and make sure that we get paid for it, that the patient they get paid or the technology gets reimbursed and they don’t have a large out of pocket expense.

So it’s a real big efficiency benefit for us and the clinics. We don’t give guidance, but I will tell you that we’ve been successful in growing our top line revenue double digits. We’re expecting to continue that. I’m seeing Brad smile. And one of the things that I think has been really differentiated about us in the last two years is we’ve always been growing and we’ve always been profitable, but we haven’t been growing our profitability.

And really in the last two years, we’ve been successful in leveraging our P and L and we’re going to continue to do that. So why invest? Large expanding market that I talked about. We’ve got fantastic clinically proven technology which we’re continuing to innovate on. We’ve got outstanding payer coverage and in fact last year one one of the big investments that we’ve made is expanding our footprint in that area because there’s a couple of areas most notably in California where we have gaps and we want to fill those.

We’ve got a great growth story and as I mentioned at the onset of the presentation, we’re growing, we’re profitable, we’re generating cash and we have no debt. The last thing I would mention to you is that, you know, my incentives, Brad’s incentives, all of management team’s incentives are really aligned with our investor community. So if we don’t grow and we don’t do so profitably, Brad and I, we don’t get paid our incentive compensation. We feel like that lines up well with the investors. And then also, we just recently were entered at the June into the Russell two thousand.

But when you take a look at Electromed’s financial metrics versus the averages within the Russell two thousand medical index, whether it’s sales growth, gross profit margin or operating margin, we feel like our metrics are head and shoulders above the averages. So those are my prepared comments. And I’m going to now invite Richard to come up and in the time remaining, ask some questions of Brad and I.

Richard Close, Research Lead, Canaccord: Great. Maybe we could start off with the iceberg slide, which I think is really interesting. And I’m really more curious, the 4,100,000 below the waterline, you know, how does how do you guys go about attacking that and getting awareness up?

Jim Cunniff, CEO, Electromed: No, it’s a great question. So if you may recall in that slide that I showed with the iceberg, that four point one million patients, those are patients that have COPD but they have bronchiectasis overlap and that’s about fifty four percent of the total COPD population. A lot of it, Richard, as I mentioned in my comments is awareness related. Most of these physicians when they’re seeing the patient, unless when they look at their CT scan that most of the pulmonologists have done on their patients, that it’s actually being identified that they have bronchiectasis, they’ll treat them as a COPD patient. So part of what we have invested quite a bit in is there’s a couple of foundations, the bronchiectasis NTM Foundation being one of them that has a registry of patients that have bronchiectasis and COPD, so you mine that.

But also, you know, they work with a cohort of key opinion leaders that we then can help educate and then they can spread the gospel on our behalf as well. But really, the the most notable investment that we make is in our sales team, and they’re calling on these pulmonologists every day and helping them identify patients that would fit this technology.

Richard Close, Research Lead, Canaccord: Okay. And then I cover some DME companies, so interested in that area. How did you come to the direct to patient model?

Jim Cunniff, CEO, Electromed: Well, think it’s a it predates me. So we’re not a flash of the pan. We’ve been around since 1992 and that really predates me. And I think there’s a couple of catalysts for that. One of which is, as you saw in our slides, it helps us retain more of the margin.

And I think when you you know, this is still largely a clinical sale. And so you need to have, you know, sales people that are calling on these pulmonologists who can help identify patients who could use this, you know, help educate them on HFCWO, which is our mechanism of action. Help them adjudicate the reimbursement landscape because it’s it’s not like we just get a prescription and then we can fulfill this technology. You know, for somebody to get a smart vest, they have to have been diagnosed with bronchiectasis as an example. The guidelines for CMS reimbursement are CT scan that confirms you have bronchiectasis, you have to have tried and failed something else and that could be you know, manual chest percussion.

And you have to have had a productive cough for six months. And so we need to see that in the patient’s notes. Once we see all that, then we know that we’re gonna get reimbursed for the technology and the patient won’t have a out of out of pocket expense. And that’s a big deal. And so you want to have a sales team who can actually articulate that and walk the clinic through that process.

Richard Close, Research Lead, Canaccord: That’s helpful. I am curious, you had mentioned or you had the pie charts in there and the hospital is a small sliver and you said, you know, it’d be nice to get in there and, you know, identify the patients and what not getting them using it in the hospitals. Can you talk a little bit about any partnerships you have or how you’re addressing that market?

