SecProbe.io

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

         DIVISION OF
CORPORATION FINANCE
       Mail Stop 3030

        May 28, 2010
 Robert D, Hansen Co-Founder, Chairman and Chief Executive Officer Electromed, Inc. 500 Sixth Avenue NW New Prague, Minnesota 56071
Re: Electromed, Inc.  Registration Statement on Form S-1
Filed May 3, 2010
 File No. 333-166470

Dear Mr. Hansen:

We have reviewed your filing and have th e following comments.  Where indicated, we
think you should revise your document in response to these comments.  If you disagree, we will
consider your explanation as to why our commen t is inapplicable or a revision is unnecessary.
Please be as detailed as necessary  in your explanation.  In some of our comments, we may ask you
to provide us with information so we may bette r understand your disclosure.  After reviewing this
information, we may raise additional comments.
Please understand that the purpose of our review process is to  assist you in your compliance
with the applicable disclosure requirements and to enhance the ove rall disclosure in your filing.
We look forward to working with you in these re spects.  We welcome any questions you may have
about our comments or any other aspect of our re view.  Feel free to call us at the telephone
numbers listed at the end of this letter.
Prospectus Cover Page

1. Please confirm that any preliminary prospectus  you circulate will include all non-Rule 430A
information.  This includes the price range and related informati on based on a bona fide
estimate of the public offering price within that  range, and other information that was left
blank throughout the document.
2. Please highlight the reference to  the risk factors section.  Refer to Item 501(b)(5) of
Regulation S-K.

Robert D, Hansen
Electromed, Inc.
May 28, 2010 Page 2
 Table of Contents

3. We note the first sentence in the paragraph that follows your table of contents cautioning
investors that they “should rely only on the information contained in this prospectus.”
Please consider whether this statement, in its cu rrent form, is consistent with your ability to
use free writing prospectuses.
Summary

Our Business Strengths, page 2
4. We note that this section provides a broad ove rview of the strengths  of your business.
Please balance your disclosure by providing an equally prominent overv iew of the material
risks to and weaknesses in your business.
Risk Factors
Our business, financial condition and results of operations…, page 10
5. With a view to disclosure, please:
• tell us the location and identity of  your principal di stributors; and
• tell us whether you have any agreements with these distributors and the nature of such
agreements if any.
If our patents…, page 19
6. We note that you pursue a policy of obtaining pa tents in key foreign countries.  To the
extent you do not seek patent protection in all countries in which you market your products,
please disclose the material risks to your business of such a policy.
Future sales of our common stock…, page 21
7. Please address the warrants being issued to the underwriters as compensation for this
offering in this risk factor.
Use of Proceeds, page 27
8. Please disclose the principa l reasons for the offering.
9. We note your disclosure in the f ourth paragraph that your reserv e the right to modify the use
of proceeds for other purposes.  You may rese rve the right to change the allocation of
proceeds provided you disclose the specific continge ncies that would give rise to a change.
See Instruction 7 to Item 504 of Regulation S-K.  Please revise.

Robert D, Hansen
Electromed, Inc.
May 28, 2010 Page 3
 10. Please reconcile your disclosure in this section with the disclosure in the fourth paragraph
on page 36 that you expect to finance equipment purchases with proceeds of the offering.  Also, revise the related risk f actor on page 22, as applicable.
Capitalization, page 28

11. Please revise to remove “cash and cash equivalents” from the table on page 28 since this is not part of your capitalization.
Dilution, page 29

12. Please revise your dilution disclosure to show  dilution assuming exer cise of the warrants
being issued to the underwriters.
Management’s Discussion and Analysis…, page 30
13. Refer to the last sentence of the last paragraph on page 30:
• Please disclose why Medicare reimbursement was temporarily suspended, include any
appropriate risk factors disclosure  if this could occur again; and
• It appears from your disclosure on page 36 th at the trademark lawsuit is expected to
continue.  To the extent that you reasonabl y expect that the continued litigation will
have a material impact on income from  continuing operations, by diverting the
operational focus of management or otherwise,  please provide the disclosure required by
Item 303(a)(3)(ii) of Regulation S-K.  Pleas e also clarify why management’s attention
to the trademark lawsuit significantly affect ed your sales given that you have a sales
force and other distributors.
14. We note that your revenues increased significan tly in each period presented as compared to
the previous year and that the increase was pr imarily due to increases in sales of SmartVest
Systems.  In light of the material increases  in revenues, your MD&A  disclosure does not
provide a thorough analysis that provides reader s a view of the compa ny through the eyes of
management.  When individual line items, di sclosed in your statements of operations,
significantly fluctuate in comparison to the comparable prior period, please quantify, and
disclose the nature of each item that cause d the significant change.  For example, please
quantify each material factor (i.e. such as volume changes by type of product, number of
SmartVest Systems sold for neuro-muscular diseas es, etc.), disclose separately the effect on
operations attributable to each factor causing th e aggregate change from year to year and
disclose the nature of or reason for each fact or causing the aggregate change.  The analysis
should reveal underlying material causes of the factors described and any future impact on
operating results.  Please incorporate the above comment to all of the disclosures in the
analysis of your results of operations in MD&A  and revise as necessa ry.  See Item 303 of
Regulation S-K and SEC Rel ease No. FR-72 for guidance .

