Breaking Down Electromed, Inc. (ELMD) Financial Health: Key Insights for Investors

You're looking at Electromed, Inc. (ELMD) because you see a small-cap MedTech story with a real track record, not just promises, and you want to know if the engine is still running hot. The direct takeaway is that their fiscal year 2025 (FY 2025) was defintely a banner year, solidifying their position as a profitable grower in the airway clearance therapy space. They delivered a record $64.0 million in net revenue, which is a strong 17.0% jump from the prior year, and even more impressive, their net income surged by 46.8% to hit $7.5 million. That kind of margin expansion-operating income grew to a record $9.7 million-shows operational excellence, not just top-line luck. Plus, they sit on a rock-solid balance sheet with $15.3 million in cash and zero debt as of June 30, 2025, giving them real flexibility for future capital allocation, especially after repurchasing $10.0 million of common stock in FY 2025. The question now is whether their focus on expanding the direct sales force and driving awareness of bronchiectasis, a chronic lung condition, can sustain this eleventh consecutive quarter of year-over-year growth. Let's break down the numbers to see where the real risks and opportunities lie.

Revenue Analysis

The core takeaway for Electromed, Inc. (ELMD) is simple: their direct-to-patient model is fueling consistent, double-digit growth, but the faster-growing non-homecare segment is the one to watch for a shift in revenue mix. For the full fiscal year (FY) ending June 30, 2025, Electromed, Inc. delivered a record total net revenue of $64.0 million, marking a strong 17.0% increase over the prior fiscal year's $54.7 million.

This growth is primarily driven by the sales of their flagship product, the SmartVest airway clearance system, which uses high frequency chest wall oscillation (HFCWO) therapy to help patients manage compromised pulmonary functions like bronchiectasis and cystic fibrosis. The company's revenue streams are cleanly split into two segments, and the direct sales and fulfillment model remains a key differentiator. You can see their strategic focus outlined in their Mission Statement, Vision, & Core Values of Electromed, Inc. (ELMD).

Here's the quick math on the segment contribution for FY 2025, which shows where the bulk of the revenue comes from:

• Direct Homecare Revenue: $57.3 million (89.5% of total revenue)
• Non-Homecare Revenue: $6.7 million (10.5% of total revenue)

The Direct Homecare segment remains the engine, but the non-homecare business is defintely accelerating. In FY 2025, Non-Homecare revenue jumped by 28.8% to $6.7 million, compared to a 14.8% increase in the Direct Homecare segment in the final quarter. This signals a strategic widening of their market approach beyond just the core direct-to-patient model.

Looking at the most recent data from the first quarter of fiscal year 2026 (Q1 FY 2026, ended September 30, 2025), the trend of strong, diversified growth continues with total net revenues hitting $16.9 million, a 15.1% year-over-year increase. The non-homecare segment is seeing explosive growth, driven by key sub-segments:

What this breakdown shows is a clear, deliberate shift to expand presence in the Hospital and Distributor markets, complementing the core Homecare business. The over 50% growth in Hospital revenue is a massive opportunity that could significantly change the overall revenue mix over the next couple of years, so keep an eye on that segment's continued performance. It's a smart way to scale without overburdening the direct sales force immediately.

Profitability Metrics

You need to know if Electromed, Inc. (ELMD) is just growing revenue or if that growth is actually translating into better profit for shareholders. The direct takeaway is that their operational efficiency is defintely improving, showing strong operating leverage that outpaced revenue growth in fiscal year (FY) 2025.

For the year ended June 30, 2025, Electromed, Inc. posted a record net revenue of $64.0 million, which is a 17.0% increase over the prior year. More importantly, their margins expanded across the board, demonstrating that cost management and pricing power are working. They achieved their eleventh consecutive quarter of year-over-year revenue and operating income growth. That's a real track record.

Here's the quick math on their core profitability margins for FY 2025:

• Gross Profit Margin: The margin was 78.1%, up from 76.3% in FY 2024.
• Operating Profit Margin: This rose to 15.1%, a significant jump from 12.0% in FY 2024.
• Net Profit Margin: The final bottom-line margin was approximately 11.7%, calculated from their net income of $7.5 million.

Operational Efficiency and Margin Trends

The increase in the gross profit margin to 78.1% is a crucial sign of operational efficiency. This improvement was primarily driven by higher net revenue per device, meaning they are either getting better pricing or a more favorable mix of high-value products, plus they are containing their cost of goods sold (COGS). The gross profit itself hit $50.0 million in FY 2025, up from $41.7 million in FY 2024. That's a 19.9% increase in gross profit dollars, which is faster than the 17.0% revenue growth.

