2 unchanged sentences
Condensed Balance Sheets
−Removed: December 31, 2025
+Added: March 31, 2026
June 30, 2025
8 unchanged sentences
Income tax receivable
+Added: 15,000 408,000
Prepaid expenses and other current assets
16 unchanged sentences
4,530,000 5,079,000
−Removed: Income tax payable
Warranty reserve
10 unchanged sentences
Common stock, $ 0.01 par value per share, 13,000,000 shares authorized;
−Removed: 8,279,631 and 8,349,176 shares issued and outstanding, as of December 31, 2025, and June 30, 2025, respectively
+Added: 8,279,845 and 8,349,176 shares issued and outstanding, as of March 31, 2026, and June 30, 2025, respectively
83,000 83,000
11 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
−Removed: $ 18,897,000 $ 16,255,000 $ 35,784,000 $ 30,923,000
+Added: Nine Months Ended
Cost of revenues
−Removed: 4,078,000 3,628,000 7,768,000 6,805,000
−Removed: 14,819,000 12,627,000 28,016,000 24,118,000
Operating expenses
Selling, general and administrative
−Removed: 10,815,000 9,834,000 21,101,000 19,221,000
Research and development
−Removed: 384,000 251,000 625,000 417,000
Total operating expenses
−Removed: 11,199,000 10,085,000 21,726,000 19,638,000
Operating income
−Removed: 3,620,000 2,542,000 6,290,000 4,480,000
Interest income, net
−Removed: 109,000 152,000 243,000 347,000
Net income before income taxes
−Removed: 3,729,000 2,694,000 6,533,000 4,827,000
Income tax expense
−Removed: 968,000 726,000 1,636,000 1,385,000
−Removed: $ 2,761,000 $ 1,968,000 $ 4,897,000 $ 3,442,000
Income per share:
−Removed: $ 0.33 $ 0.23 $ 0.59 $ 0.41
−Removed: $ 0.32 $ 0.22 $ 0.56 $ 0.38
Weighted-average common shares outstanding:
−Removed: 8,270,565 8,424,534 8,296,674 8,494,511
−Removed: 8,689,290 8,953,349 8,685,497 8,983,726
See Notes to Condensed Financial Statements (Unaudited).
1 unchanged sentence
Condensed Statements of Cash Flows (Unaudited)
−Removed: Six Months Ended December 31,
+Added: Nine Months Ended March 31,
Cash Flows From Operating Activities
−Removed: $ 4,897,000 $ 3,442,000
Adjustments to reconcile net income to net cash provided by operating activities:
−Removed: 427,000 414,000
−Removed: 90,000 78,000
Share-based compensation expense
−Removed: 1,114,000 1,652,000
Changes in operating assets and liabilities:
Accounts receivable
−Removed: ( 1,600,000 ) 558,000
Contract assets
−Removed: ( 116,000 ) ( 278,000 )
−Removed: ( 260,000 ) 500,000
Prepaid expenses and other assets
−Removed: ( 691,000 ) ( 279,000 )
−Removed: Income tax payable, net
−Removed: 790,000 ( 791,000 )
+Added: Income tax receivable, net
Accounts payable and accrued liabilities
−Removed: ( 88,000 ) 434,000
Accrued compensation
−Removed: ( 1,368,000 ) ( 270,000 )
Net cash provided by operating activities
−Removed: 3,195,000 5,460,000
Cash Flows From Investing Activities
Expenditures for property and equipment
−Removed: ( 886,000 ) ( 270,000 )
Expenditures for finite-life intangible assets
−Removed: ( 37,000 ) ( 25,000 )
Net cash used for investing activities
−Removed: ( 923,000 ) ( 295,000 )
Cash Flows From Financing Activities
Issuance of common stock upon exercise of options
−Removed: 232,000 346,000
Taxes paid on net share settlement of stock awards
−Removed: ( 234,000 ) ( 820,000 )
Repurchase of common stock
−Removed: ( 3,766,000 ) ( 4,536,000 )
Net cash used for financing activities
−Removed: ( 3,768,000 ) ( 5,010,000 )
−Removed: Net (decrease) increase in cash
−Removed: ( 1,496,000 ) 155,000
+Added: Net increase (decrease) in cash
Cash and cash equivalents
Beginning of period
−Removed: 15,287,000 16,080,000
End of period
−Removed: $ 13,791,000 $ 16,235,000
Supplemental Disclosures of Cash Flow Information
Cash paid for income taxes
−Removed: $ 846,000 $ 2,180,000
Supplemental Disclosures of Noncash Investing and Financing Activities
Property and equipment and intangible asset acquisitions in accounts payable
−Removed: $ 44,000 $ 73,000
−Removed: Taxes owed on net share settlement of stock awards in accrued liabilities
−Removed: $ 6,000 $ 1,026,000
Demonstration equipment transferred between inventory and property and equipment
−Removed: $ 101,000 $ 131,000
+Added: Obligation for unsettled share repurchases in accrued liabilities
Issuance of common stock upon the vesting of performance-based stock units
4 unchanged sentences
Balance at June 30, 2024
−Removed: 8,637,883 $ 87,000 $ 20,790,000 $ 23,668,000 $ 44,545,000
−Removed: - - - 1,474,000 1,474,000
Exercise of common stock options, vesting of performance stock units and issuance of restricted stock, net of cancellations and tax withholdings
−Removed: 81,944 1,000 ( 671,000 ) - ( 670,000 )
Share-based compensation expense
−Removed: - - 697,000 - 697,000
Repurchase of common stock
−Removed: ( 262,756 ) ( 3,000 ) - ( 4,555,000 ) ( 4,558,000 )
Balance at September 30, 2024
−Removed: 8,457,071 $ 85,000 $ 20,816,000 $ 20,587,000 $ 41,488,000
−Removed: - - - 1,968,000 1,968,000
Exercise of common stock options, vesting of performance stock units and issuance of restricted stock, net of cancellations and tax withholdings
−Removed: 99,773 1,000 ( 831,000 ) - ( 830,000 )
Share-based compensation expense
−Removed: - - 955,000 - 955,000
Repurchase of common stock
−Removed: - - - 22,000 22,000
Balance at December 31, 2024
−Removed: 8,556,844 $ 86,000 $ 20,940,000 $ 22,577,000 $ 43,603,000
+Added: Exercise of common stock options, net of cancellations and tax withholdings
+Added: Share-based compensation expense
+Added: Repurchase of common stock
+Added: Balance at March 31, 2025
Shareholders’
Balance at June 30, 2025
