# Electromed, Inc. (ELMD) Informational only - not investment advice. CIK: 0001488917 SIC: 3845 Electromedical & Electrotherapeutic Apparatus SIC breadcrumb: [Manufacturing](/division/D/) > [SIC Major Group 38](/major-group/38/) > [SIC 3845 Electromedical & Electrotherapeutic Apparatus](/industry/3845/) Latest 10-K filed: 2025-08-26 SEC page: https://www.sec.gov/edgar/browse/?CIK=1488917 Filing source: https://www.sec.gov/Archives/edgar/data/1488917/000143774925027761/elmd20250630_10k.htm ## At a glance FY2025 · period end 2025-06-30 · filed 2025-08-26 · accession 0001437749-25-027761 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001488917.json | Metric | Value | FY | Provenance | | --- | ---: | ---: | --- | | Revenue | 64,000,000 USD | 2025 | verified | | Net income | 7,537,000 USD | 2025 | verified | | Assets | 53,802,000 USD | 2025 | verified | | Free cash flow | 11,131,000 USD | 2025 | computed | | Net margin | 11.78% | 2025 | computed | | Operating margin | 15.09% | 2025 | computed | | Revenue YoY | +16.97% | 2025 | computed | | ROE | 17.44% | 2025 | computed | Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Operating margin = operating income ÷ revenue. Revenue YoY = FY2025 revenue ÷ FY2024 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity. No market price, no rating, no forecast on this site. Not investment advice. ### Peer percentile fingerprint | Ratio | ELMD | Peer median | Percentile | N | | --- | ---: | ---: | ---: | ---: | | Net margin | 11.8% | -5.9% | 82 | 12 | | Operating margin | 15.1% | 9.7% | 73 | 12 | | Revenue growth | 17.0% | 15.3% | 58 | 13 | | FCF margin | 17.4% | 11.0% | 92 | 13 | | ROE | 17.4% | -12.2% | 92 | 13 | | ROA | 14.0% | -7.1% | 92 | 13 | | Liabilities / equity | 0.25 | 0.95 | 8 | 13 | | Current ratio | 4.31 | 3.77 | 58 | 13 | Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC industry 3845 Electromedical & Electrotherapeutic Apparatus, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking. ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 64000000 | USD | 2025 | 2025-08-26 | | Net income | 7537000 | USD | 2025 | 2025-08-26 | | Assets | 53802000 | USD | 2025 | 2025-08-26 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-08-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001488917.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | | | | | | | 28,306,696 | 31,299,750 | 32,471,000 | 35,756,000 | 41,659,000 | 48,067,000 | 54,716,000 | 64,000,000 | | Net income | | | | | 2,212,502 | 2,229,472 | 1,831,173 | 1,980,330 | 4,161,000 | 2,362,000 | 2,305,000 | 3,166,000 | 5,150,000 | 7,537,000 | | Operating income | | | | | 3,109,308 | 3,569,339 | 2,712,302 | 2,829,623 | 5,118,000 | 3,140,000 | 2,972,000 | 4,008,000 | 6,581,000 | 9,660,000 | | Gross profit | | | | | 17,876,263 | 20,568,429 | 21,772,612 | 23,847,944 | 25,200,000 | 27,305,000 | 31,442,000 | 36,519,000 | 41,726,000 | 49,971,000 | | Diluted EPS | | | | | 0.27 | 0.26 | 0.21 | 0.23 | 0.47 | 0.27 | 0.26 | 0.36 | 0.58 | 0.85 | | Operating cash flow | | | | | 2,166,903 | 1,191,121 | 2,442,200 | 2,589,874 | 4,196,000 | 3,077,000 | -686,000 | 1,315,000 | 9,067,000 | 11,393,000 | | Capital expenditures | | | | | 534,944 | 618,763 | 526,227 | 1,330,598 | 844,000 | 287,000 | 1,425,000 | 1,648,000 | 287,000 | 262,000 | | Share buybacks | | | | | | | | | | 1,124,000 | 1,448,000 | 153,000 | 275,000 | 10,000,000 | | Assets | | | | | 20,577,517 | 23,060,649 | 27,392,131 | 29,399,232 | 33,245,000 | 37,109,000 | 41,364,000 | 45,806,000 | 52,234,000 | 53,802,000 | | Liabilities | | | | | 4,218,921 | 3,993,099 | 4,743,172 | 3,665,258 | 2,995,000 | 4,693,000 | 7,191,000 | 8,139,000 | 7,689,000 | 10,593,000 | | Stockholders' equity | | | | | 16,358,596 | 19,832,589 | 22,577,724 | 25,735,000 | 30,250,000 | 32,416,000 | 34,173,000 | 37,667,000 | 44,545,000 | 43,209,000 | | Cash and cash equivalents | 1,702,435 | 503,564 | 1,502,702 | 3,598,240 | | | | | 10,479,000 | 11,889,000 | 8,153,000 | 7,372,000 | 16,080,000 | 15,287,000 | | Free cash flow | | | | | 1,631,959 | 572,358 | 1,915,973 | 1,259,276 | 3,352,000 | 2,790,000 | -2,111,000 | -333,000 | 8,780,000 | 11,131,000 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net margin | | | | | | | 6.47% | 6.33% | 12.81% | 6.61% | 5.53% | 6.59% | 9.41% | 11.78% | | Operating margin | | | | | | | 9.58% | 9.04% | 15.76% | 8.78% | 7.13% | 8.34% | 12.03% | 15.09% | | Return on equity | | | | | 13.53% | 11.24% | 8.11% | 7.70% | 13.76% | 7.29% | 6.75% | 8.41% | 11.56% | 17.44% | | Return on assets | | | | | 10.75% | 9.67% | 6.69% | 6.74% | 12.52% | 6.37% | 5.57% | 6.91% | 9.86% | 14.01% | | Liabilities / equity | | | | | 0.26 | 0.20 | 0.21 | 0.14 | 0.10 | 0.14 | 0.21 | 0.22 | 0.17 | 0.25 | | Current ratio | | | | | 5.15 | 6.38 | 4.85 | 6.72 | 9.38 | 6.83 | 4.83 | 4.69 | 5.75 | 4.31 | ## As-reported value updates 1 tracked difference above grepcent's stated thresholds were found between the earliest XBRL-filed value and the value currently on file for the same fiscal period. Ledger: /company/ELMD/revisions/ ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001488917.