Robert D, Hansen
Electromed, Inc.
May 28, 2010 Page 4
 Critical Accounting Policies and Estimates, page 31

General
15. The following comments on critical accounti ng policies and estimates contained in
Management’s Discussion and Analysis should al so be considered, if  applicable, in the
notes to your financial statements.
Revenue Recognition and Allowance for Doubtful Accounts, page 31
16. We see that you provide medical devices and services directly to patients and the majority
of your transactions are with third-party payers.  Please tell us how you considered the
guidance in FASB ASC Topic 954 – Health Ca re Entities in determining your accounting
for revenue and receivables.  In addition, tell us how you considered whether you should
report revenue and receivables net rather than  gross, less a provision for discounts.

17. We refer to your disclosure that  revenues are recorded at amount s estimated to be received.
Please revise to clarify how you estimate am ounts to be received under reimbursement
arrangements with third-party payers.  In a ddition, disclose whether your adjustments to
amounts previously billed have been material.  Please disclose the “many contingencies” in
the reimbursement process discussed on pa ge 30 and indicate how these impact your
revenue recognition.  The amount of contractual allowances with third party payers should
also be disclosed for each period.
18. We note the discussion on page  F-8 that other than installment sales you receive payment
for the vast majority of accounts receivable w ithin one year.  Please revise to clarify the
payment terms for your receivable s and disclose your policy for receivables not paid in one
year.
19. We note the discussion on page 54 that the majo rity of patients are able to obtain monthly
payments from Medicare, Medicaid, private insurance or a combination of the foregoing.
Please disclose the period over which these m onthly payments are made, any conditions that
must be met for the payments to continue a nd your accounting treatmen t if the payments are
no longer made.  Please tell us whether any of  these arrangements are considered a lease
rather than a sale.

20. We note your discussion that certain third-party reimbursement agencies pay you on a
monthly installment basis, the payments can span over several years and that you recognize
these sales using the installment method and reco rd revenue as each installment is received.
Please disclose the specific transactions a nd third-party reimbursement agencies that you
are accounting for under the installment method.  In addition, disclose the specific terms
and nature of these transactio ns and clarify why the installment method is appropriate. Tell
us why your accounting for these arrangements woul d not be considered the cash basis.  We
also note in your disclosure that deferred cost s are amortized to cost of revenue over the
estimated period collections are scheduled to occur.  Please tell us your basis for this

Robert D, Hansen
Electromed, Inc.
May 28, 2010 Page 5

accounting treatment.  In your res ponse, please also refe r to the table in Note 1 on page F-9,
and tell us why amortized cost of revenues as a percentage of re venue recognized under
installment sales varies from 14% to 24% in the periods presented.

21. Please clarify whether you have any post shipme nt obligations that could impact revenue
recognition.  Clarify you r obligations with re gard to training or providing product updates.
We note the discussion on page 53 under product warranties that if a newer model of your
system has been developed and sold between the time of purchase of the original system
and the need for replacement, you may replace the system with a newer model at your discretion.  Please tell us how this was considered in your revenue recognition or warranty polices.  In addition, disclose if you have provided replacement products in the past.
Valuation of Long-lived and Intangible Assets, page 32

22. We reference your disclosure that patent legal defense costs are capitalized.  Please disclose the accounting for these costs to the extent you are unsuccessful in  your defense efforts.
Allowance for Excess and Slow-moving Inventory, page 32