−Removed: 8,349,176 $ 83,000 $ 21,941,000 $ 21,185,000 $ 43,209,000
−Removed: - - - 2,136,000 2,136,000
Exercise of common stock options, vesting of restricted stock units, and issuance of restricted stock awards, net of cancellations and tax withholdings
−Removed: 48,519 1,000 ( 46,000 ) - ( 45,000 )
Share-based compensation expense
−Removed: - - 458,000 - 458,000
Repurchase of common stock
−Removed: ( 40,848 ) - - ( 1,013,000 ) ( 1,013,000 )
Balance at September 30, 2025
−Removed: 8,356,847 $ 84,000 $ 22,353,000 $ 22,308,000 $ 44,745,000
−Removed: - - - 2,761,000 2,761,000
Exercise of common stock options, vesting of restricted stock units, and issuance of restricted stock awards, net of cancellations and tax withholdings
−Removed: 28,377 - 64,000 - 64,000
Share-based compensation expense
−Removed: - - 656,000 - 656,000
Repurchase of common stock
−Removed: ( 105,593 ) ( 1,000 ) - ( 2,786,000 ) ( 2,787,000 )
Balance at December 31, 2025
−Removed: 8,279,631 $ 83,000 $ 23,073,000 $ 22,283,000 $ 45,439,000
+Added: Exercise of common stock options and vesting of restricted stock units, net of cancellations and tax withholdings
+Added: Share-based compensation expense
+Added: Repurchase of common stock
+Added: Balance at March 31, 2026
Electromed, Inc.
22 unchanged sentences
Nature of Business and Summary of Significant Accounting Policies of the Annual Report on Form 10 -K for the year ended June 30, 2025.
−Removed: There have been no significant changes to these policies that have had a material impact on the Unaudited Condensed Financial Statements and the accompanying disclosure notes for the three and six months ended December 31, 2025 .
+Added: There have been no significant changes to these policies that have had a material impact on the Unaudited Condensed Financial Statements and the accompanying disclosure notes for the three and nine months ended March 31, 2026 .
Recently Issued Accounting Standards
3 unchanged sentences
It is effective for annual periods beginning after December 15, 2024, with early adoption permitted.
−Removed: The Company expects to adopt this standard for its fiscal year ending June 30, 2026, and is evaluating the impact of adoption and additional disclosure requirements.
+Added: The Company expects to adopt this standard for its fiscal year ending June 30, 2026.
+Added: Except for the required expanded disclosures, the Company does not expect the adoption of this ASU to have a material effect on the consolidated financial statements.
ASU 2024 - 03 - Reporting Comprehensive Income :
9 unchanged sentences
Revenue is measured based on consideration specified in the contract with a customer, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price.
+Added: Estimates of variable consideration primarily relate to capped installment payment arrangements with third‑party payers and patient responsibility amounts, including deductibles, coinsurance, copayments, and similar amounts.
+Added: Estimating variable consideration requires significant judgement, including selecting estimation methodologies, evaluating historical payment experience, and assessing factors that may affect future collections.
+Added: Electromed estimates variable consideration using the expected value method, as it best predicts the amount of consideration to which Electromed expects to be entitled, given the large number of contracts with similar characteristics and a wide range of possible outcomes.
+Added: In applying this method, management considers quantitative inputs such as historical claims approval rates, payment timing and recovery patterns, historical termination experience, and patient demographic data, as well as qualitative factors including changes in insurance coverage, mortality, patient utilization patterns, and other relevant circumstances.
+Added: Capped installment payment arrangements represent the majority of Electromed’s variable consideration.
+Added: For the periods presented, amounts subject to capped installment payment arrangements represented a significant portion of net revenues, accounting for approximately 96 % of net revenues in the homecare market.
+Added: Electromed’s estimates of consideration related to these arrangements are based on historical payment and termination patterns and are subject to contractual caps that limit the total consideration to which Electromed may be entitled.
When a contract with a customer has been established, revenue is recognized when a performance obligation is satisfied by transferring control of a distinct good or service to a customer, typically upon shipment or delivery.
1 unchanged sentence
In the following table, net revenues are disaggregated by market:
−Removed: Three Months Ended December 31,
−Removed: Six Months Ended December 31,
+Added: Three Months Ended March 31,
+Added: Nine Months Ended March 31,
$ 16,732,000 $ 14,102,000 $ 48,895,000 $ 41,906,000
5 unchanged sentences
In the following table, net homecare revenue is disaggregated by payer type:
−Removed: Three Months Ended December 31,
−Removed: Six Months Ended December 31,
+Added: Three Months Ended March 31,
+Added: Nine Months Ended March 31,
$ 8,190,000 $ 7,151,000 $ 23,346,000 $ 21,329,000
7 unchanged sentences
The following tables provide information about accounts receivable and contract assets from contracts with customers:
−Removed: As of December 31, 2025
+Added: As of March 31, 2026
As of June 30, 2025
4 unchanged sentences
Total Accounts receivable, net of allowances for credit losses, as of June 30, 2024 , were $ 23,333,000 .
