Record Net Revenues of $30.4 million
Representing 13% Growth From the Prior Year
InfuSystem Holdings, Inc. (NYSE American: INFU),
(“InfuSystem” or the “Company”), a leading national health care
service provider, facilitating outpatient care for durable medical
equipment manufacturers and health care providers, today reported
financial results for the first quarter ended March 31, 2023.
2023 First Quarter
Overview:
- Net revenues totaled $30.4 million, an increase of 13% vs.
prior year.
- Integrated Therapy Services ("ITS") net revenue was $18.8
million, an increase of 13% vs. prior year.
- Durable Medical Equipment Services ("DME Services") net revenue
was $11.6 million, an increase of 15% vs. prior year.
- Gross profit was $15.5 million, an increase of 1% vs. prior
year.
- Gross margin was 51.2%, a decrease of 6.2% vs. prior year.
- ITS gross margin was 61.5%, a decrease of 3.0% vs. prior
year.
- DME Services gross margin was 34.5%, a decrease of 11.2% vs.
prior year.
- Net loss of $0.3 million, or $(0.02) per diluted share, flat
vs. prior year.
- Adjusted earnings before interest, income taxes, depreciation,
and amortization (“Adjusted EBITDA”) (non-GAAP) was $4.2 million,
an increase of 2% vs. prior year.
- Reaffirming annual revenue and Adjusted EBITDA guidance.
Management Discussion
Richard DiIorio, chief executive officer of InfuSystem, said,
“We are off to a strong start in 2023, exceeding our plan with
solid top-line growth of 13% for the first quarter. InfuSystem
achieved an important milestone with net quarterly revenue
exceeding $30 million for the first time in company history. We had
strong demand for our services during the quarter, resulting in DME
growth of 15%, led by biomedical services and 13% growth in ITS
with solid growth coming from all three of our therapies; Oncology,
Wound Care and Pain Management. These positive results are
reflective of our team’s execution and continued commitment to
delivering industry-leading service.”
“The growth in our biomedical service business resulted from
increased volume of onboarding new facilities and devices for our
tier-one global healthcare partner. This did impact our gross
margin and profitability due to higher spending to enable the
accelerated volumes. We are closely monitoring expenses as we ramp
the business, seeking to optimize the team for both short-term
onboarding opportunities and long-term operating efficiencies to
enhance margins.”
“In Wound Care, our objective is to provide leading-edge
solutions that promote healing, improve patient outcomes, and lower
the cost of care through our SI Wound Care partnership. An
important early component of that strategy is the expansion of
distribution partnerships to provide our customers with multiple
options that promote healing throughout the continuum of care. Our
new distribution agreement with Genadyne for Negative Pressure
Wound Therapy devices and associated products, which was announced
on April 25, 2023, represents an important step in achieving our
goals.”
“We look forward to building on the momentum established in the
first quarter. The entire InfuSystem team is dedicated to achieving
consistent operational and financial growth in the coming quarters
and in the years to come. Consistent execution is an important goal
for all of us at InfuSystem and we owe it to our loyal
shareholders,” concluded Mr. DiIorio.
2023 First Quarter Financial Review
Net revenues for the quarter ended March 31, 2023 were $30.4
million, an increase of $3.6 million, or 13%, compared to $26.8
million for the quarter ended March 31, 2022. Both of the Company's
reporting segments contributed to this increase.
ITS net revenue of $18.8 million increased $2.1 million, or 13%,
during the first quarter of 2023 as compared to the same prior year
period. This increase was primarily attributable to additional
treatment volume in Oncology and Pain Management, revenue from
sales-type leases of NPWT pumps, improved third party payer
collections on billings and higher average prices. Net revenue in
Oncology for the three-month period of 2023 represented the largest
increase totaling $1.6 million, or a 11% increase compared to the
same prior year period. This was followed by an increase in revenue
for Wound Care which increased by $0.2 million, or 63% compared to
the same prior year period, mainly due to an increase in sales of
equipment on sales-type leases partially offset by lower treatment
volumes. Pain Management net revenue of 2023 increased by $0.3
million, which represented an increase of 28% as compared to the
three-month period of 2022.
