Greetings and welcome to the Electromed Third Quarter Fiscal 2020 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kalle Ahl of The Equity Group. Please go ahead.

Thank you, Rachel and good morning everyone. Electromed’s third quarter fiscal 2020 financial results were released yesterday after the market close. A copy of the earnings release can be found in the Investor Relations section of the company’s website at www.smartvest.com. As a matter of formality, I need to remind you that some of the statements that management will make on this call are considered forward-looking statements, including statements about the company’s future operating and financial 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. Any such statements represent management’s expectations as of today’s date. You should not place undue reliance on these forward-looking statements and the company does not undertake any obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise. 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 opening remarks, after which Jeremy will present a summary of the company’s third quarter fiscal 2020 financial results and then we will open the call for questions. Now, it’s my pleasure to turn the call over to Kathleen.

Thank you, Kelly. Good morning, everyone and thank you for joining us to discuss Electromed’s third quarter fiscal 2020 financial results and recent developments. Much has changed in the world since our last conference call in February. Coronavirus or COVID-19 has disrupted global economies, healthcare systems and people’s lives. Our thoughts are with those individuals whose health has been jeopardized by this crisis and we extend our gratitude to the healthcare professionals fighting COVID-19 on the frontlines. I am proud of our team’s unwavering commitment to ensuring the seamless manufacturing and delivery of SmartVest airway clearance devices during these challenging times. Amidst the onset of the COVID-19 outbreak, we achieved strong revenue growth 18% from the prior year period and net income of $653,000 in our fiscal third quarter, while prioritizing the health and safety of our employees, clinicians and patients. Before discussing our financial results, I would like to review the measures we have taken to protect the well-being of our people and the actions we have taken to mitigate the impact of the COVID-19 pandemic on our business. Regarding our safety initiatives, we instituted staggered work shifts and created separate workstations to accommodate social distancing. We implemented a policy requiring all employees to wear masks and additionally gloves in our manufacturing areas. We encourage remote and flexible work arrangements for employees where feasible. We ceased all non-essential travel and we established strict on and off-site sanitation and infection control practices. Regarding our actions to mitigate the impact of COVID- 19 on Electromed’s business, we strengthened our communication to clinics via videoconference for virtual in-services, therapy demonstrations and patient follow-up. We implemented virtual training options for patients to minimize patient to train or contact. We focused on building awareness among practitioners of recent Centers for Medicare and Medicaid Services…

Thank you, Kathleen and good morning everyone. As Kathleen shared, our net revenue in the third quarter of fiscal 2020 increased 18% to $8.7 million from $7.4 million in the third quarter of fiscal 2019 driven by growth in home care revenue. Home care revenue increased 14.3% to $7.8 million primarily due to higher average allowable based on payer mix and a greater percentage of referrals getting approved. Institutional revenue increased 46.9% to $609,000 from $414,000 in the prior year period due to higher average selling price per device and an increase in volume of devices and garments sold. In the first quarter of fiscal 2020, we began selling into the home medical equipment distributors. Distributor revenue totaled $165,000 during the third quarter of fiscal 2020. To reiterate, our direct sales channel remains our primary focus. We believe the home care distributor channel is complementary to our core business, particularly in those areas of the country where our SmartVest brand is under recognized and we see opportunities for accelerating growth on a supplemental basis. International revenue, which is not a strategic growth area for Electromed, totaled approximately $137,000 compared to $142,000 in the prior year period. Quarter-to-quarter sales variability can be expected due to the nature of our business and the COVID-19 outbreak will likely have a temporary – will have a temporary overall negative impact on our revenue. That said, we anticipate a resumption of long-term double-digit revenue growth on the back end of this pandemic. Gross profit increased 18.3% to $6.6 million or 75.4% of net revenue in the third quarter of fiscal 2020 from $5.6 million or 75.2 % of net revenue in the third quarter of fiscal 2019. The increase in gross profit resulted primarily from an increase in home care revenue and the increase in…

Thank you. [Operator Instructions] Your first question is from Kyle Bauser from Dougherty & Co. Please go ahead.

Hi, good morning, Kathleen and Jeremy. Thanks for taking the questions. So, maybe first on the relaxed CMS guidelines regarding the waiver, so I imagine this has been very useful in the institutional channel, but just kind of curious, are you utilizing that more in the institutional setting or home care setting kind of what's been the implication of that? Thanks.