−Removed: Six Months Ended
+Added: Accounts receivable outstanding for greater than one year totaled $ 473,000 and $ 430,000 as of March 31, 2026, and June 30, 2025, respectively.
+Added: Our accounts receivable balance contains amounts due from governmental and other third -party payers, including Medicare.
+Added: Under certain payer programs, cash collection occurs through interim payments and final settlement over a period greater than one year, generally approximating thirteen months.
+Added: The Company has determined that this collection period represents its normal operating cycle.
+Added: In accordance with ASC 210‑10‑45, the Company classifies these receivables as current assets.
+Added: Nine Months Ended
Fiscal Year Ended
−Removed: December 31, 2025
+Added: March 31, 2026
June 30, 2025
11 unchanged sentences
Inventory consists of the following:
−Removed: As of December 31, 2025
+Added: As of March 31, 2026
As of June 30, 2025
5 unchanged sentences
Other assets consist of the following:
−Removed: As of December 31, 2025
+Added: As of March 31, 2026
As of June 30, 2025
2 unchanged sentences
Other accrued liabilities consist of the following:
−Removed: As of December 31, 2025
+Added: As of March 31, 2026
As of June 30, 2025
8 unchanged sentences
Changes in the Company’s warranty reserve were as follows:
−Removed: Six Months Ended
+Added: Nine Months Ended
Fiscal Year Ended
−Removed: December 31, 2025
+Added: March 31, 2026
June 30, 2025
7 unchanged sentences
$ 1,784,000 $ 1,645,000
−Removed: Income tax expense was estimated at $ 968,000 and $ 1,636,000 , and the effective tax rate was 26.0 % and 25.1 % for the three and six months ended December 31, 2025 .
−Removed: Estimated income tax expense for the three and six months ended December 31, 2025 , includes a discrete current tax benefit of $ 22,000 and $ 103,000 , respectively, primarily related to the windfall tax benefit of vested restricted stock awards and the exercise of stock options.
−Removed: Income tax expense was estimated at $ 726,000 and $ 1,385,000 , and the effective tax rate was 26.9 % and 28.7 % for the three and six months ended December 31, 2024 .
−Removed: Estimated income tax expense for the three and six months ended December 31, 2024 , includes a discrete current tax benefit of $ 135,000 and $ 139,000 , respectively, primarily related to the exercise of stock options and the vesting of restricted stock awards.
+Added: Income tax expense was estimated at $ 863,000 and $ 2,499,000 , and the effective tax rate was 22.3 % and 24.0 % for the three and nine months ended March 31, 2026 .
+Added: Estimated income tax expense for the three and nine months ended March 31, 2026 , includes a discrete current tax benefit of $ 94,000 and $ 197,000 , respectively, primarily related to the windfall tax benefit of vested stock awards, the exercise of stock options, and the true up for the prior year Federal R&D credit.
+Added: Income tax expense was estimated at $ 391,000 and $ 1,776,000 , and the effective tax rate was 17.1 % and 25.0 % for the three and nine months ended March 31, 2025 .
+Added: Estimated income tax expense for the three and nine months ended March 31, 2025 , includes a discrete current tax benefit of $ 338,000 and $ 478,000 , respectively, primarily related to the exercise of stock options.
The Company is subject to U.S.
13 unchanged sentences
On December 16, 2025, the Company entered into a credit agreement with BMO Bank N.A.
−Removed: The credit agreement provides the Company with a senior security credit facility with a $ 10,000,000 revolving line of credit.
+Added: The credit agreement provides the Company with a senior secured credit facility with a $ 10,000,000 revolving line of credit.
The credit agreement provides that the credit facility will mature on December 16, 2026 , if not renewed or replaced before such date.
−Removed: Any borrowings under the credit facility will bear interest at one -month Term SOFR ( 3.87 % on December 31, 2025), plus 1.75 %, payable monthly.
−Removed: There was no outstanding principal balance on the line of credit as of December 31, 2025.
+Added: Any borrowings under the credit facility will bear interest at the applicable one -month Term SOFR rate ( 3.67 % on March 31, 2026), plus 1.75 %, payable monthly.
+Added: There was no outstanding principal balance on the line of credit as of March 31, 2026.
The Company provided a first priority security interest in substantially all of its existing and future assets to secure the payment obligations under the credit agreement.
5 unchanged sentences
On September 9, 2025, the Company announced the approval of a stock repurchase authorization.
−Removed: Under the authorization, the Company may repurchase up to $ 10,000,000 of the Company's outstanding shares of common stock.
+Added: Under the authorization, the Company may repurchase up to $ 10,000,000 of its outstanding shares of common stock.
This repurchase authorization has no expiration date.
−Removed: As of December 31, 2025 , a total of 146,441 shares have been repurchased and retired under this authorization for a total cost of $ 3,766,000 , or an average of $ 25.72 per share.
+Added: As of March 31, 2026 , a total of 151,911 shares have been repurchased and retired under this authorization for a total cost of $ 3,918,000 , or an average of $ 25.79 per share.
Repurchased shares are automatically retired and constitute authorized but unissued shares.
1 unchanged sentence
The Company’s share-based compensation plans are described in Note 8 to the financial statements included in the Company’s Annual Report on Form 10 -K for fiscal 2025.