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2022-Q3 | 2022-03-31 | | | 0.07 | reported discrete quarter | | 2022-Q2 | 2022-12-31 | | | 0.11 | reported discrete quarter | | 2023-Q3 | 2023-03-31 | | | 0.12 | reported discrete quarter | | 2023-Q4 | 2023-06-30 | 13,612,000 | 1,033,000 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q1 | 2023-09-30 | 12,324,000 | 155,000 | 0.02 | reported discrete quarter | | 2024-Q2 | 2023-09-30 | | 155,000 | | reported discrete quarter | | 2024-Q2 | 2023-12-31 | 13,689,000 | | 0.19 | reported discrete quarter | | 2024-Q3 | 2023-12-31 | | 1,674,000 | | reported discrete quarter | | 2024-Q3 | 2024-03-31 | 13,871,000 | | 0.17 | reported discrete quarter | | 2024-Q4 | 2024-06-30 | 14,832,000 | 1,828,000 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2024-09-30 | 14,668,000 | 1,474,000 | 0.16 | reported discrete quarter | | 2025-Q2 | 2024-09-30 | | 1,474,000 | | reported discrete quarter | | 2025-Q2 | 2024-12-31 | 16,255,000 | | 0.22 | reported discrete quarter | | 2025-Q3 | 2024-12-31 | | 1,968,000 | | reported discrete quarter | | 2025-Q3 | 2025-03-31 | 15,684,000 | | 0.21 | reported discrete quarter | | 2025-Q4 | 2025-06-30 | 17,393,000 | 2,204,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2025-09-30 | 16,887,000 | 2,136,000 | 0.25 | reported discrete quarter | | 2026-Q2 | 2025-09-30 | | 2,136,000 | | reported discrete quarter | | 2026-Q2 | 2025-12-31 | 18,897,000 | | 0.32 | reported discrete quarter | | 2026-Q3 | 2025-12-31 | | 2,761,000 | | reported discrete quarter | | 2026-Q3 | 2026-03-31 | 18,575,000 | | 0.35 | reported discrete quarter | ## Filed narrative (10-K & 10-Q) ## Business Verbatim Item 1 Business section from ELMD's latest 10-K: [/company/ELMD/business/](/company/ELMD/business/). ## Risk Factors Verbatim Item 1A Risk Factors from ELMD's latest 10-K: [/company/ELMD/risk-factors/](/company/ELMD/risk-factors/). ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1488917/000143774926016429/elmd20260331_10q.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high Filing date: 2026-05-12 Report date: 2026-03-31 Item 2.         Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Financial Statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and our audited financial statements and related notes thereto included in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 (“fiscal 2025”). Overview Electromed, Inc. (“we,” “our,” “us,” “Electromed” or the “Company”) develops and provides innovative airway clearance products applying High Frequency Chest Wall Oscillation (“HFCWO”) technologies in pulmonary care for patients. We manufacture, market and sell products that provide HFCWO, including the SmartVest® Airway Clearance System (“SmartVest System”) that includes our newest generation SmartVest Clearway® Airway Clearance System (“Clearway”), previous generation SmartVest SQL®, and related garments and accessories to patients with compromised pulmonary function. The SmartVest Clearway, which received 510(k) clearance from the U.S. Food and Drug Administration in November 2022, provides patients with proven quality of life outcomes while offering a state-of-the-art patient experience with a simple touch screen user interface, small generator footprint and comfortable, lightweight vests. Our products are sold in both the homecare market and the hospital market for inpatient use, which we refer to as “hospital sales.” Since 2000, we have marketed the SmartVest System and its predecessor products to patients suffering from bronchiectasis, cystic fibrosis, and other chronic pulmonary conditions that require external chest manipulation to enhance mucus transport. Additionally, we offer our products to a patient population that includes neuromuscular disorders such as cerebral palsy, muscular dystrophies, amyotrophic lateral sclerosis (“ALS”), patients with post-surgical complications or who are ventilator dependent and patients who have other conditions involving excess secretion and impaired mucus transport. The SmartVest System is often eligible for reimbursement from major private insurance providers, health maintenance organizations (“HMOs”), state Medicaid systems, and the federal Medicare system, which