What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-08-22 compared with 2022-08-23 · 259 added, 270 removed, 438 unchanged (55% of the section changed)

50 unchanged sentences

● eligibility

for reimbursement by private insurance, federal or state government programs or combinations

of the foregoing.

for reimbursement by private insurance, federal or state government programs or combinations of the foregoing.

Effectiveness of treatment with high-frequency chest wall oscillation in patients with bronchiectasis.

16 unchanged sentences

prescription.

SmartVest System is currently available in one model – SQL ® – which is sold into home care and hospital

We will continue to support and service earlier SmartVest models pursuant to the applicable product warranty.

part of our growth strategies, we periodically evaluate opportunities involving products and services, especially those that may

provide value to the respiratory homecare and institutional market.

To that end, we made meaningful progress in the development

of our next generation SmartVest System during our fiscal year ended June 30, 2022 (“fiscal 2022”) and estimate launching

such device and completing the corresponding FDA 510(k) clearance process in the first half of our fiscal year ending June 30,

2023 (“fiscal 2023”).

SmartVest SQL System

SmartVest SQL System consists of an inflatable therapy garment, a programmable air pulse generator and a patented single-hose

that delivers air pulses from the generator to the garment.

The SmartVest SQL is designed for maximum comfort and lifestyle convenience,

so patients can readily fit therapy into their daily routines.

The SmartVest SQL was designed to be significantly smaller, quieter,

and lighter than its predecessor, and offers features that make it easier to use and enable greater patient freedom.

SmartVest System is currently available in two models, The SmartVest SQL ® and SmartVest Clearway ® –

which are sold into home care and hospital markets.

In November 2022, we announced the introduction of SmartVest Clearway ® ,

our next generation HFCWO system designed around an enhanced patient experience and modern design.

We will continue to support

and service earlier SmartVest models pursuant to the applicable product warranty.

As part of our growth strategies, we periodically

evaluate opportunities involving products and services, especially those that may provide value to the respiratory homecare and

institutional market.

SmartVest Clearway System

SmartVest Clearway System consists of an inflatable therapy garment, a programmable air pulse generator and a patented single-hose

that delivers air pulses from the generator to the garment to create oscillatory pressure on the chest wall.

The SmartVest Clearway

is designed for maximum comfort and lifestyle convenience, so patients can readily fit therapy into their daily routines.

SmartVest Clearway was designed with the patient experience in mind continuing our history of offering the smallest, lightest

weight generator on the market and introduces an intuitive touch screen to simplify use.

The enhanced features make it easier

to use and enable greater patient freedom in completing therapy.

oscillation coverage and patented Soft Start (R) technology:

All SmartVest

garments provide 360° oscillation coverage, which delivers simultaneous treatment

to all lobes of the lungs.

The oscillatory squeeze-and-release technology delivers therapeutic

pressure to the chest wall to loosen, sheer and propel mucus into the upper airways where

it can be more easily expectorated.

Our patented Soft Start technology gently inflates

the garment to better acclimate the patient to therapy.

system design with Breathing Room TM :

The active inflate – active

deflate mechanism of the SmartVest System enables patients to take deep breaths during

therapy without feeling restricted, providing patients with a more comfortable treatment

● Programmable

generator with user-friendly device operation:

The SmartVest Clearway introduces

an intuitive touchscreen with single touch start.

The improved user interface enhances

device programming and simplifies every-day use.

The system features multiple operating

modes, including ramp, favorite settings designations, and options for saving, locking

and restoring protocols.

An enhanced pause feature allows the physician to program dedicated

times for the patient to clear secretions during therapy.

single-hose design:

4 unchanged sentences

extending the forces upward and inward in strong but smooth cycles surrounding the chest.

system design with active inflate – active deflate:

The active inflate –

active deflate mechanism of the SmartVest System provides patients a more comfortable

treatment experience by allowing them to take deep breaths and breathe more easily without

feeling restricted.

● Soft-fabric

garment is lightweight and comfortable:

The SmartVest garment is lightweight and

designed to resemble an article of clothing.

Quick fit Velcro ® -like closures

allow for a secure, comfortable fit without bulky straps and buckles.

The simple design

creates a broad size adjustment range to ensure a properly tailored fit to accommodate

pediatric and adult patients.

Soft Start ® and 360° garment oscillation coverage:

gently fills the garment to acclimate the patient to therapy.

All SmartVest garments

provide 360° oscillation coverage, which delivers simultaneous treatment to all lobes

of the lungs.

quieter and lighter:

The SmartVest SQL System is 25% smaller, 5db quieter and 30%

lighter than the prior SmartVest SV2100 System, which we previously discontinued on July

The SmartVest SQL is the lightest and overall quietest HFCWO generator on the

market, weighing less than 16 pounds, making it easier for patients to use and integrate

HFCWO therapy into their daily lives.

