Benzinga | Sep 27, 2021 08:09AM EDT

Electromed Names 2 Independent Directors, Kathy Tune, Joe Galatowitsch, To Board; Enters Cooperation Deal With ~6% Co. Investor, Summers Value Partners

Enters into Cooperation Agreement with Summers Value Partners and Announces Formation of Finance and Strategy Committee to Review Value Creation Opportunities

Directors Steve Craney and George Winn to Retire from the Board at Upcoming Annual Meeting

NEW PRAGUE, Minn.--(BUSINESS WIRE)-- Electromed, Inc. ("Electromed" or the "Company") (NYSE:ELMD), a leader in innovative airway clearance technologies, today announced that it will nominate two new independent directors, Kathy Tune and Joe Galatowitsch, for election to its Board of Directors at the Company's Fiscal 2022 Annual Meeting of Shareholders (the "Annual Meeting"), to be held in November. In connection with these nominations, Electromed has entered into a cooperation agreement with Summers Value Partners LLC ("Summers Value Partners"), an investment firm that beneficially owns approximately 5.9% of Electromed's outstanding common stock.

As part of the agreement, Electromed will form a Finance and Strategy Committee of the Board that will be responsible for, among other things, making recommendations to the Board with respect to the Company's strategy and value creation opportunities, including strategic growth and long-term business plans, research and development, capital allocation and M&A. The new Finance and Strategy Committee of the Board will be formed immediately following the Annual Meeting and will be chaired by Ms. Tune.

Steve Craney and George Winn, both current directors, have informed the Company of their intention to retire from the Board and their respective terms will expire as of the Annual Meeting. With these changes, the Electromed Board will continue to have seven directors following the Annual Meeting, four of whom will have joined in the past three years and a majority of whom will be women. The Board will elect a new independent Chair of the Board immediately following the Annual Meeting.

"The Electromed Board is committed to ongoing refreshment and ensuring that its directors possess the qualifications and experience needed to drive Electromed's growth and strategic execution well into the future," said Mr. Craney, Chairman of the Board. "Both Kathy and Joe possess unique insights and expertise in the healthcare and medical technology markets, and we are confident they will add valuable perspectives as Electromed continues its work to capitalize on the significant untapped market opportunity. On behalf of George and I, it has been a pleasure to have worked with so many talented colleagues and we are proud of all that the Company has accomplished over the past decade."

"Together, Kathy and Joe bring proven track records of growing businesses and highly relevant experience in areas that are of strategic importance to Electromed, including corporate board service, medical technology management, commercial execution, global market development, investment and capital markets, and investor relations," said Greg Fluet, director and Chair of the Board's Nominating and Governance Committee. "At Electromed, we are committed to adding directors with complementary skills and capabilities that contribute toward Electromed's continued growth and generation of shareholder value. These appointments further advance our Board refreshment efforts and reflect valuable feedback from our shareholders, and we appreciate Summers Value Partners' input during this thoughtful process."

"On behalf of the entire Board and management team, I would like to thank Steve and George for their decades of service as directors of Electromed," said Kathleen Skarvan, President and Chief Executive Officer of Electromed. "They each made many valuable contributions during their tenures, helping to oversee the Company's efforts to deliver revenue growth, profitability and product innovation. Today, Electromed has a proven growth strategy, which is driving double-digit revenue growth, profitability and strong cash flows. I look forward to working alongside Kathy, Joe and my other fellow Board members as well as management to build on this momentum."

Andrew Summers, Founder and Managing Member of Summers Value Partners, said, "We appreciate the constructive dialogue we have had with the Electromed Board and management team and are confident that the changes announced today will help Electromed focus on the goal of enhancing value for all shareholders. With a refreshed Board and newly formed Finance and Strategy Committee, we believe that Electromed is poised for continued growth and value creation."

Pursuant to the cooperation agreement, Summers Value Partners agreed to withdraw its director nominations previously submitted to the Company and support the Board's full slate of directors at the Annual Meeting. Summers Value Partners has also agreed to customary standstill and voting commitments, among other provisions. The full agreement between Summers Value Partners and Electromed will be filed on a Form 8-K with the U.S. Securities and Exchange Commission.