Electromed reported a 35% compound annual growth rate in operating income from fiscal 2021 to fiscal 2026, alongside a 15.3% increase in net revenues to $73.8 million for the year ended June 30, 2026. The company, which develops airway clearance systems, also posted a 78.5% gross margin and an 18.8% operating margin for fiscal 2026, both exceeding industry benchmarks.
The medical equipment company, based in New Prague, Minnesota, attributed its growth to expansion in the home care segment, which now accounts for 94% of total revenue. Home care revenue rose 16.3% year-over-year to $66.6 million, while hospital revenue declined 29% in the fourth quarter due to extended sales cycles. Management highlighted a $3.1 billion revenue opportunity within the primary pulmonology market, based on an estimated 834,000 diagnosed but untreated patients.
Electromed’s gross margin improved to 78.5% from 78.1% in the prior year, compared with a medical equipment index average of 53.9%. Operating income surged to $13.9 million from $3.1 million five years ago, while net income reached $11.3 million, or $1.30 per diluted share. The company generated $9.7 million in operating cash flow and maintained a debt-free balance sheet with $20.5 million in cash. Share buybacks totaled $3.9 million during the fiscal year.
The company’s home care revenue is split between commercial and other payers (50%), Medicare (48%), and Medicaid (2%). Referral volumes showed 76% of patients treated for bronchiectasis and 19% for cystic fibrosis. Management targets home care revenue per sales representative in the range of $1.05 million to $1.15 million for fiscal 2027, up from $1.145 million in fiscal 2026. The company plans to fill 67 territories, including three new ones, next fiscal year.
Electromed’s stock declined 2.36% to close at $39.34 in regular trading on August 25, 2026, and slipped an additional 1.12% in after-hours trading. The company has a market capitalization of approximately $350 million. CEO Jim Cunniff is scheduled to retire in April 2027, with the CMS phasing out fax-based ordering by May 2028.