−Removed: Share-based compensation expenses were $ 1,114,000 and $ 1,652,000 for the six months ended December 31, 2025 , and 2024 , respectively.
−Removed: This expense is included in selling, general and administrative, research and development, and cost of revenues expense in the Condensed Statements of Operations.
+Added: Share-based compensation expenses were $ 1,960,000 and $ 2,409,000 for the nine months ended March 31, 2026 , and 2025 , respectively.
+Added: This expense is included in selling, general and administrative, research and development, and cost of revenues in the Condensed Statements of Operations.
Stock Options
−Removed: Stock option transactions during the six months ended December 31, 2025 , are summarized as follows:
+Added: Stock option transactions during the nine months ended March 31, 2026 , are summarized as follows:
Weighted-Average
5 unchanged sentences
( 26,740 ) $ 10.02
−Removed: Cancelled or Forfeited
+Added: Canceled or Forfeited
( 4,988 ) $ 22.36
−Removed: Outstanding at December 31, 2025
+Added: Outstanding at March 31, 2026
632,151 $ 10.95
The following assumptions were used to estimate the fair value of stock options granted:
−Removed: Six Months Ended
+Added: Nine Months Ended
Fiscal Year Ended
−Removed: December 31, 2025
+Added: March 31, 2026
June 30, 2025
4 unchanged sentences
The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price.
−Removed: On December 31, 2025 , the weighted average remaining contractual term for all outstanding stock options was 5.9 years and the aggregate intrinsic value of the options was $ 11,605,000 .
−Removed: Outstanding on December 31, 2025 , there were 637,495 stock options issued to employees, of which 441,255 were vested and exercisable and had an aggregate intrinsic value of $ 8,987,000 .
−Removed: As of December 31, 2025 , $ 865,000 of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of approximately 2.3 years.
+Added: On March 31, 2026 , the weighted-average remaining contractual term for all outstanding stock options was 5.7 years, and the aggregate intrinsic value of the options was $ 7,906,000 .
+Added: Outstanding on March 31, 2026 , there were 632,151 stock options issued to employees, of which 446,848 were vested and exercisable and had an aggregate intrinsic value of $ 6,518,000 .
+Added: As of March 31, 2026 , $ 677,000 of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of approximately 2.1 years.
Restricted Stock
−Removed: During the six months ended December 31, 2025 , the Company issued restricted stock awards to employees totaling 22,300 shares of common stock, with a weighted average vesting term of 3 years and a weighted average fair value of $ 23.95 per share.
−Removed: During the six months ended December 31, 2025, the Company issued restricted stock awards to its Board of Directors totaling 21,000 shares of common stock, with a vesting term of 6 months and a fair value of $ 27.42 per share.
−Removed: There were 65,374 shares of unvested restricted stock with a weighted average fair value of $ 22.02 per share outstanding as of December 31, 2025 .
−Removed: As of December 31, 2025 , $ 1,034,000 of total unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average period of approximately 1.6 years.
−Removed: During the six months ended December 31, 2025 , the Company issued restricted stock units to employees totaling 56,318 shares of common stock, with a weighted average vesting term of 3 years and a weighted average fair value of $ 23.96 per share.
−Removed: During the six months ended December 31, 2025 , there were 6,973 restricted stock units cancelled or forfeited.
−Removed: There were 94,301 shares of unvested restricted stock units with a weighted average fair value of $ 21.27 per share outstanding as of December 31, 2025 .
−Removed: As of December 31, 2025 , $ 1,337,000 of total unrecognized compensation expense related to restricted stock units is expected to be recognized over a weighted-average period of approximately 2.5 years.
+Added: During the nine months ended March 31, 2026 , the Company issued restricted stock awards to employees totaling 22,300 shares of common stock, with a weighted average vesting term of 3 years and a weighted average fair value of $ 23.95 per share.
+Added: During the nine months ended March 31, 2026 , the Company issued restricted stock awards to its Board of Directors totaling 21,000 shares of common stock, with a vesting term of six months and a fair value of $ 27.42 per share.
+Added: There were 65,374 shares of unvested restricted stock with a weighted average fair value of $ 22.02 per share outstanding as of March 31, 2026 .
+Added: As of March 31, 2026 , $ 636,000 of total unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average period of approximately 1.6 years.
+Added: During the nine months ended March 31, 2026 , the Company issued restricted stock units to employees totaling 58,548 shares of common stock underlying restricted stock units, with a weighted average vesting term of 3 years and a weighted average fair value of $ 24.01 per share.
+Added: During the nine months ended March 31, 2026 , there were 8,073 restricted stock units canceled or forfeited.
+Added: There were 94,891 shares of unvested restricted stock units with a weighted average fair value of $ 21.30 per share outstanding as of March 31, 2026 .
+Added: As of March 31, 2026 , $ 1,109,000 of total unrecognized compensation expense related to restricted stock units is expected to be recognized over a weighted-average period of approximately 2.3 years.
Performance-Based Restricted Stock Units
2 unchanged sentences
TSR was evaluated from the initial grant date through the end of each subsequent fiscal quarter using the three -month volume-weighted average closing prices in accordance with the underlying award agreement.
−Removed: The PSU's were eligible to vest and settle into shares of common stock on a 1 -for- 1 basis with respect to one -half of the shares upon achieving a TSR of 50 % and the remaining shares upon a TSR of 100 %, in each case within four years of the date of grant.
+Added: The PSUs were eligible to vest and settle into shares of common stock on a 1 -for- 1 basis with respect to one -half of the shares upon achieving a TSR of 50 % and the remaining shares upon a TSR of 100 %, in each case within four years of the date of grant.