DME Services net revenue of $11.6 million (exclusive of
inter-segment revenues) increased $1.5 million, or 15%, during the
first quarter of 2023 as compared to the same prior year period.
This increase included higher biomedical services revenue which
increased by $1.7 million, or 98% compared to the same prior year
period, partially offset by lower equipment rentals totaling $0.3
million. The increased biomedical revenue was mainly due to a new
master services agreement with a leading global healthcare
technology and diagnostic company that was launched in April
2022.
Gross profit for the first quarter of 2023 of $15.5 million
increased $0.2 million, or 1.1%, from $15.4 million for the first
quarter of 2022. The increase was driven by the increase in net
revenue partially offset by lower gross profit percentage of net
revenue ("gross margin"). Gross margin was 51.2% during the first
quarter of 2023 as compared to 57.4% during the same prior year
period, a decrease of 6.2%. This decrease was due to a decrease in
the gross margin for both the DME Services and ITS segments.
ITS gross profit was $11.5 million during the first quarter of
2023, representing an increase of $0.8 million, or 7.5%, compared
to the same prior year period. The improvement reflected an
increase in net revenues partially offset by a lower gross margin,
which decreased from the prior year by 3.0% to 61.5%. The lower
gross margin was the result of a $0.4 million increase in the
adjustment recorded for pump disposal expenses and an impact from
unfavorable product mix favoring lower margin revenues. These
increased expenses were partially offset by improved third party
payer collections on billings and improved coverage of fixed costs
from the higher net revenue. Pump disposal expenses include
retirements of damaged pumps and reserves for missing pumps. The
increase was mainly related to an updated estimate of the volume of
pumps considered missing based on pump return data and physical
inventories. The lower margin mix was primarily related to the
increase in NPWT pump sales leases.
DME Services gross profit during the first quarter of 2023 was
$4.0 million, representing a decrease of $0.6 million, or 13.6%,
compared to the same prior year period. This decrease was due to
was due to a decrease in gross margin, which was partially offset
by the increase in net revenues. The DME gross margin was 34.5%
during the current period, which was 11.2% lower than the same
prior year period. This decrease was due to an increase in labor
costs related to an increase in the number of biomedical
technicians and other expenses associated with the rapid
on-boarding of the new master services agreement. Some of the
additional labor costs include training activities and other labor
expenses associated with building a larger team in order to have
the capacity required to support much higher planned revenue
volume. Over time, higher revenue levels are expected to absorb a
portion of the increased labor costs resulting in an improved gross
margin. Other increased expenses associated with the on-boarding
ramp, which include increased travel expenses and employee
acquisitions costs, are expected to decrease in the future. We
currently estimate that the additional expenses incurred during the
three-month period of 2023 that will either be absorbed or reduced
totaled approximately $1.3 million.
Selling and marketing expenses for the first quarter of 2023
were $3.2 million, a decrease of 2.9% from $3.3 million for the
first quarter of 2022. Selling and marketing expenses as a
percentage of net revenues decreased to 10.6% compared to the same
prior year period at 12.4%. This decrease reflected improved
coverage of fixed costs from the higher net revenue.
General and administrative (“G&A”) expenses for the first
quarter of 2023 were $12.1 million, an increase of 2.1% from $11.8
million for the first quarter of 2022. The increase of $0.2 million
was due to $0.2 million in additional audit expenses associated
with additional requirements to comply with the Sarbanes-Oxley Act
of 2002, higher travel expenses and other increases including
higher personnel wages, healthcare, information technology and
general business expenses. These increases were partially offset by
a decrease in stock-based compensation expense of $0.3 million.
