NEW PRAGUE, Minn.–(BUSINESS WIRE)–Electromed, Inc. (NASDAQ: ELMD) today announced financial results for
the three months and fiscal year ended June 30, 2011. Net revenues for
the three months ended June 30, 2011 were approximately $4,954,000, a
36.7% increase compared to net revenues of approximately $3,624,000 for
the same period last year. Net revenues for the fiscal year ended June
30, 2011 were approximately $19,004,000, a 32.9% increase compared to
net revenues of approximately $14,304,000 for the same period last year.

The Company also announced net income of approximately $165,000, or
$0.02 per basic and diluted share, for the three months ended June 30,
2011, compared to net income of approximately $71,000, or $0.01 per
basic and diluted share, for the same three-month period last year. For
the fiscal year ended June 30, 2011, net income was $1,056,000, or $0.14
per basic and $0.13 per diluted share, compared to net income of
approximately $916,000, or $0.15 per basic and diluted share, for the
same period last year. Net revenues increased primarily due to an
expansion of the sales force. Net income results were attributable to
higher net revenues, offset by expenses related to increases in sales
force, support and production personnel, and an expansion of marketing
and research and development activities. In addition, earnings per share
were affected by an increase to the number of outstanding shares of
Company common stock as compared to the prior-year periods, which was
attributable to the Company’s completion of its initial public offering
in August 2010. Including the underwriter’s over-allotment option, a
total of 1,900,000 shares of Company common stock were registered and
sold in the initial public offering.

Robert Hansen, Chairman and CEO, commented on the Company, saying,

“Electromed, Inc. is a rapidly growing company. It is using a
portion of the capital received from its IPO to grow its sales force and
support its infrastructure. We believe these actions are
essential investments in driving longer-term profitable results. We
have also continued to make important investments in research and
development. We believe that new innovations are the surest path
to sustainable growth and higher profits. We have pursued these
investments while maintaining solid profitability and a strong balance
sheet.”

Gross profit increased to approximately $3,600,000, or 72.7% of net
revenues, for the three months ended June 30, 2011, and $13,778,000, or
72.5% of net revenues, for the fiscal year ended June 30, 2011. For the
three months and fiscal year ended June 30, 2010, gross profit was
approximately $2,698,000, or 74.4% of net revenues, and $10,378,000, or
72.6% of net revenues, respectively. The increase in gross profit
dollars resulted primarily from the increase in sales volume. Gross
profit percentage was consistent for the year ended 2011 from 2010. The
slight decrease in gross profit percentage for the three-month period
ended June 30, 2011 primarily resulted from lower reimbursement from the
mix of referrals as compared to the three-month period ended June 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
fluctuate margins slightly on a quarterly basis.

Operating expenses, which consist of selling, general, and
administrative expenses and research and development expenses, were
approximately $3,192,000 and $11,908,000, respectively, for the three
months and fiscal year ended June 30, 2011, an increase of approximately
29.9% over total operating expenses for the three-month period last year
and an increase of approximately 38.8% over total operating expenses for
the 2010 fiscal year. These planned increases resulted from higher
payroll and marketing expenses related to increasing the size of the
sales team, patient training costs related to a higher sales volume,
increased expenses relating to being a newly public company, and
increased research and development expenses.

Total cash was approximately $4,092,000 as of June 30, 2011. For the
fiscal year ended June 30, 2011, cash provided by financing activities
was approximately $6,007,000, consisting of approximately $6,364,000 net
proceeds received in August and September 2010 in connection with the
Company’s initial public offering, $26,000 from exercise of warrants,
and $60,000 in proceeds from subscription notes receivable. This was
offset by principal payments on long-term debt of approximately
$436,000. An aggregate of $1,111,000 was used for investing activities
during the 2011 fiscal year, including $659,000 in payments for patent
and trademark costs, primarily relating to defense of the SmartVest^®
trademark, and $452,000 in net expenditures for property and equipment.
The Company’s receivable position increased 45.9% to approximately
$9,593,000, reflecting the significant sales growth over the past fiscal
year.

About Electromed, Inc.
Electromed, Inc., founded in 1992 and
headquartered in New Prague, Minnesota, manufactures, markets, and sells
products that provide airway clearance therapy, including the SmartVest^®
Airway Clearance System and related products, to patients with
compromised pulmonary function. Further information about the Company
can be found at www.Electromed.com.

Cautionary Statements
Certain statements found in
this release may constitute forward-looking statements as defined in the
U.S. Private Securities Litigation Reform Act of 1995. Forward-looking
statements reflect the speaker’s current views with respect to future
events and financial performance and include any statement that does not
directly relate to a current or historical fact. The forward-looking
statements in this release include those relating to the Company’s
business strategy and intent to maximize long-term growth and profits.
Forward-looking statements and the Company’s expectations regarding
gross margins, and can generally otherwise be identified by the words
“believe,” “expect,” “anticipate” or “intend” or similar words.
Forward-looking statements cannot be guaranteed and actual results may
vary materially due to the uncertainties and risks, known and unknown,
associated with such statements. Examples of risks and uncertainties for
Electromed include, but are not limited to, the impact of emerging and
existing competitors, the effectiveness of our sales and marketing
initiatives, the success of our research and development activities,
changes to reimbursement programs, as well as other factors described
from time to time in our reports to the Securities and Exchange
Commission (including our Annual Report on Form 10-K). Investors should
not consider any list of such factors to be an exhaustive statement of
all of the risks, uncertainties or potentially inaccurate assumptions
investors should take into account when making investment decisions.
Shareholders and other readers should not place undue reliance on
“forward-looking statements,” as such statements speak only as of the
date of this release.