Electromed Profile
Electromed, Inc. (Electromed) develops, manufactures, markets, and sells innovative products that provide airway clearance therapy, including the SmartVest Airway Clearance System (SmartVest System) and related products, to patients with compromised pulmonary function with a commitment to excellence and compassionate service.
The company employs a direct-to-patient and provider model, through which it obtains patient referrals from clinicians, manages insurance claims on behalf of its patients, and delivers the SmartVest System to patients, training them on proper use in their homes. This model allows the company to directly approach patients and clinicians, whereby the company disintermediates the traditional durable medical equipment (DME) channel and captures both the manufacturer and distributor margins. The company also sells its products in the acute care setting for patients in a post-surgical or intensive care unit, or who were admitted for a lung infection brought on by compromised airway clearance.
The SmartVest System features a programmable air pulse generator, a therapy garment worn over the upper body and a connecting hose, which together provide safe, comfortable, and effective airway clearance therapy. The SmartVest System generates HFCWO (High Frequency Chest Wall Oscillation), an airway clearance therapy. One factor of respiratory health is the ability to clear secretions from airways. Impaired airway clearance, when mucus cannot be expectorated, may result in labored breathing and/or inflammatory and immune systems boosting mucus production that invites bacteria trapped in stagnant secretions to cause infections. Studies show that HFCWO therapy is as effective an airway clearance method for patients who have compromised pulmonary function as traditional chest physical therapy (CPT) administered by a respiratory therapist. However, HFCWO can be self-administered, relieving a caregiver of participation in the therapy, and eliminating the attendant cost of an in-home care provider.
The SmartVest System is designed for patient comfort and ease of use, which promotes adherence to prescribed treatment schedules, leading to improved airway clearance, patient outcomes and quality of life, and a reduction in healthcare utilization. The company offers a broad range of garments, referred to as vests and wraps, in sizes for children and adults that allow for tailored fit. User-friendly controls allow patients to administer their daily therapy with minimal or no assistance. The company’s direct product support services provide patient and clinician education, training, and follow-up to ensure that the product is integrated into each patient’s daily treatment regimen. Additionally, its reimbursement department assures the company is working on behalf of the patient by processing their physician paperwork, providing clinical support and billing the applicable insurance provider.
Products
The company markets the SmartVest System and its predecessor products to patients suffering from bronchiectasis, cystic fibrosis, and neuromuscular conditions, such as cerebral palsy and amyotrophic lateral sclerosis (ALS). The company’s products are sold into the home health care market and the acute care setting for patients in a post-surgical or intensive care unit, or who were admitted for a lung infection brought on by compromised airway clearance. Accordingly, its sales points of contact include adult pulmonology clinics, cystic fibrosis centers, neuromuscular clinics and hospitals.
The company has received clearance from the U.S. Food and Drug Administration (FDA) to market the SmartVest System to promote airway clearance and improve bronchial drainage. In addition, Electromed is certified to apply the Conformite Europeenne (European Conformity or CE) marking for HFCWO device sales in all European Union member countries and approved for HFCWO device sales in other, select international countries. The SmartVest System is available only with a physician’s prescription.
The SmartVest System is available in one model – SQL – which is sold into home care and hospital markets. The company will continue to support and service earlier SmartVest models pursuant to the applicable product warranty.
As part of the company’s growth strategies, it periodically evaluates opportunities involving products and services, especially those that may provide value to the respiratory homecare and institutional market. To that end, the company made meaningful progress in the development of its next generation SmartVest System during the 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 the company’s fiscal year ending June 30, 2023 (fiscal 2023).
The SmartVest SQL System
The 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.
SmartVest Connect
In 2017, the company launched the SmartVest SQL with SmartVest Connect wireless technology, a personalized HFCWO therapy management portal for patients with compromised pulmonary function. In March 2020, the company 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.
Other Products
The company markets the Single Patient Use (SPU) SmartVest and SmartVest Wrap to health care providers in the acute care setting. 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 the company’s product and may encourage use of the SmartVest System for home care, which can be provided to patients with a chronic condition upon discharge.