● Programmable

generator with user-friendly device operation:

The SmartVest SQL features multiple

operating modes, including ramp, and options for saving, locking and restoring protocols.

Further, an enhanced pause feature allows the physician to program dedicated times for

the patient to clear secretions.

June 2017, we launched the SmartVest SQL with SmartVest Connect ® wireless technology, a personalized HFCWO therapy

management portal for patients with compromised pulmonary function.

In March 2020, we launched the SmartVest Connect app for both

the iOS and Android operating systems.

The SmartVest Connect app securely connects to the SmartVest SQL System through

Bluetooth™ technology.

This interface allows patients and healthcare teams to track therapy in real-time and collaborate

on care decisions to improve therapy adherence and patient outcomes.

SmartVest Connect is available to pediatric and cystic fibrosis

patients, and targeted adult pulmonary clinics using a Bluetooth-enabled SmartVest SQL System.

The SmartVest garment is the lightest HFCWO

garment available and is designed to resemble an article of clothing.

The light design

takes weight off of the patients shoulders and torso enhancing the therapy experience.

Quick fit Velcro ® -like closures allow for a secure, comfortable fit without

bulky straps and buckles.

The simple design creates a broad size adjustment range to

ensure a properly tailored fit to accommodate pediatric and adult patients.

SmartVest Clearway is the smallest and lightest HFCWO generator on the

market, weighing less than 14 pounds.

The lightweight design, ergonomic carrying handle

and compact storage case make it easier for patients to move throughout their home, store

and integrate HFCWO therapy into their daily lives.

June 2017, we launched SmartVest Connect ® wireless technology, a personalized HFCWO therapy management portal for

patients with compromised pulmonary function.

In March 2020, we launched the SmartVest Connect app for both the iOS and Android

operating systems.

The SmartVest Connect app securely connects to the SmartVest System through Bluetooth™ technology.

interface allows patients and healthcare teams to track therapy in real-time and collaborate on care decisions to improve therapy

adherence and patient outcomes.

market the Single Patient Use (“SPU”) SmartVest and SmartVest Wrap ® to health care providers in the

1 unchanged sentence

Hospitals issue the SPU SmartVest or SmartVest Wrap to an individual patient for managing airway clearance

Both SPU products provide full coverage oscillation and facilitate continuity of care because they introduce the patient to our

product and may encourage use of the SmartVest System for home care, which can be provided to patients with a chronic condition

upon discharge.

We estimate the total served U.S.

market for HFCWO has returned to pre-pandemic levels and is estimated at approximately $220 million to $240 million, with growth in HFCWO adoption at approximately 5% based on independent third-party market research.

We believe the market for HFCWO is continuing to expand due to an aging population, higher incidence of chronic lung disease, growing awareness by physicians of diseases and conditions for which patients can benefit from using HFCWO therapy, and treatments moving to lower cost home care settings.

while inpatient.

Both SPU products provide full coverage oscillation and facilitate continuity of care when the SmartVest System

is prescribed for patients with a chronic condition upon discharge for use in the home.

estimate the total served U.S.

market for HFCWO is approximately $250 million in 2022 growing at a 9% compound annual growth rate

based on independent third-party market research.

We believe the market for HFCWO is under recognized and underdiagnosed and is

continuing to expand due to an aging population, higher incidence of chronic lung disease, growing awareness by physicians of

diseases and conditions for which patients can benefit from using HFCWO therapy, and treatments moving to lower cost home care

Indications for when HFCWO may be prescribed are not specific to any one disease.

A physician may elect to prescribe HFCWO when such individual believes the patient will benefit from improved airway clearance and external chest manipulation is the treatment of choice to enhance mucus transport and improve bronchial drainage.

A physician may elect to prescribe

HFCWO when such individual believes the patient will benefit from improved airway clearance and external chest manipulation is

the treatment of choice to enhance mucus transport and improve bronchial drainage.

SmartVest System is primarily prescribed for patients with bronchiectasis, cystic fibrosis, and neuromuscular conditions such

7 unchanged sentences

increased hospitalizations and medication use, and increased morbidity and mortality.

are driven to make life's important moments possible, one breath at a time, by leading the HFCWO therapy market in clinical evidence

that supports the therapeutic imperative of clearing excess mucus from the lungs.

Electromed continues to add to the body of evidence

in support of HFCWO with multiple published clinical outcome studies demonstrating a significant improvement in quality of life and reduction

in exacerbation rates, hospitalizations, emergency department visits, and antibiotic prescriptions in bronchiectasis patients using the

SmartVest System.

This includes the most recent clinical study, a 2022 publication in the American Journal of Respiratory and Critical

Care Medicine reviewing outcomes among non-cystic fibrosis bronchiectasis patients with HFCWO Therapy.