The most telling metric, Operating Profit Margin, surged by 3.1 percentage points to 15.1%. This shows superb operating leverage-the company's selling, general, and administrative (SG&A) expenses are growing slower than their gross profit, allowing more of the gross profit dollars to flow down to operating income. Operating income was $9.7 million, a 46.8% increase over the previous year. That's a huge jump in profitability.

Benchmarking Against the Industry

When you look at the broader Medical Device industry, Electromed, Inc.'s gross margin of 78.1% is exceptionally strong. For context, a major competitor in the respiratory care space, ResMed, recently reported a gross margin of 57.4%. Electromed, Inc.'s direct-to-patient model, which you can read more about in their Mission Statement, Vision, & Core Values of Electromed, Inc. (ELMD), seems to be a key differentiator, allowing them to capture a much higher margin on their SmartVest® Airway Clearance System.

Here is a snapshot of the key profitability ratios, showing the positive trend:

What this estimate hides is the potential for margin pressure from rising raw material and labor costs, which the broader Medtech sector is dealing with. Still, Electromed, Inc. has successfully offset these in FY 2025 through price realization and efficiency improvements, like the implementation of their new Customer Relationship Management (CRM) system and manufacturing optimization plan. The trend is clear: they are getting better at converting sales into profit.

Next Step: Look into the Q1 FY 2026 results to confirm if the margin expansion momentum is continuing into the new fiscal year.

Debt vs. Equity Structure

You want to know how Electromed, Inc. (ELMD) funds its growth, and the answer is simple: they don't use debt. This is a crucial, defintely uncommon signal in the medical technology space. For the entire fiscal year 2025 (FY 2025), which ended June 30, 2025, Electromed, Inc. operated with a completely debt-free balance sheet.

That means their overview of debt levels is straightforward: both short-term and long-term debt were $0. They are financing their entire operation and expansion-including a record $64.0 million in net revenue for FY 2025-purely through retained earnings and equity. This is a massive risk mitigator for you as an investor.

Exploring Electromed, Inc. (ELMD) Investor Profile: Who's Buying and Why?

The Zero-Leverage Advantage

The Debt-to-Equity (D/E) ratio is a key measure of financial leverage, showing how much debt a company uses to finance its assets relative to the value of shareholders' equity. Here's the quick math: with $0 in debt and total shareholders' equity of $43.2 million as of June 30, 2025, Electromed, Inc.'s D/E ratio is a perfect 0.00.

To be fair, that's an anomaly in the medical device sector. The median Debt-to-Equity ratio for the Surgical and Medical Instruments and Apparatus industry is around 0.70. Even a major peer in the respiratory care market, ResMed Inc., operates with a low D/E ratio of about 0.11 to 0.14. Electromed, Inc. is operating with zero financial leverage, which means zero interest expense and no risk of defaulting on loan covenants.

Equity Funding and Capital Allocation

Since Electromed, Inc. has no debt, there are no recent debt issuances, credit ratings, or refinancing activities to report. The company's capital strategy is entirely focused on equity funding and managing its cash from operations. They are a profitable company, generating a record $11.4 million in cash from operating activities in FY 2025.

Instead of paying down debt, the management is using that cash to return value to shareholders. This is a key action to watch:

• Fund Growth: Reinvesting operating cash flow into the business, like expanding the direct sales force.
• Manage Equity: Executing a share repurchase program, buying back $10.0 million of common stock throughout FY 2025.

This capital allocation choice-internal funding and stock buybacks-signals strong confidence in future cash flow and a commitment to boosting Earnings Per Share (EPS). The only limit here is that having zero debt means they aren't utilizing debt's tax deductibility, but for a small-cap with this level of organic growth, the flexibility and safety of a pristine balance sheet clearly outweigh that cost.

Liquidity and Solvency

You're looking at Electromed, Inc. (ELMD) and wondering if they can cover their near-term bills-a smart move, because liquidity (the ability to meet short-term obligations) is the bedrock of financial stability. The direct takeaway here is that Electromed's liquidity position is exceptionally strong, backed by a large cash balance and zero debt, which gives them significant operational flexibility.

As of the end of fiscal year 2025 (June 30, 2025), Electromed's balance sheet showed total current assets of $45.08 million and estimated current liabilities of $10.48 million. This is a very healthy cushion. The key ratios confirm this strength:

• Current Ratio: The current ratio (Current Assets / Current Liabilities) stands at 4.30. This means the company has $4.30 in current assets for every dollar of current liabilities. A ratio over 2.0 is generally considered excellent, so 4.30 is a sign of substantial short-term financial safety.
• Quick Ratio: The quick ratio (or acid-test ratio), which excludes less-liquid assets like inventory, is also robust at 3.81. This tells you they can cover all their immediate obligations nearly four times over, even if they couldn't sell a single item of inventory quickly.

Honestly, this level of liquidity is defintely a major strength. It signals a low risk of financial distress and the capacity to fund growth initiatives without needing to borrow.