Well, good morning, Kyle and thank you for the question. The waiver is going to assist patients and pulmonologists, primarily in the home care environment and also that will help us with the discharge patients. So as people are admitted to the hospital, maybe if they have the COVID-19 suffering from a lower respiratory infection, they are being discharged and by the way, many of those patients are being discharged into a long-term healthcare facility or a skilled nursing home and from there they are being discharged home. So, this would be primarily for our home care part of the business, because it really has to do with the requirements for prescribing and the medical documentation that’s needed in order to be able to qualify for reimbursement.

Great. So, 90% of sales come from that channel. So that’s great to hear. Are you right now during the pandemic – have you seen SmartVest being used in a lot of conditions outside of the normal call point, bronchiectasis, cystic fibrosis etcetera?

What we would typically see that will qualify under the waiver that we may not have qualified or would have been approved previously would be COPD that would be the primary diagnosis that we're seeing at this time we have received some prescriptions with COVID-19 diagnosis. They also would have typically other comorbidities or underlying issues that they've had even prior to contracting the COVID-19 but we do think this is a wonderful opportunity for physicians and patients who normally wouldn't be able to access HFCWO or SmartVest to utilize the waiver to help more patients and it gives us an opportunity to follow those patients and understand how they too are showing improved quality of life and reduced hospitalization so we're looking forward to understanding how this will continue to help more patients over the next few weeks.

Got it. And just a couple more here if I may now that you expect a higher percentage of Medicare patients that will convert over then for the waiver and that's within the Medicare population can you remind me what was the conversion rate in the past and can I go high 90’s even a 100% how should we think about that?

We think in that Medicare population that will qualify for the waiver that as you stated it could be in that 90% or above and that's been the experience we've seen in the last few weeks already again if it's a respiratory related disease and the doctor the physician or practitioner has been clear about that that will qualify.

Okay. And then you talked about a lot of clinics being closed who are having restricted hours but some have moved to it being a virtual to the extent you can share I mean any sense as to what percentage of accounts active accounts has re opened and are reengaging?

Thank you for that question. So we have been doing pulse surveys with our clinics across all of our territories and so in the beginning of April versus the beginning of May we have now started to see the number of offices opening. starting to increase and also the number of offices doing face to face visits increasing also I would say it's in the in the high single digit percentage that that has shifted but it's a trend that we're watching very closely and will continue to do that it to conduct those pulse surveys and that's how the sales organization is being made aware that they can then move out and visit those offices they're contacting them on a regular basis regardless and this way they can get back in and understand the rate of patients that they're seeing how many appointments they're having per day and we will see that gradually increase we believe over across the United States again that's going to be dependent on that stage and what the governor of that state has for specific orders about opening up their particular geographic area but we're encouraged.

Okay great. Thanks for the updates and Jeremy, all the best. Thank you so much.

Thanks Kyle.

Thank you. [Operator Instructions] Your next question comes from Mike [indiscernible] from MNX Holdings. Please go ahead.

Thank you. Good morning folks. How are you? I just wanted to say I am always brief as you guys know both you, Kathleen and Jeremy, as a very long-term shareholder I just want to thank you again for your forthrightness and clarity on your presentations. It seems completely thorough and totally honest and have been through the year. So thank you for that. And on a personal note, Jeremy, I am wishing you all the best in your future endeavors and your next adventure maybe as wonderful as this one has been and thank you as a shareholder and that’s it guys I know how difficult this time is and I think you are doing a fabulous job.

Thank you so much Mike for those comments and thank you for being a long-term shareholder. We very much appreciate it. Jeremy?

Yes, thanks Mike. We appreciate your support over the last 8 plus years, so…

Thank you. There are no further questions at this time. I will now turn the call back to Kathleen Skarvan for closing remarks.

Thank you, Rachel. Thank you all for participating on our call this morning. While we won’t be on the road for investor conferences in the near-term, given COVID-19 we remain accessible for one-on-one calls. Please reach out to our Investor Relations firm, The Equity Group, if you are interested in scheduling a follow-up call. We look forward to reporting back to you in August when we will release our fourth quarter fiscal 2020 financial results. Have a good day and stay well.

Thank you. This does conclude today’s conference. You may disconnect your lines. Thank you for participating.