The grant date fair value of the awards was determined using a Monte Carlo valuation model with an expected term of four years.
1 unchanged sentence
As of December 31, 2024, TSR exceeded the 100 % target, resulting in the vesting of the remaining 87,500 shares of common stock.
−Removed: As a result of both vesting, unrecognized stock-based compensation expense totaling $ 718,000 was recognized in the six months ended December 31, 2024, which was set to be recognized in future periods.
−Removed: There were no performance-based restricted stock units issued or outstanding during the six months ended December 31, 2025.
+Added: As a result of both vesting, unrecognized stock-based compensation expense totaling $ 648,000 was recognized in the nine months ended March 31, 2025, which was set to be recognized in future periods.
+Added: There were no performance-based restricted stock units issued or outstanding during the nine months ended March 31, 2026.
Commitments and Contingencies
13 unchanged sentences
The computations of the basic and diluted EPS amounts were as follows:
−Removed: Three Months Ended December 31,
−Removed: Six Months Ended December 31,
+Added: Three Months Ended March 31,
+Added: Nine Months Ended March 31,
$ 3,003,000 $ 1,891,000 $ 7,900,000 $ 5,333,000
7 unchanged sentences
$ 0.35 $ 0.21 $ 0.91 $ 0.59
−Removed: Common stock equivalents excluded from the calculation of diluted earnings per share because their impact was anti-dilutive were 57,146 and 8,865 for the three months ended December 31, 2025 , and 2024 , respectively, and were 37,509 and 43,498 for the six months ended December 31, 2025, and 2024, respectively.
+Added: Common stock equivalents excluded from the calculation of diluted earnings per share because their impact was anti-dilutive were 56,030 and 3,196 for the three months ended March 31, 2026 , and 2025 , respectively, and were 43,592 and 47,971 for the nine months ended March 31, 2026, and 2025 , respectively.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.
5 unchanged sentences
Food and Drug Administration in November 2022, provides patients with proven quality of life outcomes while offering a state-of-the-art patient experience with a simple touch screen user interface, small generator footprint and comfortable, lightweight vests.
−Removed: Our products are sold in both the homecare market and the hospital market for inpatient use, which we refer to as “hospital sales.” Since 2000, we have marketed the SmartVest System and its predecessor products to patients suffering from bronchiectasis, cystic fibrosis, and other chronic pulmonary conditions which require external chest manipulation to enhance mucus transport.
+Added: Our products are sold in both the homecare market and the hospital market for inpatient use, which we refer to as “hospital sales.” Since 2000, we have marketed the SmartVest System and its predecessor products to patients suffering from bronchiectasis, cystic fibrosis, and other chronic pulmonary conditions that require external chest manipulation to enhance mucus transport.
Additionally, we offer our products to a patient population that includes neuromuscular disorders such as cerebral palsy, muscular dystrophies, amyotrophic lateral sclerosis (“ALS”), patients with post-surgical complications or who are ventilator dependent and patients who have other conditions involving excess secretion and impaired mucus transport.
4 unchanged sentences
For a description of our critical accounting estimates and assumptions used in the preparation of our financial statements, including the unaudited Condensed Financial Statements in this Quarterly Report on Form 10-Q, see Notes 1 and 2 to our unaudited Condensed Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Part II, Item 7, and Note 1 to our audited financial statements included in Part II, Item 8, of our Annual Report on Form 10-K for fiscal 2025.
−Removed: There were no material changes in our critical accounting estimates and assumptions since the filing of our Annual Report on Form 10-K for fiscal 2025 .
+Added: There have been no material changes to our critical accounting estimates and assumptions since the filing of our Annual Report on Form 10-K for fiscal 2025 .
Results of Operations
−Removed: Net revenues for the three and six months ended December 31, 2025, and 2024 are summarized in the table below.
+Added: Net revenues for the three and nine months ended March 31, 2026, and 2025 are summarized in the table below.
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
Increase (Decrease)
2 unchanged sentences
Homecare revenue.
−Removed: Homecare revenue increased by $2,681,000, or 18.4%, for the three months ended December 31, 2025, compared to the same period in the prior year.
−Removed: For the six months ended December 31, 2025, homecare revenue increased by $4,359,000, or 15.7%, compared to the same period in the prior year.
−Removed: The increases were primarily due to an increase in direct sales representatives and higher net revenues per sales representative.
−Removed: For the three months ended December 31, 2025, we averaged 58 homecare field sales representatives.
+Added: Homecare revenue increased by $2,630,000, or 18.6%, for the three months ended March 31, 2026, compared to the same period in the prior year.
+Added: Approximately $1,959,000 of the increase in revenue was due to higher volume, which was driven by additional sales representatives and increased sales representative productivity, and approximately $671,000 was due to higher net revenues per approval.
+Added: For the nine months ended March 31, 2026, homecare revenue increased by $6,989,000, or 16.7%, compared to the same period in the prior year.
+Added: Approximately $5,699,000 of the increase in revenue was due to higher volume, which was driven by additional sales representatives and increased sales representative productivity, and approximately $1,290,000 was due to higher net revenues per approval.
+Added: For the three months ended March 31, 2026, we averaged 57 homecare field sales representatives.
Hospital revenue.
−Removed: Hospital revenue was $655,000, a decrease of $68,000, or 9.4%, for the three months ended December 31, 2025, compared to the same period in the prior year.
−Removed: For the six months ended December 31, 2025, hospital revenue was $1,702,000, an increase of $289,000, or 20.5%, compared to the same period in the prior year.
