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1. ResMed for airway clearance systems.

2. Dexcom for lung therapy devices.

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• SmartVest Airway Clearance System: A high-frequency chest wall oscillation (HFCWO) medical device designed to help patients clear mucus from their lungs, primarily used for conditions such as bronchiectasis, cystic fibrosis, and neuromuscular disorders.

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Electromed (ELMD) Major Customers

• Bronchiectasis Patients: Individuals diagnosed with bronchiectasis, a chronic lung condition characterized by irreversible widening of the airways, leading to mucus buildup and increased susceptibility to infections. This is Electromed's largest and most frequently targeted patient population.
• Cystic Fibrosis Patients: Individuals with cystic fibrosis, a genetic disorder that affects the exocrine glands, causing the production of thick, sticky mucus that can block airways and lead to recurrent lung infections. Airway clearance devices are a standard part of their treatment regimen.
• Patients with Other Chronic Respiratory Conditions Requiring Airway Clearance: This category includes individuals suffering from various other chronic lung diseases or neuromuscular disorders that impair the body's natural ability to clear mucus from the airways. Examples may include certain forms of chronic obstructive pulmonary disease (COPD), primary ciliary dyskinesia, or conditions like muscular dystrophy or spinal cord injuries affecting respiratory function.

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Jim Cunniff, President and Chief Executive Officer

Appointed CEO in July 2023, Jim Cunniff brings over 30 years of executive leadership experience in the MedTech and broader healthcare industry. His expertise spans general management, sales and marketing, finance, manufacturing, distribution, mergers, and acquisitions. Prior to Electromed, Mr. Cunniff served as President, CEO, and Board Director of Provista, a Vizient company, where he consistently grew revenue and executed two acquisitions. He also held President, CEO, and Board Director roles for Leiters, was Senior Vice President of Americas for Kinetics Concepts, and President of Emerging Markets for Stryker Corporation.

Brad Nagel, Chief Financial Officer

Brad Nagel joined Electromed as Chief Financial Officer in October 2022. He possesses over 15 years of experience in financial leadership and strategic planning with Fortune 500 companies, including establishing best practices for internal controls and financial reporting. Most recently, he was the Divisional Chief Financial Officer of Global Lung Health and Visualization at Medtronic, where he played a key role in driving revenue growth. Before Medtronic, Mr. Nagel held various roles in finance, sales operations, and accounting at Target Corporation and TCF Bank.

Peter Horwich, Vice President, Marketing

Peter Horwich was appointed Vice President, Marketing in October 2024, bringing over 20 years of experience in driving commercial growth in the Medical Technology market to Electromed. Prior to joining Electromed, he directed Global Strategic Marketing for Respiratory Therapies at Abiomed (now J&J MedTech). Mr. Horwich also spent over a decade in marketing roles of increasing responsibility at Medtronic and held various marketing positions at Arizant (now Solventum), Entegris, and Guidant (now Boston Scientific).

Christopher Holland, Chief Commercial Officer

Christopher Holland has served as Electromed's Chief Commercial Officer since February 2022. He has 30 years of experience in driving commercial growth within Medical Technology markets, with a proven track record of executing revenue-growth initiatives and successful new product introductions. His previous leadership positions include Vice President of Commercialization at Prosomnus Sleep Technologies, Inc., and Chief Commercial Officer and Executive Vice President of Sales and Global Business Development at Nonin Medical, Inc.

Kristine Owata, Vice President of Reimbursement & Payer Relations

Kristine Owata joined Electromed as Vice President of Reimbursement & Payer Relations in October 2020. She brings over 15 years of diverse leadership experience in people management, client experience, and process improvement. Ms. Owata previously served as president and director of Intelligere, Inc., where she led strategic planning, process improvement, revenue cycle management efficiencies, business development, and growth. She was also the owner of W4P Revenue Cycle Solutions and a sales representative at Empi/DJO Global.

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The key risks for Electromed (ELMD) primarily revolve around external factors affecting the medical device industry and the specific market for airway clearance technologies.

1. Changes to Healthcare Reimbursement Policies and Laws

   Electromed's business is significantly exposed to the risk of changes in healthcare reimbursement policies, including those from Medicare, Medicaid, and private insurance. Any adverse modifications to these policies or broader state and federal healthcare laws could directly impact the company's revenue and profitability.

2. Competitive Landscape and New Drug Discoveries

   The company operates in a competitive market, and sustained success requires continuous innovation and effective market differentiation. A significant risk also stems from potential new drug or pharmaceutical discoveries that could treat conditions like bronchiectasis more effectively, potentially reducing the demand for Electromed's airway clearance technology. While a competitor's recent product refresh has not yet impacted Electromed's business, the competitive landscape necessitates ongoing vigilance.

3. Regulatory Hurdles and Maintaining Regulatory Compliance

   Electromed faces risks related to regulatory hurdles, which have previously affected its product development and market expansion plans. The inability to secure timely regulatory approvals for new medical devices can lead to delays in product launches and impact investor confidence. The company must continuously maintain regulatory compliance and obtain necessary future regulatory approvals and clearances for its products.