G&A expenses as a percentage of net revenues for the first
quarter of 2023, decreased to 39.7% compared to 44.2% for the same
prior year period mainly reflecting improved net revenue coverage
of fixed costs.
Net loss for the first quarter of 2023 was $0.3 million, or
$(0.02) per diluted share, compared to a net loss of $0.4 million,
or $(0.02) per diluted share for the first quarter of 2022.
Adjusted EBITDA, a non-GAAP measure, for the first quarter of
2023 was $4.2 million, or 13.9% of net revenue, and increased by
$0.1 million, or 2.2%, compared to Adjusted EBITDA for the same
prior year quarter of $4.1 million, or 15.5% of prior period net
revenue.
Balance sheet, cash flows and liquidity
During the three-month period ended March 31, 2023, operating
cash flow was a use of cash totaling $0.2 million. During the same
period in 2022 operating cash flow was a source of cash totaling
$4.1 million. The change reflected lower operating margins during
2023 including the extra on-boarding expenses related to the
biomedical services contract and increases in working capital
including higher accounts receivable and inventories associated
with the growth in sales volume during the period. Capital
expenditures, which include purchases of medical devices, totaled
$4.3 million during the three-month period of 2023 which was $1.2
million, or 38%, higher than the amount purchased during the same
prior year period, an amount which was partially offset by higher
proceeds from the sale of medical equipment which increased by $0.3
million. Additionally, during the three-month period of 2023, $0.2
million was used to repurchase the Company's common stock under a
stock repurchase plan authorized on June 30, 2021.
As of March 31, 2023, available liquidity totaled $38.3 million
and consisted of $38.0 million in available borrowing capacity
under the Company's revolving line of credit plus cash and cash
equivalents of $0.3 million. Net debt, a non-GAAP measure
(calculated as total debt of $36.4 million less cash and cash
equivalents of $0.3 million) as of March 31, 2023 was $36.1 million
representing an increase of $3.1 million as compared to net debt of
$33.0 million as of December 31, 2022 (calculated as total debt of
$33.2 million less cash and cash equivalents of $0.2 million). Our
ratio of Adjusted EBITDA to net debt (non-GAAP) for the last four
quarters was 1.73 to 1.00 (calculated as net debt of $36.1 million
divided by Adjusted EBITDA of $20.8 million).
On April 26, 2023, we amended the 2021 credit agreement in order
to extend the term of the facility and to replace LIBOR with Term
SOFR as a benchmark interest rate. The new expiration date of the
2021 Credit Agreement is April 26, 2028.
Full Year 2023 Guidance
InfuSystem is reaffirming its annual guidance for the full year
2023 with net revenue growth estimated to be in the range of 8% to
10%, or approximately $118 million to $121 million in net revenues
and Adjusted EBITDA to be greater than $22 million. The Company is
forecasting Adjusted EBITDA margin (non-GAAP) to be greater than
19% for the year.
The full year 2023 guidance reflects management’s current
expectation for operational performance, given the current market
conditions. This includes our best estimate of revenue and Adjusted
EBITDA and does not include any material revenue from SI Wound Care
LLC. The Company and its businesses are subject to certain risks,
including those risk factors discussed in our most recent annual
report on Form 10-K for the year ended December 31, 2022, filed on
March 16, 2023. The financial guidance is subject to risks and
uncertainties applicable to all forward-looking statements as
described elsewhere in this press release.
Conference Call
The Company will conduct a conference call for all interested
investors on Thursday, May 4, 2023, at 9:00 a.m. Eastern Time to
discuss its first quarter 2023 financial results. The call will
include discussion of Company developments, forward-looking
statements and other material information about business and
financial matters.
To participate in this call, please dial (833) 366-1127 or (412)
902-6773, or listen via a live webcast, which is available in the
Investors section of the Company’s website at
https://ir.infusystem.com/. A replay of the call will be available
by visiting https://ir.infusystem.com/ for the next 90 days or by
calling (877) 344-7529 or (412) 317-0088, confirmation code
9911637, through May 11, 2023.