−Removed: The decrease in the three months ended December 31, 2025, was due to fewer capital equipment orders as hospital capital revenue is a long-cycle sale and revenue from quarter to quarter can vary depending on capital budget allocations at the hospital.
−Removed: The growth in the six months ended December 31, 2025, primarily reflects an increase in sales representatives focused on the hospital market and higher capital and disposal demand.
+Added: Hospital revenue was $1,032,000, an increase of $308,000, or 42.5%, for the three months ended March 31, 2026, compared to the same period in the prior year.
+Added: For the nine months ended March 31, 2026, hospital revenue was $2,734,000, an increase of $597,000, or 27.9%, compared to the same period in the prior year.
+Added: The growth in the three and nine months ended March 31, 2026, primarily reflects an increase in sales representatives focused on the hospital market and higher capital and disposal demand.
Homecare distributor revenue.
−Removed: Homecare distributor revenue increased by $98,000, or 12.1%, for the three months ended December 31, 2025, compared to the same period in the prior year.
−Removed: For the six months ended December 31, 2025, homecare distributor revenue increased by $340,000, or 24.4%, compared to the same period in the prior year.
−Removed: The increases in homecare distributor sales were primarily a result of increased orders from distribution partners.
+Added: Homecare distributor revenue increased by $19,000, or 2.7%, for the three months ended March 31, 2026, compared to the same period in the prior year.
+Added: For the nine months ended March 31, 2026, homecare distributor revenue increased by $359,000, or 17.2%, compared to the same period in the prior year.
+Added: The increases in homecare distributor sales were primarily a result of increased orders from our distribution partners.
Other revenue.
−Removed: Other revenue was $63,000, a decrease of $69,000, or 52.3% for the three months ended December 31, 2025, compared to the same period in the prior year.
−Removed: For the six months ended December 31, 2025, other revenue was $185,000, a decrease of $127,000, or 40.7%, compared to the same period in the prior year.
+Added: Other revenue was $96,000, a decrease of $66,000, or 40.7%, for the three months ended March 31, 2026, compared to the same period in the prior year.
+Added: For the nine months ended March 31, 2026, other revenue was $281,000, a decrease of $193,000, or 40.7%, compared to the same period in the prior year.
The decreases in other revenue were primarily due to the lower demand for purchases by international distributors and other customers that do not fall within the markets described above.
−Removed: Gross profit dollars increased to $14,819,000, or 78.4% of net revenues, for the three months ended December 31, 2025, from $12,627,000, or 77.7% of net revenues, in the same period in the prior year.
−Removed: Gross profit dollars increased to $28,016,000, or 78.3% of net revenues, for the six months ended December 31, 2025, from $24,118,000, or 78.0% of net revenues, in the same period in the prior year.
+Added: Gross profit dollars increased to $14,643,000, or 78.8% of net revenues, for the three months ended March 31, 2026, from $12,229,000, or 78.0% of net revenues, in the same period in the prior year.
+Added: Gross profit dollars increased to $42,659,000, or 78.5% of net revenues, for the nine months ended March 31, 2026, from $36,347,000, or 78.0% of net revenues, in the same period in the prior year.
The increases in gross profit were primarily a result of increased overall revenue and higher net revenues per device.
1 unchanged sentence
Selling, general and administrative expenses.
−Removed: Selling, general and administrative (“SG&A”) expenses were $10,815,000 and $21,101,000 for the three and six months ended December 31, 2025, respectively, representing an increase of $981,000 and $1,880,000, or 10.0% and 9.8%, respectively, compared to the same periods in the prior year.
−Removed: Payroll and compensation-related expenses were $7,496,000 and $14,372,000 for the three and six months ended December 31, 2025, respectively, representing an increase of $621,000 and $1,040,000, or 9.0% and 7.8%, respectively, compared to the same periods in the prior year.
+Added: Selling, general and administrative (“SG&A”) expenses were $10,516,000 and $31,617,000 for the three and nine months ended March 31, 2026, respectively, representing an increase of $704,000 and $2,584,000, or 7.2% and 8.9%, respectively, compared to the same periods in the prior year.
+Added: Payroll and compensation-related expenses were $6,955,000 and $21,326,000 for the three and nine months ended March 31, 2026, respectively, representing an increase of $363,000 and $1,402,000, or 5.5% and 7.0%, respectively, compared to the same periods in the prior year.
The increases in the current-year periods were primarily due to the increase in salaries and incentive compensation related to the higher average number of sales representatives and higher overall compensation costs.
We have also continued to provide regular merit-based increases for our employees and are regularly benchmarking our compensation ranges, including share-based compensation, for new and existing employees to ensure we can hire and retain the talent needed to drive growth in our business.
−Removed: Travel, meals and entertainment expenses were $1,013,000 and $2,287,000 for the three and six months ended December 31, 2025, respectively, representing an increase of $20,000 and $330,000, or 2.0% and 16.9%, respectively, compared to the same periods in the prior year.
+Added: Travel, meals and entertainment expenses were $1,070,000 and $3,357,000 for the three and nine months ended March 31, 2026, respectively, representing an increase of $148,000 and $477,000, or 16.1% and 16.6%, respectively, compared to the same periods in the prior year.
The increases in the current year were primarily due to a higher average number of direct sales representatives, training, and increased travel to support sales activity as well as market development.
−Removed: Total discretionary marketing expenses were $443,000 and $853,000 for the three and six months ended December 31, 2025, respectively, representing an increase of $88,000 and $234,000, or 24.8% and 37.8%, respectively, compared to the same period in the prior year.
−Removed: The increases in the current year were due to increased investment in our direct-to-consumer advertising and other market development initiatives in t he six months ended December 31, 2025.