Marketing, Sales and Distribution
The company’s sales and marketing efforts are focused on driving adoption of its products and services with physicians, clinicians, patients, and third-party payers; and building market awareness to the benefits of HFCWO for the treatment of bronchiectasis. Because the sale of the SmartVest System requires a physician's prescription, the company markets to physicians and health care providers, as well as directly to patients. The majority of its revenue comes from domestic home care sales through a physician referral model. The company has established its own domestic sales force and support network, which is able to provide superior education, support and training to its customers.
The company’s direct U.S. sales force works with physicians and clinicians, primarily pulmonologists, in defined territories to help them understand the company’s products and services and the value they provide to their respective patients. As of June 30, 2022, the company had 52 field sales employees, including six regional sales managers, 43 clinical area managers (CAMs), and three clinical educators. The company also has developed a network of approximately 250 respiratory therapists and health care professionals across the U.S. to assist with in-home SmartVest System patient training on a non-exclusive, independent contractor basis. These independent contractors are credentialed by the National Board for Respiratory Care as either Certified Respiratory Therapists or Registered Respiratory Therapists and provide national coverage to an internal team of Registered Respiratory Therapists dedicated to supporting SmartVest patients.
Additionally, Electromed employs a team of reimbursement specialists dedicated to managing insurance and payer relations and supporting prescribers and patients in navigating financial considerations. The availability of reimbursement is an important consideration for health care professionals and patients. The company must demonstrate the effectiveness of its products to public and private insurance providers.
The company generates 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 its 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 its website and social media channels. The company continues to evaluate opportunities to offer the SmartVest System through selected Home Medical Equipment (HME) distributors. The company maintains agreements with three HME distributors, one national and two regional, to distribute and sell the SmartVest System in the United States home care market.
International Marketing
The company sells its products outside of the U.S. primarily through independent distributors specializing in respiratory products. Through June 30, 2022, the majority of its distributors operated in exclusive territories. The company’s principal distributors are located in Europe, the Arab states of the Persian Gulf, Southeast Asia, South America, and Central America.
Research and Development
During fiscal 2022, the company incurred research and development expenses of approximately $1,356,000.
Intellectual Property
As of June 30, 2022, the company held 13 United States and 43 foreign-issued patents covering the SmartVest System and its underlying technology and had 13 pending United States and foreign patent applications. The company also has received 10 U.S. and 100 foreign trademark and service mark registrations.
The company generally pursues patent protection for patentable subject matter in its proprietary devices in foreign countries that it has identified as key markets for its products. These markets include the European Union, Japan, and other countries.
Governmental Regulation
The company’s medical devices are subject to regulation by numerous government agencies, including the FDA and comparable foreign regulatory agencies.
In addition to the clearances and approvals, the company obtained ISO 13485 certification in January 2005 and received annual certification of its compliance to the ISO (International Organization for Standardization) quality standards.
The company must register annually with the FDA as a device manufacturer, and as a result, is subject to periodic FDA inspection for compliance with the FDA’s Quality System Regulation requirements that require the company to adhere to certain extensive regulations. In addition, the federal Medical Device Reporting regulations require the company to provide information to the FDA whenever there is evidence that reasonably suggests that a device may have caused or contributed to a death or serious injury, or if a malfunction were to occur, could cause or contribute to a death or serious injury.
The company is working on finalizing updates to the quality system to achieve full compliance with Regulation (EU) 2017/745 (EU MDR), which came into effect in May 2021.
The Federal Physician Payments Sunshine Act (Section 6002 of the PPACA) requires ongoing data collection and annual management and reporting by the company and imposes civil penalties for manufacturers that fail to report timely, accurately, or completely to the Centers for Medicare and Medicaid Services.
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 the company provides its products directly to patients and bill third-party payers, such as Medicare, Medicaid, and insurance companies, the company is a ‘covered entity’ and must comply with these standards.
Strategy
As part of the company’s growth strategies, it periodically evaluates opportunities involving products and services, especially those that may provide value to the respiratory homecare and institutional market.
History
Electromed, Inc. was founded in 1992. The company was incorporated in Minnesota in 1992.