2-6 Generating additional

clinical evidence to further support the SmartVest System as a preferred treatment for bronchiectasis patients will remain a focus for

us in fiscal 2023, with two clinical studies in progress.

The first such clinical study is a prospective, multi-center bronchiectasis

outcomes study utilizing SmartVest therapy, and the second is a post surveillance study with chronic obstructive pulmonary disease ("COPD")

and bronchiectasis patients prescribed SmartVest utilizing quality of life questionnaires to measure outcomes prior to therapy and at

two intervals following initiation of the therapy.

are driven to make life’s important moments possible, one breath at a time, by leading the HFCWO therapy market in clinical

evidence that supports the therapeutic imperative of clearing excess mucus from the lungs.

Electromed continues to add to the

body of evidence in support of HFCWO with multiple published clinical outcome studies demonstrating a significant improvement

in quality of life and reduction in exacerbation rates, hospitalizations, emergency department visits, and antibiotic prescriptions

in bronchiectasis patients using the SmartVest System.

This includes a 2022 publication in the American Journal of Respiratory

and Critical Care Medicine reviewing outcomes among non-cystic fibrosis bronchiectasis patients with HFCWO Therapy 2-6.

addition, we designed and ran a quality-of-life study for COPD patients using SmartVest, which was shared at the 2023 American

Thoracic Society International Conference and published in American Journal of Respiratory and Critical Care Medicine.

results demonstrated statistically significant favorable responses to HFCWO as add on therapy for patients with a primary diagnosis

We have also shared data from our bronchiectasis quality of life trial at the 2023 World Bronchiectasis and NTM Conference

highlight effects of HFCWO on clinical symptoms of patients with bronchiectasis Generating additional clinical evidence to further

support the SmartVest System as a preferred treatment for bronchiectasis patients will remain a focus in fiscal 2024.

believe that bronchiectasis is under recognized and underdiagnosed but is experiencing a surge in clinical interest and awareness,

4 unchanged sentences

have estimated prevalence of bronchiectasis, which we believe are helpful for estimating a range of the overall market size.

(2017) projected 4.2 million adults in the United States over the age of 40 may have

bronchiectasis, suggesting there is a large pool of patients with undiagnosed disease.

(2018) confirmed a high prevalence of bronchiectasis in the United States, identifying

over 600,000 unique patients with at least one bronchiectasis claim (ICD-9 claims 494.0

(2017) projected 4.2 million adults in the United States over the age of 40 may have bronchiectasis, suggesting there is a large

pool of patients with undiagnosed disease.

(2018) confirmed a high prevalence of bronchiectasis in the United States, identifying over 600,000 unique patients with at least

one bronchiectasis claim (ICD-9 claims 494.0 or 494.1).

The study also observed that patients with dual diagnosis of bronchiectasis

and COPD were in poorer health, with more office visits, more inpatient admissions and

more acute respiratory infections.

(2012) estimated that 190,000 unique cases of bronchiectasis were diagnosed in Medicare patients

in 2007 and bronchiectasis prevalence increased 8.7% annually between 2000 and 2007.

Based on historic growth in prevalence and assuming a constant growth rate, the estimated

number of bronchiectasis diagnoses in Medicare patients in 2021 exceeded 608,000.

and COPD were in poorer health, with more office visits, more inpatient admissions and more acute respiratory infections.

(2012) estimated that 190,000 unique cases of bronchiectasis were diagnosed in Medicare patients in 2007 and bronchiectasis prevalence

increased 8.7% annually between 2000 and 2007.

9 Based on historic growth in prevalence and assuming a constant growth

rate, the estimated number of bronchiectasis diagnoses in Medicare patients in 2021 exceeded 608,000.

(2017) found 20% (n=350) of patients with bronchiectasis enrolled in the U.S.

Bronchiectasis

Research Registry between 2008 and 2014 also had COPD and 29% (n=515) also had asthma.

Other studies have found that the overlap between bronchiectasis and COPD is observed

in 27% to 57% of patients with COPD.

(2017) found that prevalence of bronchiectasis in patients with COPD ranged from a low

of 4% to as high as 69% with mean prevalence of 54%.

In many studies in patients with

COPD, the presence of bronchiectasis was associated with reduced lung function, greater

sputum production, more frequent exacerbations and increased mortality versus those with

Bronchiectasis Research Registry between 2008 and

2014 also had COPD and 29% (n=515) also had asthma.

7 Other studies have found that the overlap between bronchiectasis

and COPD is observed in 27% to 57% of patients with COPD.

(2017) found that prevalence of bronchiectasis in patients with COPD ranged from a low of 4% to as high as 69% with mean prevalence

In many studies in patients with COPD, the presence of bronchiectasis was associated with reduced lung function, greater

sputum production, more frequent exacerbations and increased mortality versus those with COPD alone.

studies indicate a wide range of potential prevalence of bronchiectasis patients in the United States.