Working Capital and Cash Flow Trends

The working capital (Current Assets minus Current Liabilities) at the end of FY 2025 was $34.6 million, a figure that continues a strong upward trend, which is a clear indicator of efficient operations and strong collections. This is the capital buffer that fuels day-to-day operations and short-term growth. Here's the quick math on the cash flow statement for the fiscal year ended June 30, 2025:

The $11.4 million in cash generated from operations (CFO) was a record for Electromed, Inc.. This is the most important number for a growth-oriented company, showing that core business activities are generating substantial cash. What this estimate hides is the company's capital allocation strategy: they are generating so much cash that they spent $10.0 million on share repurchases in FY 2025, which is a direct return of capital to shareholders and a strong signal of management's confidence in the stock's value.

The minimal cash used in investing activities shows that their growth is largely organic and not dependent on massive, risky capital expenditures (CapEx). Plus, the company has no debt, which eliminates a major solvency risk and keeps interest expense at zero. This is a clean balance sheet, giving them a huge advantage over peers who are struggling with higher interest rates. For a deeper dive into the valuation metrics, you can read the full post: Breaking Down Electromed, Inc. (ELMD) Financial Health: Key Insights for Investors.

Valuation Analysis

You are looking at Electromed, Inc. (ELMD) and wondering if the market has priced it correctly. Based on fiscal year 2025 metrics, the stock appears to be trading in a fair-to-rich zone when compared to its historical averages, but Wall Street analysts defintely see significant upside.

The core valuation ratios tell a story of a growth-focused medical device company. Electromed, Inc.'s trailing price-to-earnings (P/E) ratio currently stands at 26.08, which is a premium to the broader market but lower than its own five-year average of 30.11. This suggests expectations for continued, albeit slightly moderated, earnings growth. The forward P/E ratio is even lower at 22.70, indicating analysts anticipate a solid jump in earnings over the next year.

When we look at the enterprise value-to-EBITDA (EV/EBITDA) ratio, which is a great way to compare companies regardless of their capital structure, Electromed, Inc. is at 16.12. This is below the five-year average of 16.44, suggesting the company is relatively fairly valued on an operating basis. The price-to-book (P/B) ratio, however, is at 4.58, which is a good bit higher than its three-year average of 3.50, reflecting the market's willingness to pay a premium for the company's assets and growth potential.

• Trailing P/E: 26.08 (Suggests growth expectations).
• P/B Ratio: 4.58 (Shows a premium on book value).
• EV/EBITDA: 16.12 (Fairly valued against its own history).

Stock Price Volatility and Analyst View

The stock price trends over the last 12 months show some real volatility. The 52-week range has swung from a low of $17.73 to a high of $35.56. As of mid-November 2025, the stock is trading around $25.21, which is a 16.25% decline year-to-date. This kind of drop, despite strong underlying fundamentals-like the record fiscal year 2025 results-often reflects broader market profit-taking or macroeconomic jitters, not a fundamental flaw in the business model. You can see how the company is driving its mission by reviewing the Mission Statement, Vision, & Core Values of Electromed, Inc. (ELMD).

Electromed, Inc. is not a dividend-paying stock. The dividend yield is 0.00%, and the payout ratio is also 0.00%. This is typical for a small-cap growth company in the medical device space, where capital is prioritized for reinvestment into sales force expansion, R&D, and market penetration to fuel double-digit revenue growth.

The analyst community is largely bullish. The consensus rating among Wall Street analysts is a clear Buy. The average 12-month price target is $36.50, which implies a forecasted upside of approximately 44.78% from the current stock price of $25.21. Here's the quick math: the difference between the current price and the target is over $11 per share, a substantial projected gain. What this estimate hides is the execution risk inherent in scaling a sales force, but the target suggests a belief in their ability to continue taking market share.

Finance: Track the forward P/E ratio against industry peers over the next quarter to see if the anticipated earnings growth is priced in correctly.

Risk Factors

You're looking at Electromed, Inc. (ELMD) because the fiscal year (FY) 2025 results were strong-net revenue hit a record $64.0 million, up 17.0% year-over-year, and net income was $7.5 million. But as a seasoned analyst, you know that past performance is just the starting line for assessing risk. The company operates in a highly specific medical device niche, and that brings a distinct set of near-term risks that could quickly derail this growth.

The biggest external threat is the constant drumbeat of reimbursement risk. Electromed's High Frequency Chest Wall Oscillation (HFCWO) devices, like the SmartVest® Airway Clearance System, rely heavily on Medicare, Medicaid, and private insurance. Any adverse change to these policies-even a small tweak in coverage criteria or payment rates-could directly impact their primary revenue stream. This is a perpetual concern in the medical device industry. Also, new drug or pharmaceutical discoveries that treat conditions like bronchiectasis (the primary indication for their device) could significantly reduce the need for mechanical clearance therapy, which is a major strategic threat.

