Greetings and welcome to the Electromed, Inc.’s Second Quarter Fiscal 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It’s now my pleasure to introduce your host Kalle Ahl, The Equity Group. Thank you, Mr. Ahl. You may begin.

Thank you, Audrey, and good morning, everyone. Electromed’s second quarter fiscal 2017 financial results were released yesterday after the market close. A copy of the earnings release can be found under the Investor Relations section of the Company’s website at www.smartvest.com. As a matter of formality, I need to remind participants that remarks made by management during the course of this call may contain forward-looking statements about the Company’s results and plans. Such statements are subject to risks and uncertainties that could cause actual performance or achievements to be materially different from those projected. The words belief, expect, plan, intend, estimate, anticipate, should or could and similar expressions or words that are used to identify forward-looking statements. But their absence does not mean a statement is not forward-looking. In addition, any projections as to the Company’s future performance represents managements estimate as of today, February 8, 2017. You should not place undue reliance on these forward-looking statements. We expressly do not undertake any duty to update forward-looking statements whether as a result of new information, future events or otherwise. We ask that you please refer to the Company’s SEC filings for further guidance on this matter. Joining us from Electromed this morning are Ms. Kathleen Skarvan, President and Chief Executive Officer; and Mr. Jeremy Brock, Chief Financial Officer. Kathleen will begin with some openings remarks after which Jeremy will present a summary of the Company’s second quarter fiscal 2017 financial results and then we’ll open the call for questions. Now, it’s my pleasure to turn the call over to Kathleen.

Thank you, Kalle. Good morning, everyone, and thank you for joining us to discuss Electromed’s second quarter fiscal 2017 results. This quarter we reported record net revenue of $6.4 million despite incurring a onetime revenue reduction of $212,000 for retroactive Medicaid repayment, which Jeremy will discuss later. Our revenue grew approximately 15% sequentially and exceeded a very strong prior year comparable quarter, reflecting our ongoing investment in sales, reimbursement and product innovation. Among second quarter fiscal 2017 highlights, our sales team achieved the highest level of referrals in Electromed’s history and we increase the level of referrals per field sales employee, a key measure of productivity. Revenue tends to late referrals. So we remain very optimistic about continued revenue growth in the second half of fiscal 2017. We ended the quarter with 35 field sales reps up from 27 at the end of the same period last year. In addition to benefiting from a larger salesforce and a ramp in new employee sales productivity, we are gaining significant traction from an evidence based marketing approach rooted in quantifiable outcomes. In particular, we are leveraging two recently published studies that verify the effectiveness of SmartVest use by patients with non-cystic fibrosis bronchiectasis. Our most recent study, published in January 2017, demonstrated a 60% reduction in overall healthcare utilization and cost as a result of a material decrease in bronchiectasis-related exacerbations for a population of patients who used SmartVest. Additionally secondary benefits such as the potential to reduce hospital readmissions and the potential to impact deterring antibiotic resistance may have even greater benefits than decreasing cost. This is a powerful message that has resonated quite well with physicians. Our field reps also are hearing enthusiasm from patients and clinicians about the opportunity to further personalize their therapy with our new garment colors…

Thank you, Kathleen, and good morning, everyone. Our net revenue in the second fiscal quarter of 2017 reached $6.4 million, a new record up from $6.3 million in the second fiscal quarter of 2016. As Kathleen pointed out, our home care revenue in the second fiscal quarter was negatively impacted by approximately $212,000 related to a reinterpretation of a reimbursement allowable and process by a participating state Medicaid program that required retroactive repayment of previously collected and recognized revenue. We believe this payment is a onetime event and is not reflective of other state Medicaid reimbursement processes. During the second quarter of fiscal 2016, our home care revenue benefited by approximately $250,000 from processing a backlog of referrals from the prior fiscal year in a certain state. That backlog accumulated while we reapplied for a state home medical equipment license until we met – when we met a newly imposed requirement to have an approved in-state presence. This license was reinstated in October of 2015. After taking into consideration the negative impact of the retroactive repayment during the second quarter of 2017, and the favorable impact of the processing the backlog referrals during the second quarter of fiscal 2016, home care revenue for the second quarter of fiscal 2017 increased primarily due to increases in both approvals and referrals. The increase in referrals was predominately due to growth in the number of field sales employees and a higher number of referrals per field sales employee as compared to the comparable prior year period. Institutional revenue was $605,000, up 14.4% compared to the prior year. The increase in revenue was primarily due to a higher average selling price for devices sold compared to the same period in the prior year. International revenue which is not a strategic growth area for Electromed…

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Michael Disler, a Private Investor. Please proceed with your question.

Good morning, folks, and congratulations on a great quarter. Just two quick things. One, I believe Jeremy you said the tax – effective tax rate for the quarter was 37.8% versus 13.3% the prior year. Is that correct?

Yes, that is correct.

Okay. So I just I’m looking at the pretty big tax rate perhaps there will be some changes in Washington, which might affect you positively in that regard. And the second thing, just a minor thing, well, I’m not asking you today. Well, Jeremy inside information on which state you had to pay that reversal on the $200,000 in revenues recognized of $212,000 approximately. My – just question is, you think that’s a onetime event from that particular state, fine. Is there anything out there that you think looming from other states looking to clawback revenues in any kind of fashion?

Yes, thank you for your question. To clarify that if we believe this is a onetime, that is for all state Medicaid’s. Looking at the way that this individual state interpreted their own regulations and their payment and allowable, we don’t believe that based on the other state regulations and allowables and payment processes that they could actually make this reinterpretation. So while we never know what our individual state will go on – we’ll do on a prospective basis. We do believe that this is a onetime event when it comes to any adjustments from a state Medicaid on a look back basis.

Okay and thank you very much for clarifying, continued success. Ms. Skarvan, thank you. And Jeremy I’ll be speaking to you on the phone most likely. And keep up the good work. I’ll speak to you soon. Thank you.

Thank you, Michael.

[Operator Instructions] Our next question comes from the line of Ryan Crackel, Private Investor. Please proceed with your question.

Good morning, everybody. Thank you for taking my question. I was just hoping you could comment on where you are in the process of wrapping up your salesforce and how you expect that process to impact operating expenses going forward. Thank you.

Thank you for the question Ryan. This is Kathleen, of course. We will be continuing to expand our salesforce. It’s going to be at a moderated level. We’re continuing to balance those additional investment costs with the return and we do believe though that there still is opportunity to expand the salesforce that will contribute to growing revenues at a continued rate similar to what we have historically. But again, we don’t expect that likely to have the same impact that you are seeing this year-over-year. And so hopefully, that helps you get some inside on how we are thinking about that going forward.

Okay, thank you. And do you guys publish any information about your backlog?

We do not. Not at this time.

Okay, thank you.

Thank you. At this time, there are no further questions. This does conclude our question-and-answer session. I will turn it back to Ms. Kathleen Skarvan for closing comments.