We also believe that it is difficult

to estimate from these studies which patients will need or benefit from HFCWO.

Internal company estimates derived from 2020 analysis

of the IQVIA PharMetrics Plus database, one of the largest US health plan databases of adjudicated integrated medical and pharmacy claims,

indicate a 15% to 20% penetration of HFCWO within the diagnosed Bronchiectasis population 15 .

By conservatively assessing the

market size in relation to the clinical studies cited above, we calculate that current HFCWO adoption may account for only 90,000 patients

of the 500 to 600 thousand currently diagnosed and treatable patients (see Figure 1 below).

We believe that bronchiectasis is underdiagnosed

based on clinical study and epidemiology evidence with an even greater number of patients that could potentially benefit

from diagnosis and treatment.

We believe that HFCWO is under prescribed for bronchiectasis patients resulting in a large, underpenetrated

US market opportunity and growth potential for HFCWO therapy.

We also believe that it

is difficult to estimate from these studies which patients will need or benefit from HFCWO.

Internal company estimates derived

from 2020 analysis of the IQVIA PharMetrics Plus database, one of the largest US health plan databases of adjudicated integrated

medical and pharmacy claims, indicate a 15% to 20% penetration of HFCWO within the diagnosed Bronchiectasis population 15 .

By conservatively assessing the market size in relation to the clinical studies cited above, we calculate that current HFCWO adoption

may account for only 100,000 patients of the 500,000 to 600,000 currently diagnosed and treatable patients (see Figure 1 below).

We believe that bronchiectasis is underdiagnosed in the U.S.

based on clinical study and epidemiology evidence with an even greater

number of patients that could potentially benefit from diagnosis and treatment.

We believe that HFCWO is under prescribed for

bronchiectasis patients resulting in a large, underpenetrated US market opportunity and growth potential for HFCWO therapy.

Using High Frequency Chest Wall Oscillation in a Bronchiectasis Patient Population:

7 unchanged sentences

Respiratory Therapy Journal.

Employment of an algorithm of care including chest physiotherapy results in reduced hospitalizations and stability

of lung function in bronchiectasis.

Employment of an algorithm of care including chest physiotherapy results in reduced hospitalizations and stability of

lung function in bronchiectasis.

BMC Pulmonary Medicine .

29 unchanged sentences

Internal company estimates derived from IQVIA 2018 PharMetrics Plus Database

Effects of High Frequency Chest Wall Oscillation

(HFCWO) on Clinical Symptoms in COPD.

American Journal of Respiratory and Critical Care Medicine.

Effects of High Frequency Chest Wall Oscillation

(HFCWO) on Quality of Life in Bronchiectasis.

6th World Bronchiectasis & NTM Conference.

Poster Abstract 310-B

HFCWO Market Opportunity - Bronchiectasis Patients (U.S.) – Figure 1

18 unchanged sentences

Sales and Distribution

Our sales and marketing efforts are focused on driving adoption of our products and services with physicians, clinicians, patients, and third-party payers and building market awareness to the benefits of HFCWO for treatment of bronchiectasis.

Because the sale of the SmartVest System requires a physician's prescription, we market to physicians and health care providers as well as directly to patients.

The majority of our revenue comes from domestic home care sales through a physician referral model.

We have established our own domestic sales force and support network, which we believe is able to provide superior education, support and training to our customers.

sales and marketing efforts are focused on driving adoption of our products and services with physicians, clinicians, patients,

and third-party payers and building market awareness to the benefits of HFCWO for treatment of bronchiectasis.

Because the sale

of the SmartVest System requires a physician’s prescription, we market to physicians and health care providers as well as

directly to patients.

Most of our revenue comes from domestic homecare sales through a physician referral model.

We have established

our own domestic sales force and support network, which we believe is able to provide superior education, support, and training

to our customers.

sales force works with physicians and clinicians, primarily pulmonologists, in defined territories to help them understand

19 unchanged sentences

the $47.6 million of our revenue derived from the U.S.

in fiscal 2022, approximately

91% represented home care and 4% represented hospital sales.

We expect to achieve future

sales, earnings, and overall market share growth through a continued focus on product

innovation, differentiation and improved patient experiences and outcomes in the home

care segment.

We believe that our position in the market, direct sales team and a dedication

to advancing education on HFCWO awareness positions us to drive market awareness and

growth to the benefits of HFCWO in treatment of bronchiectasis.

We believe that dedicated

service to our providers and patients is a key component of achieving future sales.

seek companies that are easy to work with, are responsive and care for their patients

as an extension of their practices.

in fiscal 2023, approximately 92% represented home care and 4% represented

hospital sales.

We expect to achieve future sales, earnings, and overall market share growth through a continued focus on product

innovation, differentiation and improved patient experiences and outcomes in the home care segment.