we believe is an important consideration for patients considering an HFCWO course of therapy. For domestic sales, the SmartVest System may be reimbursed under the Medicare-assigned billing code (E0483) for HFCWO devices if the patient has cystic fibrosis, bronchiectasis (including chronic bronchitis or COPD that has resulted in a diagnosis of bronchiectasis), or any one of certain enumerated neuromuscular diseases and myopathies and can demonstrate that another less expensive physical or mechanical treatment did not adequately mobilize retained secretions. Private payers consider a variety of sources, including Medicare, as guidelines in setting their coverage policies and payment amounts. Critical Accounting Estimates For a description of our critical accounting estimates and assumptions used in the preparation of our financial statements, including the unaudited Condensed Financial Statements in this Quarterly Report on Form 10-Q, see Notes 1 and 2 to our unaudited Condensed Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Part II, Item 7, and Note 1 to our audited financial statements included in Part II, Item 8, of our Annual Report on Form 10-K for fiscal 2025. There have been no material changes to our critical accounting estimates and assumptions since the filing of our Annual Report on Form 10-K for fiscal 2025. 11 Table of Contents Results of Operations Net Revenues Net revenues for the three and nine months ended March 31, 2026, and 2025 are summarized in the table below. [[GREPCENT_TABLE]] [["","","Three Months Ended","","","Nine Months Ended"],["","","March 31,","","","March 31,"],["","","2026","","","2025","","","Increase (Decrease)","","","2026","","","2025","","","Increase (Decrease)"],["Homecare","","$","16,732,000","","","$","14,102,000","","","$","2,630,000","","","","18.6","%","","$","48,895,000","","","$","41,906,000","","","$","6,989,000","","","","16.7","%"],["Hospital","","","1,032,000","","","","724,000","","","","308,000","","","","42.5","%","","","2,734,000","","","","2,137,000","","","","597,000","","","","27.9","%"],["Homecare distributor","","","715,000","","","","696,000","","","","19,000","","","","2.7","%","","","2,449,000","","","","2,090,000","","","","359,000","","","","17.2","%"],["Other","","","96,000","","","","162,000","","","","(66,000",")","","","(40.7",")%","","","281,000","","","","474,000","","","","(193,000",")","","","(40.7",")%"],["Total","","$","18,575,000","","","$","15,684,000","","","$","2,891,000","","","","18.4","%","","$","54,359,000","","","$","46,607,000","","","$","7,752,000","","","","16.6","%"]] [[/GREPCENT_TABLE]] Homecare revenue. Homecare revenue increased by $2,630,000, or 18.6%, for the three months ended March 31, 2026, compared to the same period in the prior year. Approximately $1,959,000 of the increase in revenue was due to higher volume, which was driven by additional sales representatives and increased sales representative productivity, and approximately $671,000 was due to higher net revenues per approval. For the nine months ended March 31, 2026, homecare revenue increased by $6,989,000, or 16.7%, compared to the same period in the prior year. Approximately $5,699,000 of the increase in revenue was due to higher volume, which was driven by additional sales representatives and increased sales representative productivity, and approximately $1,290,000 was due to higher net revenues per approval. For the three months ended March 31, 2026, we averaged 57 homecare field sales representatives. Hospital revenue. Hospital revenue was $1,032,000, an increase of $308,000, or 42.5%, for the three months ended March 31, 2026, compared to the same period in the prior year. For the nine months ended March 31, 2026, hospital revenue was $2,734,000, an increase of $597,000, or 27.9%, compared to the same period in the prior year. The growth in the three and nine months ended March 31, 2026, primarily reflects an increase in sales representatives focused on the hospital market and higher capital and disposal demand. Homecare distributor revenue. Homecare distributor revenue increased by $19,000, or 2.7%, for the three months ended March 31, 2026, compared to the same period in the prior year. For the nine months ended March 31, 2026, homecare distributor revenue increased by $359,000, or 17.2%, compared to the same period in the prior year. The increases in homecare distributor sales were primarily a result of increased orders from our distribution partners. Other revenue. Other revenue was $96,000, a decrease of $66,000, or 40.7%, for the three months ended March 31, 2026, compared to the same period in the prior year. For the nine