23. In addition to your allowance for excess and slow-moving inventory, please tell us whether there are any other significant estimates you make in evaluati ng the carrying value of your
inventory.  We reference your disclosure on page F-9 indicat ing you value your inventory at
standard cost.
Warranty Reserve, page 32

24. We refer to your disclosure of product warranti es as a limited warranty.  On page 53, we see
you describe the warranty as a “lifetime” warrant y for sales in the United States and Canada
and a limited warranty for sales outside of the United States and Canada.  Please reconcile
these statements and update your disclosure here  and on page F-53 to include the nature and
term of your product warranties.  In addition, please disclose the average life of your
products.
Results of Operations, page 33
General
25. To the extent that you attribute increases in selling, general and admi nistrative expenses to
increases in labor headcount and incentive plan s, please revise to pr ovide an indication of
the number and nature of labor positions added and impact of incentive plans implemented.

Robert D, Hansen
Electromed, Inc.
May 28, 2010 Page 6
 Fiscal Year Ended June 30, 2009 Compared  to Fiscal Year Ended June 30, 2008

International Revenue, page 34
26. To the extent that you attribute increases in revenue to adding additional distributors and
increasing your presence in fore ign countries, please revise to  provide an indication of the
number of distributors added and quan tify the increase in foreign countries.
Liquidity and Capital Resources
Cash Flows, page 36
27. We see that your credit facility with U.S. Bank contains certain covena nts.  Please disclose
whether you are in compliance with  the terms of the covenants.
Business
Other Products, page 42
28. Please revise your disclosure to  describe clearly the differe nces between your smart vest
system and the single patient use vest and the smart vest wrap.
 Our Markets, page 46

29. Please reconcile your disclosure that patients are able to obtain third-party reimbursements with your actual billing process describe d on page 53 in which you pursue third-party
reimbursements on behalf of the patient.  Pl ease include in the di sclosure which party
retains the risk if third-party reimbursements are not obtained.
Marketing, Sales and Distribution, page 48

30. With a view to disclosure, please tell us:
• the countries in Europe, Asia and other re gions where you currently sell your products;
• the value of the products sold in each country  in the most recent fiscal year and interim
period;
• whether you have all applicable  regulatory approvals to market and sell your products in
each country; and
• whether you have or have applied for patent  protection in each of those countries.
31. Please disclose the size of your sales force and the geographic coverage of your sales representatives.

Robert D, Hansen
Electromed, Inc.
May 28, 2010 Page 7
 32. Please describe the material terms of your ag reement dated June 2008 with a consultant to
assist with obtaining contracts with hosp ital buying groups as disc losed in the first
paragraph on page 3.  Provide your legal analysis for not filing th is agreement as an exhibit.
33. Please revise the last two paragraphs of th is section on page 49 to present balanced
disclosure of the disadvantages of the smart vest system in contrast to the advantages
described by you.  Also, if you include disclo sure contrasting your system against chest
physical therapy you should also contrast the smart vest syst em with competing systems
such as the ARI and RespirTech systems disclosed on page 50.
Competition, page 50

34. Please expand your disclosure to address the proportion of the market for treatment of cystic
fibrosis, bronchiectasis and the certain neuro-muscular disorders for which reimbursement is available, held by high frequency chest wa ll oscillation systems relative to the other
treatment options listed on page 50, or tell us  why this information is unavailable.
Research and Development, page 51

35. With a view to disclosure, please tell us what  engineering services are provided by Hansen
Engine Corporation, whether alternative sources  are available for thes e services, the terms
of any extension of the agreement beyond June, 2010 and whether and when the agreement may be terminated by Hansen Engine.
Third-Party Reimbursement, page 53

36. Please disclose what other conditions qualify for reimbursement that you reference in the
last sentence on page 40.
37. Disclose the principal neuro- muscular disorders referenced  in the first paragraph on
page 54.
Employees, page 60
38. Please clarify whether your respiratory therap ists are certified and identify who provides
certification.
Management, page 62
39. Please indicate the amount of  time your CEO devotes to Ha nsen Engine Corporation;
include any appropriate ri sk factor disclosure.
40. Please provide the complete disclosure requ ired by Item 401(e) of Regulation S-K for
Thomas Hagedorn including the name and pr incipal business of each corporation or
organization in which he was empl oyed in the past five years.

Robert D, Hansen
Electromed, Inc.
May 28, 2010 Page 8
 Executive Compensation, page 65

41. We note your disclosure that base compensation is determined using a subjective process.
We also note your disclosure