We believe that our position

in the market, direct sales team and a dedication to advancing education on HFCWO awareness positions us to drive market awareness

and growth to the benefits of HFCWO in treatment of bronchiectasis.

We believe that dedicated service to our providers and patients

is a key component of achieving future sales.

Providers seek companies that are easy to work with, are responsive and care for

their patients as an extension of their practices.

generate sales interest through multiple channels that include visits to pulmonology clinics and medical centers, participation

in medical conferences, maintenance of industry contacts to increase the visibility and acceptance of our products by physicians

and health care professionals, participation with patient organizations such as the Cystic Fibrosis Foundation, as well as through

a focus on increasing patients by word of mouth and traffic to our website and social media channels.

We continue to evaluate

opportunities to offer the SmartVest System through selected Home Medical Equipment (“HME”) distributors.

agreements with three HME distributors, one national and two regional, to distribute and sell the SmartVest System in the United

States home care market.

We expect to continue our direct sales channel as our primary homecare revenue source.

and health care professionals, support of industry events such as the Cystic Fibrosis Foundation World Bronchiectasis Day and

American Lung Association Fight for Air Climb, as well as through a focus on increasing patients by word of mouth and traffic

to our website and social media channels.

We continue to evaluate opportunities to offer the SmartVest System through selected

Home Medical Equipment (“HME”) distributors.

We maintain agreements with a limited number of HME distributors to distribute

and sell the SmartVest System in the United States home care market.

We expect to continue our direct sales channel as our primary

homecare revenue source.

International

Approximately

1.3% and 1.8% of our net revenues were from sales outside of the U.S.

in our fiscal 2022 and our fiscal year ended June 30, 2021

1% of our net revenues were from sales outside of the U.S.

in both of our fiscal 2023 and our fiscal year ended June 30, 2022

(“fiscal 2022”), respectively.

2 unchanged sentences

specializing in respiratory products.

Through June 30, 2022, the majority of our distributors operated in exclusive territories.

Our principal distributors are located in Europe, the Arab states of the Persian Gulf, Southeast Asia, South America and Central

Units are sold at a fixed contract price with payments made directly from the distributor, rather than being tied to

reimbursement rates of a patient’s insurance provider as is the case for domestic sales.

Our sales strategy outside of the

is to maintain our current distributors with less emphasis on contracting with new distributors.

Through June 30, 2023, most of our distributors operated in exclusive territories.

Our principal

distributors are located in Europe, the Arab states of the Persian Gulf, Southeast Asia, South America and Central America.

are sold at a fixed contract price with payments made directly from the distributor, rather than being tied to reimbursement rates

of a patient’s insurance provider as is the case for domestic sales.

Our sales strategy outside of the U.S.

is to maintain

our current distributors with less emphasis on contracting with new distributors.

Reimbursement

13 unchanged sentences

of one to 15 months, which is consistent with reimbursement procedures followed by Medicare and other third parties.

amount we receive for any single referral may vary based on a number of factors, including Medicare and third-party reimbursement

amount we receive for any single referral may vary based on several factors, including Medicare and third-party reimbursement

processes and policies.

The patient retains the risk of reimbursement to the Company in the event of non-payment by third-party

The reimbursement department includes the payer relations function working directly with all payer types to increase the

covered lives for the SmartVest System with national and regional private insurers and applicable state and federal government

entities as well as to maintain all of the current licenses with state and federal government and payer contracts.

The reimbursement department includes the payer relations function working directly with all payer types

to increase the covered lives for the SmartVest System with national and regional private insurers and applicable state and federal

government entities as well as to maintain the current licenses with state and federal government and payer contracts.

SmartVest System is reimbursed under HCPCS code E0483.

10 unchanged sentences

or our ability to collect amounts from individual patients.

patients are able to qualify for reimbursement and payment from Medicare, Medicaid, private insurance or combinations of the foregoing.

We expect that subsequent generations of HFCWO products also will qualify for reimbursement under Medicare and most major

health plans.

However, some third-party payers must also approve coverage for new or innovative devices or therapies before they

will reimburse health care providers who use the medical devices or therapies.

In addition, we face the risk that new or modified

products could have a lower reimbursement rate, or that the levels of reimbursement currently available for our existing products

could decrease, which would hamper our ability to market and sell that product.

Consequently, our sales will continue to depend

in part on the availability of coverage and reimbursement from third-party payers, even though our devices may have been cleared

for marketing by the FDA.

The manner in which reimbursement is sought and obtained varies based upon the type of payer involved

and the setting in which the procedure is furnished.

response to the COVID-19 pandemic and the U.S.

federal government’s declaration of a public health emergency in March 2020,

CMS implemented a number of temporary rule changes and waivers to allow prescribers to best treat patients during the period of

the public health emergency.

These waivers are retroactively effective to March 1, 2020.

Clinical indications and documentation

typically required will not be enforced for respiratory related products including the SmartVest System (solely with respect to

Medicare patients).