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The primary emerging threat for Electromed is the continued development and increasing adoption of highly effective cystic fibrosis transmembrane conductance regulator (CFTR) modulator therapies. These pharmaceutical treatments, such as Trikafta, address the underlying cause of cystic fibrosis and significantly improve lung function for many patients. As these therapies become more widespread and their long-term efficacy reduces the severity and progression of lung disease, it could diminish the long-term need for, or intensity of use of, ancillary airway clearance devices like Electromed's SmartVest System for a significant portion of its patient base.

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Electromed (ELMD) primarily develops, manufactures, markets, and sells High Frequency Chest Wall Oscillation (HFCWO) airway clearance products, with its flagship product being the SmartVest® Airway Clearance System.

The addressable market for Electromed's main products and services can be understood through two key metrics:

• U.S. Bronchiectasis Patient Population: The domestic market for HFCWO devices is significantly underpenetrated, with fewer than 15% of the approximately 824,000 patients diagnosed with bronchiectasis in the U.S. currently utilizing this non-invasive therapy. The bronchiectasis market in the U.S. is estimated to be growing at 9% annually, driven by an aging population. More broadly, over 24 million people in the United States have diseases and conditions for which HFCWO therapy is routinely prescribed, including cystic fibrosis, neuromuscular conditions, and bronchiectasis.
• U.S. HFCWO Device Market Size: The total served U.S. market for HFCWO devices was estimated at approximately $220 million to $240 million in 2022. The adoption of HFCWO therapy is growing at approximately 5%.
• Global Airway Clearance Devices Market: The global market for airway clearance devices was valued at USD 677.9 million in 2024 and is projected to reach USD 1.1 billion by 2034, demonstrating a compound annual growth rate (CAGR) of 4.6%. The high-frequency chest wall oscillation (HFCWO) segment accounted for a significant share of 37.5% of this global market in 2024.

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Expected Drivers of Future Revenue Growth for Electromed (ELMD)

Over the next 2-3 years, Electromed (ELMD) is poised for revenue growth driven by several strategic initiatives and market dynamics:

1. Expansion of Direct Sales Force: Electromed plans to continue increasing its direct sales representatives and expanding into new home care sales territories across the U.S. In fiscal year 2026, the company expects the number of sales representatives to rise, with expansion into as many as 61 home care sales territories. This expansion aims to reach more patients directly and capitalize on the largely untapped domestic market for High Frequency Chest Wall Oscillation (HFCWO) devices.
2. Growth in Hospital and Distributor Channels: While home care remains the core business, Electromed has seen robust growth in its hospital and distributor segments, which are expected to contribute meaningful incremental revenues and improve overall profitability. In fiscal year 2025, the non-Home Care business grew by 28.8%, with distributor and hospital revenue increasing by 58.1% and 23.9% respectively. The company's "Triple Down On Bronchiectasis Campaign" is also aimed at expanding the SmartVest Clearway's market reach beyond homecare into these channels.
3. Increased Awareness of Bronchiectasis and HFCWO Therapy: Electromed believes that the domestic market for HFCWO devices is significantly underpenetrated, with fewer than 15% of diagnosed bronchiectasis patients currently using this therapy. The company's focus on raising awareness of bronchiectasis and the benefits of HFCWO therapy is a pivotal strategy to drive industry growth and increase the adoption of its SmartVest System among physicians and patients.
4. Manufacturing Optimization: To support anticipated growth and enhance operational efficiencies, Electromed is undertaking a manufacturing optimization plan. This initiative, which began in fiscal year 2025 and is expected to be completed in fiscal year 2026, aims to increase manufacturing capacity. This increased capacity will enable the company to meet higher demand and potentially improve gross margins.
5. Transition to Next-Generation SmartVest: Although specific new product launches are not detailed, Electromed's investor presentation indicates an expected improvement in gross margins to the high-70s with a "full transition to Next-Generation SmartVest®." This suggests that enhancements or a new iteration of their flagship product, the SmartVest® Airway Clearance System, will likely drive increased value and potentially higher revenue per approval.

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Share Repurchases

• In May 2021, Electromed's Board of Directors authorized a $3.0 million stock repurchase program, effective through May 2022.
• During fiscal year 2025, Electromed repurchased $10.0 million of its common stock, exhausting a previous authorization.
• In September 2025, the Board authorized a new stock repurchase program of up to $10.0 million of common stock.

Share Issuance

• Electromed issued $398,000 of common stock upon the exercise of options in fiscal year 2025.
• In fiscal year 2024, the company issued $311,000 of common stock from the exercise of options.
• Taxes paid on the net share settlement of stock awards amounted to $2.3 million in fiscal year 2025.

Capital Expenditures

• Electromed's capital allocation strategy in 2025 included new CRM and CAPEX investments.
• The company's working capital requirements include continuing infrastructure investments and capital expenditures incurred in the ordinary course of business.
• A manufacturing optimization plan to increase capacity was initiated in fiscal year 2025 and is expected to be completed in fiscal year 2026.