months ended March 31, 2026, other revenue was $281,000, a decrease of $193,000, or 40.7%, compared to the same period in the prior year. The decreases in other revenue were primarily due to the lower demand for purchases by international distributors and other customers that do not fall within the markets described above. Gross profit Gross profit dollars increased to $14,643,000, or 78.8% of net revenues, for the three months ended March 31, 2026, from $12,229,000, or 78.0% of net revenues, in the same period in the prior year. Gross profit dollars increased to $42,659,000, or 78.5% of net revenues, for the nine months ended March 31, 2026, from $36,347,000, or 78.0% of net revenues, in the same period in the prior year. The increases in gross profit were primarily a result of increased overall revenue and higher net revenues per device. Operating expenses Selling, general and administrative expenses. Selling, general and administrative (“SG&A”) expenses were $10,516,000 and $31,617,000 for the three and nine months ended March 31, 2026, respectively, representing an increase of $704,000 and $2,584,000, or 7.2% and 8.9%, respectively, compared to the same periods in the prior year. Payroll and compensation-related expenses were $6,955,000 and $21,326,000 for the three and nine months ended March 31, 2026, respectively, representing an increase of $363,000 and $1,402,000, or 5.5% and 7.0%, respectively, compared to the same periods in the prior year. The increases in the current-year periods were primarily due to the increase in salaries and incentive compensation related to the higher average number of sales representatives and higher overall compensation costs. We have also continued to provide regular merit-based increases for our employees and are regularly benchmarking our compensation ranges, including share-based compensation, for new and existing employees to ensure we can hire and retain the talent needed to drive growth in our business. 12 Table of Contents Travel, meals and entertainment expenses were $1,070,000 and $3,357,000 for the three and nine months ended March 31, 2026, respectively, representing an increase of $148,000 and $477,000, or 16.1% and 16.6%, respectively, compared to the same periods in the prior year. The increases in the current year were primarily due to a higher average number of direct sales representatives, training, and increased travel to support sales activity as well as market development. Total discretionary marketing expenses were $293,000 and $1,146,000 for the three and nine months ended March 31, 2026, respectively, representing a decrease of $32,000 and an increase of $203,000, or a decrease of 9.8% and an increase of 21.5%, respectively, compared to the same period in the prior year. The decrease in the three months ended March 31, 2026, was due to timing of routine marketing spend. The increase in the nine months ended March 31, 2026, was due to increased investment in our direct-to-consumer advertising and other market development initiatives. Professional fees were $1,452,000 and $3,708,000 for the three and nine months ended March 31, 2026, respectively, representing an increase of $167,000 and $104,000, or 13.0% and 2.9%, respectively, compared to the same periods in the prior year. Professional fees are primarily for services related to legal costs, shareowner services and reporting requirements, information technology technical support, insurance and consulting fees. The increases in the current periods were primarily due to increased legal and insurance costs. Research and development expenses. Research and development (“R&D”) expenses were $361,000 and $986,000 for the three and nine months ended March 31, 2026, respectively, representing an increase of $84,000 and $292,000, or 30.3% and 42.1%, respectively, compared to the same periods in the prior year. The increases were primarily due to increased average headcount and consulting expenses related to product enhancements and sustaining engineering. Operating income Operating income increased by $1,626,000 or 76.0% to $3,766,000, or 20.3% of net revenues, for the three months ended March 31, 2026, compared to the same period in the prior year. Operating income increased by $3,436,000 or 51.9% to $10,056,000, or 18.5% of net revenues, for the nine months ended March 31, 2026, compared to the same period in the prior year. The increases were primarily due to an increase in revenue and gross profit. Interest income, net Net interest income for the three and nine months ended March 31, 2026, was $100,000 and $343,000, respectively, compared to $142,000 and $489,000, respectively, for the