Jim Cunniff, CEO, Electromed: Yeah, it’s an awesome question. So a couple of things, number one of which is, you know, the hospital market is very different than the home market because every time a hospital buys a unit from us, it’s really a capital sale. In the home, it’s a capitated rental. So we’re actually billing CMS or we’re billing a commercial payer anywhere from ten to thirteen months. You know, in a hospital they’re buying capital equipment from us.

And then, you know, the trailing consumables that we have are the hoses and the vests and our wraps that we sell. That process in the hospital takes a lot longer. You know, you’re not just dealing with one decision maker, which is a pulmonologist as you know, you’re dealing with a hospital and their capital committee, their new product committee. And, you know, they will keep our technology or one of our competitors much longer. They’ll carry, you know, seven to ten years.

And so we have made investments. We’ve got several folks on our team that wake up every day calling on health systems. We have a contract with Visient, which is the largest group purchasing organization in the country that represents, you know, half the hospitals across the country. We have a contract with them, so a bit of a captive with that. And on the there’s also a niche within that that market, which is the VA hospitals.

And when we get a prescription from a VA, it’s kind of like a capital order to us. But we have a lot of veterans who can benefit from this technology. And we have a partnership with a company called Marathon Medical that is owned by it’s a small veteran owned business that has inroads into that market and we think that’s a neat place for us to be mining.

Richard Close, Research Lead, Canaccord: Helpful there. Maybe Brad, maybe a question for you since we put you up here. I’m curious, Jim had mentioned or had the slide up there versus the Russell Medical and mentioned the improving profitability. What was the driver of that over the last couple of years? It’d be helpful to know.

Brad Nagel, CFO, Electromed: Yeah. As Jim mentioned in his prepared remarks, the company has been profitable for a long time but not necessarily growing its profitability. And a lot of that has to do with the fact that as a small company, historically, when we made an investment in our sales team, we were also having to make investments into back office functions like reimbursement. And frankly, probably didn’t have the best technology or process to support those groups to become more efficient. And really what’s happened over the last couple of years, even up until kind of where we are right now, we’ve made some investments in systems like a reimbursement system for billing, like an ERP for better understanding our operations and gross margin.

And finally here, we’re just in the process of implementing a CRM. And really what those allow us to do is to gain efficiency so that as we continue to grow our sales force, we’re getting a lot more leverage out of the back office functions and systems, better people, process and technology to allow us to drop more of that revenue through to operating income.

Richard Close, Research Lead, Canaccord: Great. I know you’re in a quiet period, so I won’t ask about the But I am curious in terms of how you guys prioritize You are profitable, generating cash. So I’m just curious, what are

Brad Nagel, CFO, Electromed: the main priorities there? Absolutely. So as we’ve been able to grow our operating income, dropping more cash through to the balance sheet, a top priority has remained for us to continue to invest in the business. So we have made those capital investments in systems, and we continue to invest in growing our sales channel. Beyond investment into the business, we want to make sure that we’re finding ways to give value back to shareholders.

So we don’t want to accumulate an oversized pile of cash. And how we’ve done that most recently is over the past fiscal year, which we are just closing up. To your point, we’ve authorized two $5,000,000 share repurchases. And as of our last reporting, the finish of our Q3, we had completely closed out the first $5,000,000 and done about two thirds of the second $5,000,000 So to the extent that we can, we’ll find ways to give value back to shareholders and the primary way to do that has been through repurchases.

Richard Close, Research Lead, Canaccord: Okay. We have a minute left and I have to ask this question. Obviously, it’s been a tough month for a lot of healthcare companies, tough couple of years, but a tough month as well. But I’m curious your thoughts on the one big beautiful bill, you know, how you’re impacted or, you know, any thoughts regarding What

Jim Cunniff, CEO, Electromed: a great closing question. Yeah. The the the, you know, the big beautiful bill, it really has had no impact, and we don’t anticipate it’s gonna have impact on our business. As it relates to and probably the biggest component of that is Medicare. And thankfully, touch wood, one of the benefits we’ve had is our Medicare reimbursement is typically we get increases every year and it’s tied to the urban CPI and we expect that to continue.

When you take a look at health care spend in general and how small home care is as a percent of total, it’s minute. There’s much bigger fish to fry with other specialties and we’re just not on the radar screen for that. I think the only watch out would potentially be Medicaid, but that’s only 2% of our total revenue. And so it’s really a nascent piece of our business.

Richard Close, Research Lead, Canaccord: Okay, great. Well, thanks for being here and telling us the story.

Jim Cunniff, CEO, Electromed: It’s a pleasure. Thanks for having us. Thanks for your time and attention, everyone. Thank Appreciate it.

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