Non-GAAP Measures
This press release contains information prepared in conformity
with GAAP as well as non-GAAP financial information. Non-GAAP
financial measures presented in this press release include EBITDA,
Adjusted EBITDA, Adjusted EBITDA Margin, net debt and Adjusted
EBITDA to net debt ratio. The Company believes that the non-GAAP
financial measures presented in this press release provide useful
information to the Company’s management, investors and other
interested parties about the Company’s operating performance
because they allow them to understand and compare the Company’s
operating results during the current periods to the prior year
periods in a more consistent manner. This non-GAAP information
should be considered by the reader in addition to, but not instead
of, the financial statements prepared in accordance with GAAP, and
similarly titled non-GAAP measures may be calculated differently by
other companies. The Company calculates those non-GAAP measures by
adjusting for non-recurring or non-core items that are not part of
the normal course of business. A reconciliation of those measures
to the most directly comparable GAAP measures is provided in the
accompanying schedule, titled "GAAP to Non-GAAP Reconciliation"
below. Future period non-GAAP guidance includes adjustments for
items not indicative of our core operations, which may include,
without limitation, items included in the accompanying schedule
below. Such adjustments may be affected by changes in ongoing
assumptions and judgments, as well as non-core, nonrecurring,
unusual or unanticipated changes, expenses or gains or other items
that may not directly correlate to the underlying performance of
our business operations. The exact amounts of these adjustments are
not currently determinable but may be significant. It is therefore
not practicable to provide the comparable GAAP measures or
reconcile this non-GAAP guidance to the most comparable GAAP
measures and, therefore, such comparable GAAP measures and
reconciliations are excluded from this release in reliance upon
applicable SEC staff guidance.
About InfuSystem Holdings, Inc.
InfuSystem Holdings, Inc. (NYSE American: INFU), is a leading
national health care service provider, facilitating outpatient care
for durable medical equipment manufacturers and health care
providers. INFU services are provided under a two-platform model.
The first platform is Integrated Therapy Services (“ITS”),
providing the last-mile solution for clinic-to-home healthcare
where the continuing treatment involves complex durable medical
equipment and services. The ITS segment is comprised of Oncology,
Pain Management, Wound Therapy and Lymphedema businesses. The
second platform, Durable Medical Equipment Services (“DME
Services”), supports the ITS platform and leverages strong service
orientation to win incremental business from its direct payer
clients. The DME Services segment is comprised of direct payer
rentals, pump and consumable sales, and biomedical services and
repair. Headquartered in Rochester Hills, Michigan, the Company
delivers local, field-based customer support and also operates
Centers of Excellence in Michigan, Kansas, California,
Massachusetts, Texas and Ontario, Canada.
Forward-Looking Statements
The financial results in this press release reflect preliminary
results, which are not final until the Company’s quarterly report
on Form 10-Q for the quarter year ended March 31, 2023 is filed. In
addition, certain statements contained in this press release are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, such as statements
relating to future actions, our share repurchase program and
capital allocation strategy, business plans, strategic
partnerships, growth initiatives, objectives and prospects, future
operating or financial performance, guidance and expected new
business relationships and the terms thereof (including estimated
potential revenue under new or existing contracts). The words
“believe,” “may,” “will,” “estimate,” “continue,” “anticipate,”
“intend,” “should,” “plan,” “goal,” “expect,” “strategy,” “future,”
“likely,” variations of such words, and other similar expressions,
as they relate to the Company, are intended to identify
forward-looking statements. Forward-looking statements are subject
to factors, risks and uncertainties that could cause actual results
to differ materially, including, but not limited to, our ability to
successfully execute on our growth initiatives and strategic
partnerships, our ability to enter into definitive agreements for
the new business relationships on expected terms or at all, our
ability to generate estimated potential revenue amounts under new
or existing contracts, the uncertain impact of the COVID-19
pandemic, our dependence on estimates of collectible revenue,
potential litigation, changes in third-party reimbursement
processes, changes in law, global financial conditions and
recessionary risks, rising inflation and interest rates, supply
chain disruptions, systemic pressures in the banking sector,
including disruptions to credit markets, the Company's ability to
remediate its previously disclosed material weaknesses in internal
control over financial reporting, contributions from acquired
businesses or new business lines, products or services and other
risk factors disclosed in the Company’s most recent annual report
on Form 10-K and, to the extent applicable, quarterly reports on
Form 10-Q. Our strategic partnerships are subject to similar
factors, risks and uncertainties. All forward-looking statements
made in this press release speak only as of the date hereof. We do
not undertake any obligation to update any forward-looking
statements to reflect future events or circumstances, except as
required by law.