same period in the prior year. The decreases were primarily due to decreased interest rates and lower average cash balances throughout the period. Income tax expense Income [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A (excerpt) Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/1488917/000143774925027761/elmd20250630_10k.htm Complete FY 2025 MD&A: /company/ELMD/mda/fy2025/ Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high Filing date: 2025-08-26 Report date: 2025-06-30 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the accompanying notes included elsewhere in this Annual Report on Form 10-K. The forward-looking statements include statements that reflect management’s good faith beliefs, plans, objectives, goals, expectations, anticipations and intentions with respect to our future development plans, capital resources and requirements, results of operations, and future business performance. Our actual results could differ materially from those anticipated in the forward-looking statements included in this discussion as a result of certain factors, including, but not limited to, those discussed in the section entitled “Information Regarding Forward-Looking Statements” immediately preceding Part I of this Annual Report on Form 10-K. Overview Electromed develops and provides innovative airway clearance products applying HFCWO technologies in pulmonary care for patients of all ages. We manufacture, market and sell products that provide HFCWO, including the SmartVest System that includes our newest generation SmartVest Clearway, previous generation SmartVest SQL and related products, to patients with compromised pulmonary function. The SmartVest Clearway is an updated and modern approach to HFCWO focused on an enhanced patient experience and proven patient outcomes. The product delivers effective 360o oscillatory pressure through our proprietary rapid inflate-deflate technology which improves the patient’s ability to breathe deeply during therapy. SmartVest Clearway delivers a sleek and lightweight generator and is designed with an intuitive touchscreen to simplify programing and everyday use. Our products are sold in both the homecare market and the hospital market. The SmartVest SQL has been sold in the domestic homecare market since 2014. In 2015, we launched the SmartVest SQL into hospital and certain international markets. In June 2017, we announced the launch of the SmartVest SQL with SmartVest Connect™ wireless technology, which allows data connection between physicians and patients to track therapy performance and collaborate in treatment decisions. In 2022, we launched the SmartVest Clearway to adult pulmonary, pediatric and cystic fibrosis patients for use in the home. We have marketed the SmartVest System and its predecessor products since 2000 to patients suffering from cystic fibrosis, bronchiectasis and repeated episodes of pneumonia. Additionally, we offer our products to a patient population that includes neuromuscular disorders such as cerebral palsy, muscular dystrophies, ALS, and patients with post-surgical complications or who are ventilator dependent or have other conditions involving excess secretion and impaired mucus transport. The SmartVest System is often eligible for reimbursement from major private insurance providers, health maintenance organizations (“HMOs”), state Medicaid systems, and the federal Medicare system, which we believe is an important consideration for patients considering an HFCWO course of therapy. For domestic sales, the SmartVest System may be reimbursed under the Medicare-assigned billing code (E0483) for HFCWO devices if the patient has cystic fibrosis, bronchiectasis (including chronic bronchitis or COPD that has resulted in a diagnosis of bronchiectasis), or any one of certain enumerated neuromuscular diseases, and can demonstrate that another less expensive physical or mechanical treatment did not adequately mobilize retained secretions. Private payers consider a variety of sources, including Medicare, as guidelines in setting their coverage policies and payment amounts. We have primarily employed a direct-to-patient and provider model, through which we obtain patient referrals from clinicians, manage insurance claims on behalf of our patients and their clinicians, deliver our solutions to patients and train them on proper use in their homes. This model allows us to directly approach patients and clinicians, whereby we disintermediate the traditional HME distributors and capture both the manufacturer and distributor margins. We have engaged a limited number of regional HME distributors focused on respiratory therapies