−Removed: Professional fees were $1,166,000 and $2,256,000 for the three and six months ended December 31, 2025, respectively, representing a decrease of $13,000 and $63,000, or 1.1% and 2.7%, respectively, compared to the same periods in the prior year.
+Added: Total discretionary marketing expenses were $293,000 and $1,146,000 for the three and nine months ended March 31, 2026, respectively, representing a decrease of $32,000 and an increase of $203,000, or a decrease of 9.8% and an increase of 21.5%, respectively, compared to the same period in the prior year.
+Added: The decrease in the three months ended March 31, 2026, was due to timing of routine marketing spend.
+Added: The increase in the nine months ended March 31, 2026, was due to increased investment in our direct-to-consumer advertising and other market development initiatives .
+Added: Professional fees were $1,452,000 and $3,708,000 for the three and nine months ended March 31, 2026, respectively, representing an increase of $167,000 and $104,000, or 13.0% and 2.9%, respectively, compared to the same periods in the prior year.
Professional fees are primarily for services related to legal costs, shareowner services and reporting requirements, information technology technical support, insurance and consulting fees.
−Removed: The decrease in the sixth months ended December 31, 2025, was primarily due to external recruiting spend in the prior year that did not recur in the six months ended December 31, 2025.
+Added: The increases in the current periods were primarily due to increased legal and insurance costs.
Research and development expenses .
−Removed: Research and development (“R&D”) expenses were $384,000 and $625,000 for the three and six months ended December 31, 2025, respectively, representing an increase of $133,000 and $208,000, or 53.0% and 49.9%, respectively, compared to the same periods in the prior year.
+Added: Research and development (“R&D”) expenses were $361,000 and $986,000 for the three and nine months ended March 31, 2026, respectively, representing an increase of $84,000 and $292,000, or 30.3% and 42.1%, respectively, compared to the same periods in the prior year.
The increases were primarily due to increased average headcount and consulting expenses related to product enhancements and sustaining engineering.
Operating income
−Removed: Operating income increased by $1,078,000 or 42.4% to $3,620,000, or 19.2% of net revenues, for the three months ended December 31, 2025, compared to the same period in the prior year.
−Removed: Operating income increased by $1,810,000 or 40.4% to $6,290,000 for the six months ended December 31, 2025, compared to the same period in the prior year.
+Added: Operating income increased by $1,626,000 or 76.0% to $3,766,000, or 20.3% of net revenues, for the three months ended March 31, 2026, compared to the same period in the prior year.
+Added: Operating income increased by $3,436,000 or 51.9% to $10,056,000, or 18.5% of net revenues, for the nine months ended March 31, 2026, compared to the same period in the prior year.
The increases were primarily due to an increase in revenue and gross profit.
Interest income, net
−Removed: Net interest income for the three and six months ended December 31, 2025, was $109,000 and $243,000, respectively, compared to $152,000 and $347,000, respectively, for the same period in the prior year.
−Removed: The decreases were primarily due to decreased interest rates and lower cash balances.
+Added: Net interest income for the three and nine months ended March 31, 2026, was $100,000 and $343,000, respectively, compared to $142,000 and $489,000, respectively, for the same period in the prior year.
+Added: The decreases were primarily due to decreased interest rates and lower average cash balances throughout the period.
Income tax expense
−Removed: Income tax expense was estimated at $968,000 and 1,636,000, and the effective tax rate was 26.0% and 25.1%, for the three and six months ended December 31, 2025, respectively.
−Removed: Estimated income tax expense for the three and six months ended December 31, 2025, includes a discrete current tax benefit of $22,000 and $103,000, respectively, primarily related to the windfall tax benefit of vested restricted stock and the exercise of stock options.
−Removed: Income tax expense was estimated at $726,000 and $1,385,000, and the effective tax rate was 26.9% and 28.7%, for the three and six months ended December 31, 2024, respectively.
−Removed: Estimated income tax expense for the three and six months ended December 31, 2024, includes a discrete current tax benefit of $135,000 and $139,000, respectively, primarily related to the exercise of stock options and the vesting of restricted stock awards.
−Removed: Net income for the three and six months ended December 31, 2025, was $2,761,000 and $4,897,000, representing an increase of 40.3% and 42.3%, respectively, compared to $1,968,000 and $3,442,000 for the same periods in the prior year.
+Added: Income tax expense was estimated at $863,000 and $2,499,000, and the effective tax rate was 22.3% and 24.0%, for the three and nine months ended March 31, 2026, respectively.
+Added: Estimated income tax expense for the three and nine months ended March 31, 2026, includes a discrete current tax benefit of $94,000 and $197,000, respectively, primarily related to the windfall tax benefit of vested stock awards, the exercise of stock options, and the true up for the prior year Federal R&D credit.
+Added: Income tax expense was estimated at $391,000 and $1,776,000, and the effective tax rate was 17.1% and 25.0%, for the three and nine months ended March 31, 2025, respectively.
+Added: Estimated income tax expense for the three and nine months ended March 31, 2025, includes a discrete current tax benefit of $338,000 and $478,000, respectively, primarily related to the exercise of stock options.
+Added: Net income for the three and nine months ended March 31, 2026, was $3,003,000 and $7,900,000, representing an increase of 58.8% and 48.1%, respectively, compared to $1,891,000 and $5,333,000 for the same periods in the prior year.
The increases in net income were primarily due to increased revenue and gross profit.
2 unchanged sentences
Cash Flows from Operating Activities
−Removed: For the six months ended December 31, 2025, net cash provided by operating activities was $3,195,000.