Additional information about InfuSystem Holdings, Inc. is
available at www.infusystem.com.
FINANCIAL TABLES
FOLLOW
INFUSYSTEM HOLDINGS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
(in thousands, except share and per
share data)
2023
2022
Net revenues
$
30,370
$
26,763
Cost of revenues
14,830
11,396
Gross profit
15,540
15,367
Selling, general and administrative
expenses:
Provision for doubtful accounts
114
47
Amortization of intangibles
248
710
Selling and marketing
3,224
3,319
General and administrative
12,061
11,816
Total selling, general and
administrative
15,647
15,892
Operating loss
(107
)
(525
)
Other expense:
Interest expense
(484
)
(277
)
Other income expense
(35
)
(28
)
Loss before income taxes
(626
)
(830
)
Benefit from income taxes
302
462
Net loss
$
(324
)
$
(368
)
Net loss per share:
Basic
$
(0.02
)
$
(0.02
)
Diluted
$
(0.02
)
$
(0.02
)
Weighted average shares outstanding:
Basic
20,853,018
20,609,372
Diluted
20,853,018
20,609,372
INFUSYSTEM HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
SEGMENT REPORTING
(UNAUDITED)
Three Months Ended
March 31,
Better/
(Worse)
(in thousands)
2023
2022
Net revenues:
ITS
$
18,774
$
16,641
$
2,133
DME Services (inclusive of inter-segment
revenues)
13,226
11,610
1,616
Less: elimination of inter-segment
revenues
(1,630
)
(1,488
)
(142
)
Total
30,370
26,763
3,607
Gross profit (inclusive of certain
inter-segment allocations) (a):
ITS
11,541
10,738
803
DME Services
3,999
4,629
(630
)
Total
$
15,540
$
15,367
$
173
(a)
Inter-segment allocations are for cleaning
and repair services performed on medical equipment.
INFUSYSTEM HOLDINGS, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
(UNAUDITED)
NET LOSS TO EBITDA, ADJUSTED EBITDA,
NET LOSS MARGIN AND ADJUSTED EBITDA MARGIN:
Three Months Ended
March 31,
(in thousands)
2023
2022
GAAP net loss
$
(324
)
$
(368
)
Adjustments:
Interest expense
484
277
Income tax benefit
(302
)
(462
)
Depreciation
2,955
2,706
Amortization
248
710
Non-GAAP EBITDA
$
3,061
$
2,863
Stock compensation costs
720
1,047
Medical equipment reserve and disposals
(1)
430
170
SOX readiness costs
—
40
Certain other non-recurring costs
24
22
Non-GAAP Adjusted EBITDA
$
4,235
$
4,142
GAAP Net Revenues
$
30,370
$
26,763
Net Loss Margin (2)
(1.1
)%
(1.4
)%
Non-GAAP Adjusted EBITDA Margin
(3)
13.9
%
15.5
%
(1)
Amounts represent a non-cash expense
recorded to adjust the reserve for missing medical equipment and/or
the disposal of medical equipment and is being added back due to
its similarity to depreciation.