as an alternate sales channel. Our key growth strategies for fiscal 2026 are to accelerate our revenue growth by taking market share and expanding the addressable population for the largest and fastest growing segments of the market: adult pulmonology/bronchiectasis. Actions to support accelerating our revenue growth in this area include the following: [[GREPCENT_TABLE]] [["","\u25cf","Expand our sales force in geographies with high potential, adding an additional four territories and direct sales reps;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Increase SmartVest brand awareness through direct-to-consumer and physician marketing, and peer-to-peer education;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Provide best-in-class customer care and support; and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Develop and promulgate the body of bronchiectasis clinical evidence to increase physician adoption of the SmartVest System for patients."]] [[/GREPCENT_TABLE]] Impacts of Certain Macro-Economic Conditions and the Supply Chain on Our Business and Operations We expect that component and raw material costs will be a challenge in fiscal 2026 relating to supply chain availability and inflationary trends in electronic components and may extend to other components resulting from uncertain trade regulations such as tariffs. In certain instances, we have purchased key materials in advance to ensure adequate future supply and mitigate the risk of potential supply chain disruptions. It is possible that these macro-economic conditions could have a greater adverse impact on our supply chain in the future, including impacts associated with preventative and precautionary measures taken by other businesses and applicable governments. A reduction or further interruption in any of our manufacturing processes or significant changes in trade regulations could have a material adverse effect on our business. Any significant increases to our raw material or shipping costs could reduce our gross margins. 14 Table of Contents Critical Accounting Estimates During the preparation of our financial statements, we are required to make estimates, assumptions and judgment that affect reported amounts. Those estimates and assumptions affect our reported amounts of assets and liabilities, our disclosure of contingent assets and liabilities, and our reported revenues and expenses. We update these estimates, assumptions, and judgments as appropriate. Some of our accounting policies and estimates require us to exercise significant judgment in selecting the appropriate assumptions for calculating financial statements. Such judgments are subject to an inherent degree of uncertainty. Among other factors, these judgments are based upon our historical experience, known trends in our industry, terms of existing contracts and other information from outside sources, as appropriate. The following is a summary of our primary critical accounting policies and estimates. See also Note 1 to the Financial Statements, included in Part II, Item 8, of this Annual Report on Form 10-K. Revenue Recognition Revenue is measured based on consideration specified in the contract with a customer, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, including consideration paid or payable to customers and significant financing components. Revenue from all customers is recognized when a performance obligation is satisfied by transferring control of a distinct good or service to a customer. Individual promised goods and services in a contract are considered a performance obligation and accounted for separately if the individual good or service is distinct (i.e., the customer can benefit from the good or service on its own or with other resources that are readily available to the customer and the good or service is separately identifiable from other promises in the arrangement). If an arrangement includes multiple performance obligations, the consideration is allocated between the performance obligations in proportion to their estimated standalone selling price, unless discounts or variable consideration is attributable to one or more but not all the performance obligations. Costs related to products delivered are recognized in the period incurred, unless criteria for capitalization of costs under Accounting Standards Codification (“ASC”) 340-40, “Other Assets and Deferred Costs,” or the requirements under other applicable accounting guidance are met. The Company includes shipping and handling fees in net revenues. Shipping and handling costs associated with the shipment of the Company’s SmartVest System after control has transferred to a