−Removed: Cash flows provided by operating activities consisted of net income of $4,897,000, non-cash expenses of $1,631,000, and an increase in income tax payable, net of $790,000.
−Removed: These cash flows from operating activities were offset by an increase in accounts receivable of $1,600,000, a decrease in accrued compensation of $1,368,000, an increase in prepaid expenses and other assets of $691,000, an increase in inventories of $260,000, an increase in contract assets of $116,000, and a decrease in accounts payable and accrued expenses of $88,000.
+Added: For the nine months ended March 31, 2026, net cash provided by operating activities was $6,671,000.
+Added: Cash flows provided by operating activities consisted of net income of $7,900,000, non-cash expenses of $2,764,000, a decrease in income tax receivable, net of $393,000, and an increase in accounts payable and accrued expenses of $291,000.
+Added: These cash flows from operating activities were offset by an increase in accounts receivable of $3,591,000, a decrease in accrued compensation of $549,000, an increase in prepaid expenses and other assets of $364,000, an increase in inventories of $123,000, and an increase in contract assets of $50,000.
Cash Flows from Investing Activities
−Removed: For the six months ended December 31, 2025, cash used for investing activities was $923,000.
+Added: For the nine months ended March 31, 2026, cash used for investing activities was $1,077,000.
Cash used for investing activities consisted of $1,033,000 in expenditures for property and equipment and $44,000 in expenditures for intangible assets.
Cash Flows from Financing Activities
−Removed: For the six months ended December 31, 2025, cash used for financing activities was $3,768,000.
+Added: For the nine months ended March 31, 2026, cash used for financing activities was $3,896,000.
Cash used for financing activities consisted of $3,918,000 used for our share repurchase program and $246,000 for taxes paid on net share settlement of stock awards, partially offset by $268,000 from the issuance of common stock upon exercise of options.
4 unchanged sentences
The credit agreement provides the Company with a senior security credit facility with a $10,000,000 revolving line of credit.
−Removed: Any borrowings under the credit facility will bear interest at one-month Term SOFR (3.87% on December 31, 2025), plus 1.75%, payable monthly.
+Added: Any borrowings under the credit facility will bear interest at the applicable one-month Term SOFR (3.67% on March 31, 2026), plus 1.75%, payable monthly.
The credit agreement provides that the credit facility will mature on December 16, 2026, if not renewed before such date.
−Removed: There was no outstanding principal balance on the line of credit as of December 31, 2025.
+Added: There was no outstanding principal balance on the line of credit as of March 31, 2026.
The Company provided a first priority security interest in substantially all of its existing and future assets to secure the payment obligations under the credit agreement.
4 unchanged sentences
If we are unable to repay such indebtedness, the lender could foreclose on these assets.
−Removed: For the six months ended December 31, 2025, and 2024, we spent approximately $886,000 and $270,000, respectively, on property and equipment.
+Added: For the nine months ended March 31, 2026, and 2025, we spent approximately $1,033,000 and $117,000, respectively, on property and equipment.
We currently expect to finance planned equipment purchases with cash flows from operations or borrowings under our credit facility.
We may need to incur additional debt if we have an unforeseen need for additional capital equipment or if our operating performance does not generate adequate cash flow.
−Removed: While the impact of macroeconomic factors such as inflation are difficult to predict, we believe our cash, cash equivalents and cash flows from operations will be sufficient to meet our working capital, capital expenditure, operational cash requirements for fiscal 2026 and the foreseeable future.
+Added: While the impact of macroeconomic factors such as inflation are difficult to predict, we believe our cash, cash equivalents and cash flows from operations will be sufficient to meet our working capital, capital expenditure, and operational cash requirements for fiscal 2026 and the foreseeable future.
We will continue to evaluate our projected expenditures relative to our available cash and evaluate financing alternatives to satisfy our working capital and other cash requirements.
2 unchanged sentences
Forward-looking statements include, but are not limited to, statements regarding:
−Removed: our business strategy, including our intended level of investment in research and development and marketing activities;
−Removed: our expectations with respect to earnings, gross margins and sales growth, industry relationships, marketing strategies and international sales;
−Removed: estimated sizes of markets into which our products are or may be sold;
−Removed: our business strengths and competitive advantages;
−Removed: our ability to grow additional sales distribution channels;
−Removed: our intent to retain any earnings for use in operations rather than paying dividends;
−Removed: our expectation that our products will continue to qualify for reimbursement and payment under government and private insurance programs;
−Removed: our intellectual property plans and practices;
−Removed: the expected impact of applicable regulations on our business;
−Removed: our beliefs about our manufacturing processes;
−Removed: our expectations and beliefs with respect to our employees and our relationships with them;
−Removed: our belief that our current facilities are adequate to support our growth plans;
−Removed: our expectations with respect to ongoing compliance with the terms of our credit facility;
−Removed: our expectations regarding the ongoing availability of credit and our ability to renew our line of credit;
−Removed: enhancements to our products and services;
−Removed: expected excise tax exemption for the SmartVest System;
+Added: our business strategy, our expectations with respect to ongoing compliance with the terms of our credit facility and the ongoing availability of credit;
+Added: anticipated tax benefits;
and our anticipated revenues, expenses, capital requirements and liquidity.
−Removed: Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “ongoing,” “plan,” “potential,” “project,” “target,” “should,” “will,” “would,” and similar expressions, including the negative of these terms, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
+Added: Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “ongoing,” “plan,” “project,” “should,” “will,” “would,” and similar expressions, including the negative of these terms, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Although we believe these forward-looking statements are reasonable, they involve risks and uncertainties that may cause actual results to differ materially from those projected by such statements.
23 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.