(2)
Net Loss Margin is defined as GAAP Net
Loss as a percentage of GAAP Net Revenues.
(3)
Non-GAAP Adjusted EBITDA Margin is defined
as Non-GAAP Adjusted EBITDA as a percentage of GAAP Net
Revenues.
INFUSYSTEM HOLDINGS, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
As of
(in thousands, except par value and
share data)
March 31, 2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
256
$
165
Accounts receivable, net
18,266
16,871
Inventories
5,644
4,821
Other current assets
3,752
2,922
Total current assets
27,918
24,779
Medical equipment for sale or rental
3,042
2,790
Medical equipment in rental service, net
of accumulated depreciation
38,620
39,450
Property & equipment, net of
accumulated depreciation
4,391
4,385
Goodwill
3,710
3,710
Intangible assets, net
8,188
8,436
Operating lease right of use assets
4,295
4,168
Deferred income taxes
9,989
9,625
Derivative financial instruments
1,683
1,965
Other assets
425
80
Total assets
$
102,261
$
99,388
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
7,368
$
8,341
Current portion of long-term debt
—
—
Other current liabilities
6,562
6,126
Total current liabilities
13,930
14,467
Long-term debt, net of current portion
36,386
33,157
Operating lease liabilities, net of
current portion
3,684
3,761
Total liabilities
54,000
51,385
Stockholders’ equity:
Preferred stock, $0.0001 par value:
authorized 1,000,000 shares; none issued
—
—
Common stock, $0.0001 par value:
authorized 200,000,000 shares; 20,931,147 issued and outstanding as
of March 31, 2023 and 20,781,977 issued and outstanding as of
December 31, 2022
2
2
Additional paid-in capital
106,810
105,856
Accumulated other comprehensive income
1,270
1,489
Retained deficit
(59,821
)
(59,344
)
Total stockholders’ equity
48,261
48,003
Total liabilities and stockholders’
equity
$
102,261
$
99,388
INFUSYSTEM HOLDINGS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
Three Months Ended March
31,
(in
thousands)
2023
2022
OPERATING ACTIVITIES
Net loss
$
(324
)
$
(368
)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Provision for doubtful accounts
114
47
Depreciation
2,955
2,706
Loss on disposal of and reserve
adjustments for medical equipment
450
275
Gain on sale of medical equipment
(883
)
(228
)
Amortization of intangible assets
248
710
Amortization of deferred debt issuance
costs
18
18
Stock-based compensation
720
1,047
Deferred income taxes
(302
)
(462
)
Changes in assets -
(increase)/decrease:
Accounts receivable
(961
)
(1,278
)
Inventories
(823
)
61
Other current assets
(830
)
(50
)
Other assets
(846
)
(41
)
Changes in liabilities -
increase:
Accounts payable and other liabilities
313
1,641
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES
(151
)
4,078
INVESTING ACTIVITIES
Purchase of medical equipment
(3,968
)
(2,931
)
Purchase of property and equipment
(317
)
(178
)
Proceeds from sale of medical equipment,
property and equipment
1,234
966
NET CASH USED IN INVESTING
ACTIVITIES
(3,051
)
(2,143
)
FINANCING ACTIVITIES
Principal payments on long-term debt
(13,683
)
(10,696
)
Cash proceeds from long-term debt
16,894
12,529
Common stock repurchased as part of share
repurchase program
(153
)
(4,006
)
Common stock repurchased to satisfy
statutory withholding on employee stock-based compensation
plans
(324
)
(54
)
Cash proceeds from stock plans
559
511
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES
3,293
(1,716
)
Net change in cash and cash
equivalents
91
219
Cash and cash equivalents, beginning of
period
165
186
Cash and cash equivalents, end of
period
$
256
$
405
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504005471/en/
Joe Dorame, Joe Diaz & Robert Blum Lytham Partners, LLC
602-889-9700
InfuSystems (AMEX:INFU)
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