LONG $ELMD - Electromed, Inc.

A micro-cap that has “compounder” written all over it

Biotech and healthcare stocks have finally woken up after their 5-year slumber. What better way to play this than by looking at picks-and-shovel plays calling for your attention in the medtech sector?

Today we’re looking at a micro-cap that offers a clean thesis for 93% upside in under 2 years, backed by a solid management team that has just hopped on the train to share-repurchase land. This is a compounder in the flesh.

Teaser

• Accelerating top line with an expanding TAM; disease diagnosis growing double digits annually

• Double-digit revenue growth with operating leverage

• High-quality business with 75%+ gross margins & 15%+ EBITDA margins

• EBITDA margins expanded 731 bps in L3Y and are expected to expand another ~500 bps in N2Y yet the stock trades at 10.6x EV/FY27E EBITDA

• Revenue grew ~15% in L3Y and is expected to average ~16% Y/Y in N2Y, yet the stock trades at 2.3x EV/FY27E Sales

• FCF growing 20%+, company is buying back shares with excess cash

• Attractive acquisition target for large medtechs and private equity

• Reporting 1Q26 earnings soon, near-term catalyst

• Attractive R/R: ~93% upside in base case, ~19% downside in bear case

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