The minimum documentation now requires a valid order and documentation of a respiratory-related diagnosis.

Face-to-face and in-person requirements for respiratory devices are being waived while the

waiver is in place.

The CMS waiver was recently extended in conjunction with the extension of the federal public health emergency

for an additional 90-day period beginning July 15, 2022.

patients can qualify for reimbursement and payment from Medicare, Medicaid, private insurance or combinations of the foregoing.

Our sales continue to be dependent, in part, on the availability of coverage and reimbursement from third-party payers, even though

our devices have been cleared for marketing by the FDA.

The way reimbursement is sought and obtained varies based upon the type

of payer involved and the setting in which the procedure is furnished.

and Development

2 unchanged sentences

a demonstrated record of developing new products that receive the appropriate product approvals and regulatory clearances around

the world as demonstrated by the FDA 510(k) clearance for the SmartVest Clearway Airway Clearance System received November 2022.

fiscal 2023 and 2022, we incurred R&D expenses of approximately $916,000 and $1,356,000, or 1.9% and 3.3% of our net revenues,

respectively.

As a percentage of sales, we expect spending on R&D expenses to decrease significantly during fiscal 2023 as

compared with fiscal 2022, as we conclude the design and testing of our next generation device in preparation for an anticipated

product launch during the first half of fiscal 2023.

Product enhancements were driven by voice of customer survey and in-person

information focused on patient useability and device portability.

We also estimate that the next generation product will be a lower

cost of goods compared to the SmartVest SQL.

As a percentage of sales, we expect spending on R&D expenses to remain within a range of 1-2% of net revenues

for fiscal 2024.

of June 30, 2023, we held 12 United States and 41 foreign-issued patents covering the SmartVest System and its underlying technology

and had 9 pending United States and foreign patent applications.

These patents and patent applications offer coverage in the

field of air pressure pulse delivery to a human in support of airway clearance.

These patents and patent applications offer coverage in the field

of air pressure pulse delivery to a human in support of airway clearance.

generally pursue patent protection for patentable subject matter in our proprietary devices in foreign countries that we have

16 unchanged sentences

During fiscal

2022 we experienced longer lead times for critical electronic components related to worldwide supply shortages due to COVID-19

and the related U.S.

2022 and 2023, we experienced longer lead times for critical electronic components related to worldwide supply shortages due to

COVID-19 and the related U.S.

and global economic recovery.

We did not experience any material disruptions to customer shipments in fiscal

provide a warranty on the SmartVest System that covers the cost of replacement parts and labor, or a new SmartVest System in the

event we determine a full replacement is necessary.

For each home care SmartVest System initially purchased and currently located

For each homecare SmartVest System initially purchased and currently located

and Canada, we provide a lifetime warranty to the individual patient for whom the SmartVest System is prescribed.

2 unchanged sentences

original HFCWO technology was licensed to American Biosystems, Inc.

(now part of Hill-Rom Holdings, Inc.) (“Hillrom”),

which, until the introduction of our original MedPulse Respiratory Vest System ® in 2000, was the only manufacturer

of a product with HFCWO technology cleared for market by the FDA (Hillrom’s The Vest ® Airway Clearance System).

(formerly Hill-Rom Holdings, Inc., now part of Baxter International

Inc.) (“Baxter”), which, until the introduction of our original MedPulse Respiratory Vest System ® in

2000, was the only manufacturer of a product with HFCWO technology cleared for market by the FDA (Hill Rom’s The Vest ®

Airway Clearance System).

Respiratory Technologies, Inc.

(now RespirTech, part of Koninklijke Phillips N.V.) received FDA clearance to market their HFCWO

product, the inCourage ® Airway Clearance Therapy in 2005.

Both Hillrom and RespirTech employ a direct-to-patient

model, with RespirTech additionally offering its HFCWO device through selected DME distributors.

(formerly RespirTech, now part of Koninklijke Phillips N.V.) (“Philips”)

received FDA clearance to market their HFCWO product, the inCourage ® Airway Clearance Therapy in 2005.

and Philips employ a direct-to-patient model, with Philips additionally offering its HFCWO device through selected DME distributors.

AffloVest ® from Tactile Systems Technology Inc.

3 unchanged sentences

and supplies.

Based on annual revenue, we estimate that Hillrom maintains the highest market share in HFCWO followed by RespirTech

with Electromed in the third position.

Alternative products

for administering pulmonary therapy include:

Positive Expiratory Pressure, Intrapulmonary Percussive Ventilation, CPT and breathing

Physicians may prescribe some or all of these devices and techniques, depending upon each patient's health status,

severity of disease, compliance, or personal preference.

drivers of HFCWO product sales continue to be clinical and cost-effective evidence, technology innovations including wireless

connectivity, and HFCWO patient experience benefits such as size, weight of the generator, and product reputation.

we distinguish ourselves in these areas with competitive advantages over alternative treatments ultimately improving the patient

comfort, ease of use, and the effectiveness of HFCWO treatment.