customer are accounted for as a fulfillment cost and are included in cost of revenues. We request that customers return previously sold units that are no longer in use to us to limit the possibility that such units would be resold by unauthorized parties or used by individuals without a prescription. The customer is under no obligation to return the product; however, we do reclaim many previously sold units upon the discontinuance of patient usage. We are certified to recondition and resell returned SmartVest System units. Returned units are typically reconditioned and resold or used for demonstration equipment and warranty replacement parts. Inventory Valuation Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. Work in process and finished goods are carried at standard cost, which approximates actual cost, and includes materials, labor and allocated overhead. The reserve for obsolescence is determined by analyzing the inventory on hand and comparing it to expected future sales. Estimated inventory to be returned is based on the number of devices that have shipped that are expected to be returned prior to completion of the insurance reimbursement process. 15 Table of Contents Warranty Reserve The Company provides a lifetime warranty on its products to the prescribed patient for homecare sales within the U.S. and a one to five-year warranty for all homecare distributor, hospital and other sales. The Company estimates the costs that may be incurred under its warranty and records a liability in the amount of such costs at the time the product is shipped. Factors that affect the Company’s warranty reserve include the number of units shipped, historical and anticipated rates of warranty claims, the product’s useful life and cost per claim. The Company routinely assesses the adequacy of its recorded warranty reserve and adjusts the amounts as necessary. Share-Based Compensation Share-based payment awards consist of options to purchase shares of our common stock, restricted stock awards, restricted stock units, and performance-based awards. Expense for options is estimated using the Black-Scholes pricing model at the date of grant and expense for restricted stock is determined by the closing price on the day the grant is made. Expense is recognized on a graded vesting basis over the requisite service or vesting period of the award, or at the time services are provided for non-employee awards. Expenses for performance-based awards with market conditions are estimated using the Monte-Carlo pricing model at the date of grant and expense is recognized on a straight-line basis. In determining the fair value of options and performance-based awards with market conditions, we make various assumptions, including expected risk-free interest rate, stock price [Excerpt truncated for page length; the complete text is on the linked full-MD&A page.] Read the full FY 2025 MD&A: /company/ELMD/mda/fy2025/ All MD&A years: /company/ELMD/mda/ ## MD&A history Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page. - [FY 2024 MD&A](/company/ELMD/mda/fy2024/): filed 2024-08-27; accession 0000897101-24-000422 (https://www.sec.gov/Archives/edgar/data/1488917/000089710124000422/elmd240883_10k.htm) - [FY 2023 MD&A](/company/ELMD/mda/fy2023/): filed 2023-08-22; accession 0000897101-23-000380 (https://www.sec.gov/Archives/edgar/data/1488917/000089710123000380/elmd230887_10k.htm) - [FY 2022 MD&A](/company/ELMD/mda/fy2022/): filed 2022-08-23; accession 0000897101-22-000805 (https://www.sec.gov/Archives/edgar/data/1488917/000089710122000805/elmd221010_10k.htm) - [FY 2021 MD&A](/company/ELMD/mda/fy2021/): filed 2021-08-24; accession 0000897101-21-000726 (https://www.sec.gov/Archives/edgar/data/1488917/000089710121000726/elmd211048_10k.htm) ## Macro cross-references Indicators mapped to this company's SIC classification (industry 3845 Electromedical & Electrotherapeutic Apparatus) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim. - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm Macro-to-micro threads including this sector: [Inflation (CPI / PCE / PPI)](/thread/inflation-cpi-pce-ppi/), [US labor market](/thread/us-labor-market/), [Growth & output](/thread/growth-output/), [Money & trade](/thread/money-trade/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/), [Industrial orders & inventories](/thread/industrial-orders/), [Trade & external](/thread/trade-external/). All macro indicators: /indicators/ ## For LLMs & downloads Markdown twin: /company/ELMD.md · JSON record: /company/ELMD.json · verified financials: /company/ELMD/financials.json / /company/ELMD/financials.csv · machine TOC for the whole site: /llms.txt