Operationally, Electromed, Inc. is not immune to the supply chain and cost pressures hitting every sector. While they managed to increase their gross profit margin to 78.0% in Q3 FY 2025, the risks of component or raw material shortages, changes to trade regulations, and wage and component price inflation are real and ongoing. They manufacture in Minnesota, which helps control some logistics, but the global market still dictates component costs. Plus, the company's reliance on a single core product line means a technical problem or a major product recall would be defintely catastrophic.

Here is a quick map of the key risks highlighted in their recent filings:

• Market Competition: Intense rivalry in the airway clearance therapy market.
• Regulatory Compliance: The continuous need to maintain compliance and gain future Food and Drug Administration (FDA) approvals.
• Cybersecurity: The increasing risk of cyberattacks and data breaches affecting patient and operational data.

What this estimate hides is the speed at which a new competitor could enter the market with a superior, less-invasive technology. That's the real black swan event here.

Mitigation and Strategic Focus

To be fair, Electromed, Inc. is actively working to mitigate these risks. Their strategy is centered on strengthening their core business and returning capital to shareholders. For instance, in FY 2025, the company repurchased $10.0 million of its common stock, signaling management's confidence and providing a floor for the stock price.

On the operational side, they completed a manufacturing optimization plan and implemented a new Customer Relationship Management (CRM) system in FY 2025 to boost sales efficiency and productivity. This is smart; better sales management means faster patient approvals and higher revenue per approval. They are also expanding their direct sales force, which totaled 62 employees at the end of FY 2025, to drive growth in their core homecare market.

The table below summarizes their strategic actions against the corresponding risks:

You can dig deeper into the corporate structure and ownership dynamics in Exploring Electromed, Inc. (ELMD) Investor Profile: Who's Buying and Why?

Growth Opportunities

You want to know where the next wave of growth comes from for Electromed, Inc. (ELMD), and the answer is simple: they are successfully executing against a massive, underpenetrated market opportunity with a highly efficient business model. Their fiscal year 2025 results, which showed a revenue increase of 17.0% to $64.0 million and a net income surge of 46.35% to $7.5 million, prove their strategy is working.

The core of the opportunity lies in High Frequency Chest Wall Oscillation (HFCWO) therapy, primarily for bronchiectasis patients. There are approximately 824,000 patients diagnosed with bronchiectasis in the U.S., but fewer than 15% currently use this non-invasive therapy. This represents a significant 'iceberg' of potential new patients that Electromed, Inc. is actively targeting. The street is optimistic, too, with analysts projecting an EPS growth of 22.4% for the current year, which is well above the industry average.

Key Growth Drivers and Strategic Focus

Electromed, Inc.'s growth isn't accidental; it's a result of deliberate, multi-pronged strategic initiatives. The company's unique direct-to-patient and provider model is a major competitive advantage, streamlining the process from referral to reimbursement and driving a high gross margin of 78.1% in FY 2025.

The company is focused on three clear drivers for continued growth:

• Sales Force Expansion: Deliberately growing the direct sales force, which ended Q2 FY 2025 with 54 representatives, to capture more of the homecare market.
• Market Diversification: Expanding the non-homecare business, which includes hospital and distributor revenue, a segment that grew by a strong 28.8% to $6.7 million in FY 2025.
• Clinical Education: Running educational campaigns, like the 'Triple Down on Bronchiectasis,' which reached over 10,000 clinicians, to increase awareness and drive referrals for their SmartVest Airway Clearance System.

Honesty, this focus on the physician and patient experience is defintely a winning formula in the medical device space. Plus, their flagship SmartVest is a differentiated device, known for patient comfort and ease of use, which aids in compliance and physician preference.

Financial Strength and Competitive Positioning

Electromed, Inc.'s financial health provides a solid foundation for future expansion. The company reported a record $11.4 million in cash provided by operations in FY 2025 and, critically, holds no debt as of June 30, 2025, with a cash balance of $15.3 million. This clean balance sheet gives them flexibility to invest in their growth initiatives without needing expensive outside financing. To be fair, they are competing in a mature market against larger players, but their direct-sales model and focus on patient service are excellent differentiators.

The company also demonstrated confidence in its valuation and future prospects by repurchasing $10.0 million of its common stock throughout FY 2025, and then authorizing another $10.0 million repurchase in September 2025. This is a clear signal from management that they believe the stock is undervalued relative to its growth trajectory. The average analyst 12-month price target of $36.0, representing a 46.82% upside, supports this view.

Here's the quick math on their recent performance:

For a deeper dive into who is investing in this growth story, you should check out Exploring Electromed, Inc. (ELMD) Investor Profile: Who's Buying and Why?