Because HFCWO is not “technique dependent,” as compared

to most other alternative pulmonary therapy products, therapy remains consistent and controlled for the duration of treatment.

Recent government and

private sector initiatives in the U.S.

products for administering pulmonary therapy include:

Positive Expiratory Pressure, Intrapulmonary Percussive Ventilation, CPT

and breathing techniques.

Physicians may prescribe some or all of these devices and techniques, depending upon each patient’s

health status, severity of disease, compliance, or personal preference.

drivers of HFCWO product sales continue to be improved quality of life through documented clinical outcomes and reduction in healthcare

costs through resource utilization evidence.

Technology innovations and enhancements to the patient experience such as size, weight

of the generator, and optimized user interaction increase product reputation and patient satisfaction.

We believe we distinguish

ourselves in these areas with competitive advantages over alternative treatments ultimately improving the patient comfort, ease

of use, and the effectiveness of HFCWO treatment.

Because HFCWO is not “technique dependent,” as compared to most

other alternative pulmonary therapy products, therapy remains consistent and controlled for the duration of treatment.

government and private sector initiatives in the U.S.

and foreign countries aim at limiting the growth of health care costs including:

price regulation, competitive pricing,

coverage and payment policies, comparative effectiveness of therapies, technology assessments, and managed-care arrangements.

initiatives are causing the marketplace to put increased emphasis on the delivery of more cost-effective medical devices that result in

better clinical outcomes.

Government programs, including Medicare and Medicaid, have attempted to control costs by limiting the amount of

reimbursement the program will pay for particular procedures or treatments, restricting coverage for certain products or services, and

implementing other mechanisms designed to constrain utilization and contain costs.

Many private insurance programs look to Medicare as a

guide in setting coverage policies and payment amounts.

These initiatives have created an increasing level of price sensitivity among our customers.

price regulation, competitive pricing, coverage and payment policies, comparative effectiveness of therapies, technology assessments,

and managed-care arrangements.

These initiatives are causing the marketplace to put increased emphasis on the delivery of more

cost-effective medical devices that result in better clinical outcomes.

Government programs, including Medicare and Medicaid,

have attempted to control costs by limiting the amount of reimbursement the program will pay for procedures or treatments, restricting

coverage for certain products or services, and implementing other mechanisms designed to constrain utilization and contain costs.

Many private insurance programs look to Medicare as a guide in setting coverage policies and payment amounts.

These initiatives

have created an increasing level of price sensitivity among our customers.

Medical Equipment Licensing

8 unchanged sentences

other states.

We also maintain an in-state presence in California in order to meet their state Medicaid requirements.

presence requirements vary from state to state, but generally require a physical location that is staffed and open during regular

business hours.

We also maintain an in-state presence in California to meet their state Medicaid requirements.

In-state presence

requirements vary from state to state, but generally require a physical location that is staffed and open during regular business

We are licensed to do business in all states except for Alaska and Hawaii.

60 unchanged sentences

effect in May 2021.

We also require all of our distributors in the European Union and other regions to comply with their home

country regulations in our distributor agreements.

We also require all our distributors in the European Union and other regions to comply with their home country

regulations in our distributor agreements.

Physician Payments Sunshine Act

4 unchanged sentences

physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse midwives.

Sunshine Act requires all manufacturers of drugs and medical devices to annually report to CMS any payments or any other “transfers

The Sunshine Act requires all manufacturers of drugs and medical devices to annually report to CMS any payments or any other “transfers

of value” made to any covered recipients, including but not limited to consulting fees, grants, clinical research support,

23 unchanged sentences

is a government official of another country and the arrangement violates the law of that country.

Enforcement of all of these

regulations has become increasingly stringent, particularly due to more prevalent use of the whistleblower provisions under the

False Claims Act, which allow a private individual to bring actions on behalf of the federal government alleging that the defendant

has submitted a false claim to the federal government and to share in any monetary recovery.

If a governmental authority were

to conclude that we are not in compliance with applicable laws and regulations, we and our officers and employees could be subject

to severe criminal and civil penalties and disbarment from participation as a supplier of product to beneficiaries covered by

Medicare or Medicaid.

Enforcement of these regulations

has become increasingly stringent, particularly due to more prevalent use of the whistleblower provisions under the False Claims

Act, which allow a private individual to bring actions on behalf of the federal government alleging that the defendant has submitted

a false claim to the federal government and to share in any monetary recovery.

If a governmental authority were to conclude that

we are not in compliance with applicable laws and regulations, we and our officers and employees could be subject to severe criminal

and civil penalties and disbarment from participation as a supplier of product to beneficiaries covered by Medicare or Medicaid.

care fraud and false statement statutes, such as the Health Insurance Portability and Accountability Act of 1996 and its implementing

regulations (“HIPAA”) and the Health Information Technology for Economic and Clinical Health Act (“HITECH”),

also prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any health

care benefit program, including private payers, and knowingly and willfully falsifying, concealing, or covering up a material

fact or making any materially false, fictitious or fraudulent statement or representation in connection with the delivery of or

payment for health care benefits, items or services.

HITECH and Other Privacy Regulations

1 unchanged sentence

use and disclosure of such information.

The Health Insurance Portability and Accountability Act of 1996 and its implementing regulations

(“HIPAA”) and the Health Information Technology for Economic and Clinical Health Act (“HITECH”) set forth

privacy and security standards that govern the use and disclosure of protected electronic health information by “covered

entities,” which include healthcare providers, health plans and healthcare clearinghouses.

Because we provide our products

directly to patients and bill third-party payers such as Medicare, Medicaid, and insurance companies, we are a “covered

entity” and must comply with these standards.

Failure to comply with HIPAA and HITECH or any state or foreign laws regarding

personal data protection may result in significant fines or penalties and/or negative publicity.

In addition to federal regulations

issued under HIPAA and HITECH, some states have enacted privacy and security statutes or regulations that, in some cases, are

more stringent than those issued under HIPAA and HITECH.

In those cases, it may be necessary to modify our planned operations

and procedures to comply with the more stringent state laws.

If we fail to comply with applicable state laws and regulations,

we could be subject to additional sanctions.

HIPAA and HITECH health care fraud and false statement statutes also prohibit, among other things, knowingly and willfully executing,

or attempting to execute, a scheme to defraud any health care benefit program, including private payers, and knowingly and willfully

falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation

in connection with the delivery of or payment for health care benefits, items or services.

HIPAA and HITECH set forth privacy and security standards that govern the use and disclosure

of protected electronic health information by “covered entities,” which include healthcare providers, health plans

and healthcare clearinghouses.

Because we provide our products directly to patients and bill third-party payers such as Medicare,

Medicaid, and insurance companies, we are a “covered entity” and must comply with these standards.

Failure to comply

with HIPAA and HITECH or any state or foreign laws regarding personal data protection may result in significant fines or penalties

and/or negative publicity.

In addition to federal regulations issued under HIPAA and HITECH, some states have enacted privacy

and security statutes or regulations that, in some cases, are more stringent than those issued under HIPAA and HITECH.

cases, it may be necessary to modify our planned operations and procedures to comply with the more stringent state laws.

fail to comply with applicable state laws and regulations, we could be subject to additional sanctions.

Environmental

27 unchanged sentences

mission and goals.

As of June 30, 2022, we had 156 employees, an increase of 15.4% from fiscal 2021, who are located in 29 states

throughout the United States.

18 of our employees were respiratory therapists licensed by appropriate state professional

organizations.

We also had approximately 250 respiratory therapists and health care professionals retained on a non-exclusive,

independent contractor basis to provide training to our customers in the U.S.

None of our employees are covered by a collective

bargaining agreement.

As of June 30, 2023, we had 170 employees, an increase of 9% from fiscal 2022, who are in 30 states throughout

the United States.

18 of our employees were respiratory therapists licensed by appropriate state professional organizations.

also had approximately 170 respiratory therapists and health care professionals retained on a non-exclusive, independent contractor

basis to provide training to our customers in the U.S.

None of our employees are covered by a collective bargaining agreement.

We believe our relations with our employees are good.

12 unchanged sentences

cultivate a learning culture that provides enhancement and growth for our people, we offer educational assistance, online training,

(220 courses completed during fiscal 2022), seminars, specific skill training, and participation in business and industry organizations.

We are also committed to contributing our talents and resources to serve the communities in which we live and work through various

charitable campaigns, employee programs and volunteerism.

We believe that this commitment assists in our efforts to attract and

retain employees.

seminars, specific skill training, and participation in business and industry organizations.

We are also committed to contributing

our talents and resources to serve the communities in which we live and work through various charitable campaigns, employee programs

and volunteerism.

We believe that this commitment assists in our efforts to attract and retain employees.

believe that sharing rewards is essential to increasing employee engagement and improving morale and creating a positive culture.

8 unchanged sentences

Treating employees with dignity and equality is of utmost importance in everything we do.

pride in the fact that women represent 53% of our total managerial roles and comprise 57% of our executive leadership team.

pride ourselves on accepting, hearing, and celebrating multiple approaches and points of view and building on an inclusive and

diverse culture.

pride in the fact that women represent 50% of our total managerial roles..

We pride ourselves on accepting, hearing, and celebrating

multiple approaches and points of view and building on an inclusive and diverse culture.

is a vital aspect to the success of our people and business.

22 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business