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InfuSystem Holdings, Inc. Reports First Quarter 2020 Financial Results

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ROCHESTER HILLS, Michigan, May 14, 2020 (GLOBE NEWSWIRE) -- InfuSystem Holdings, Inc. (NYSE: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, 2020.

First Quarter Highlights:

  • Net revenues for the first quarter of 2020 were $21.6 million, an increase of 18% from the same prior year period.
  • Gross profit for the first quarter of 2020 was $12.7 million, an increase of 22% from the same prior year period.
  • Gross margin for the first quarter of 2020 was 58.8%, an increase of 2.0% from the same period prior year period.
  • Net loss was $0.4 million, or $(0.02) per diluted share, an improvement of 57% compared to the net loss of $1.0 million, or $(0.05) per diluted share, during the same prior year period.
  • Adjusted earnings before interest, income taxes, depreciation, and amortization ("Adjusted EBITDA") for the first quarter of 2020 was $4.1 million, an increase of 30% from the same prior year period.

Management Discussion

Richard DiIorio, chief executive officer of InfuSystem, said, "During the COVID-19 pandemic, our priority continues to be the safety of our team and ensuring we provide uninterrupted service to our patients and customers. I believe it is a testament to the team's planning and execution that despite the COVID-19 lockdowns throughout the U.S., we generated record revenues and significant double-digit growth in Adjusted EBITDA, with these improvements primarily driven by record oncology billings. As the first quarter has historically been our slowest quarter of the year, we believe the improved performance reflects the strength of our operating model."

Mr. DiIorio continued, "In early March, as part of our business continuity plan, we increased our inventory and prepositioned pumps and supplies in preparation for the potential impact of COVID-19. These investments minimized potential supply chain disruption and facilitated continued growth in both platforms."

"Additionally, we are off to a good start with our launch into the Negative Pressure Wound Therapy market, which is estimated to include, in the home healthcare sector, approximately $600 million in annual revenue opportunity.  Given the current environment, we encountered a temporary delay in a full launch; however, we are building momentum and continue to see opportunities to gain market share in both the short-term and for years to come."

I am proud of our employees and their relentless commitment to providing industry leading service to our patients and customers, as we battle through the COVID-19 pandemic," Mr. DiIorio concluded.

2020 First Quarter Financial Review

Results of operations

Net revenues for the 2020 first quarter of $21.6 million increased $3.4 million, or 18%, over the prior year first quarter and included increases in both operating segments.  The ITS segment net revenues increased 25% to $14.1 million compared to the prior year first quarter. The increase in revenue was primarily attributable to growth in the Company's customer base due to favorable changes in the competitive environment for oncology services.  The DME Services segment net revenues increased 7.8% to $7.4 million, taking advantage of a growing customer base and higher quantities of infusion pumps available in the rental fleet that were acquired over the past year. 

Gross profit increased 22% to $12.7 million compared with the prior year first quarter.  The gross margin percentage was 58.8%, an increase of 2.0% over the prior year first quarter, mainly due to a shift in revenue mix favoring the higher margin ITS segment.  ITS gross margin percentage for the first quarter of 2020 increased to 73.2% compared to the prior year at 69.7%, due to a favorable payer mix. DME Services gross margin for the first quarter of 2020 decreased to 31.2% compared to the prior year at 35.8%, related to a shift in revenue mix favoring lower margin equipment sales.

Selling, general and administrative expenses of $12.6 million during the 2020 first quarter increased by $1.9 million, or 17%, consisting primarily of an increase in the provision for doubtful accounts of $0.4 million and an increase in general and administrative expenses of $1.5 million.  The provision for doubtful accounts increase was attributable to slower customer collections, while the general and administrative expenses increase included costs associated with the transition of our chief financial officer and other personnel changes totaling $0.4 million.

Net loss for the first quarter of 2020 was $0.4 million, or $(0.02) per diluted share, an improvement of $0.6 million as compared to a net loss of $1.0 million, or $(0.05) per diluted share for the prior year first quarter. 

Adjusted EBITDA, a non-GAAP measure, was $4.1 million, or 18.8% of net revenue, and increased by $0.9 million or 30% over Adjusted EBITDA for the prior year quarter of $3.1 million, or 17.1% of prior year net revenue.  

Effect of Coronavirus (COVID-19)

During the 2020 first quarter, we did not incur significant additional unplanned expenses, experience disruptions in normal operations, or see evidence of weakness in our net revenues associated with our COVID-19 internal preparedness initiatives or from external impacts related to COVID-19.  These trends have continued into the second quarter except for our pain management service offering which is focused on elective surgery patients.  In response to the COVID-19, most elective surgeries have been delayed.  Our net revenues for pain management, a smaller portion of our total net revenues, has significantly decreased as a result of these delays.  However, also in response to COVID-19, market demand for infusion pumps and supplies has increased and net revenues for our DME Services segment has more than offset lower pain management net revenues.

Balance sheet and liquidity

While COVID-19 has not resulted in overall lower net revenues or higher expenses, our preparedness activities and higher volumes in the DME Services segment have resulted in higher use of cash to fund increases in working capital and an acceleration in our planned medical equipment capital expenditures. These include higher inventories associated with an increase in our safety stock of medical supplies, particularly for our oncology business, totaling approximately $1.3 million with an additional $1.7 million on order at the end of the quarter.  Also, in the 2020 first quarter we purchased approximately $3.0 million in medical equipment over our planned amounts with an additional $3.0 million placed on order with expected delivery during the second quarter.

As of March 31, 2020, we had $14.5 million in available liquidity, including cash and undrawn amounts under our revolving credit line and our capital equipment bank facility as compared to $20.9 million at the beginning of the quarter, a reduction of $6.1 million.  The decrease was partially due to our COVID-19 preparedness activities, amortization of our term debt including unusual timing of our fourth quarter 2019 payment and other non-COVID-19 related working capital increases.  We estimate that our available liquidity will decrease further during the second quarter and then grow during the second half of the year.

Conference Call

The Company will also conduct a conference call for all interested investors on Thursday, May 14, 2020, at 9:00 a.m. Eastern Time to discuss its first quarter 2020 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 10143830, through May 21, 2020.

Non-GAAP Measures

This press release contains information prepared in conformity with GAAP as well as non-GAAP financial information. 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 items that are not part of the normal course of business and that the Company's management does not believe will have similar comparable year-over-year items or for non-operating items. A reconciliation of those measures to the most directly comparable GAAP measures is provided below.

About InfuSystem Holdings, Inc.

InfuSystem Holdings, Inc. is a leading provider of infusion pumps and related durable medical equipment support services to hospitals, clinics and other alternate site healthcare providers. Headquartered in Rochester Hills, Michigan, the Company delivers local, field-based customer support and also operates Centers of Excellence in Michigan, Kansas, California, Massachusetts and Ontario, Canada. The Company's stock is traded on the NYSE American under the symbol INFU.

Forward-Looking Statements

The financial results in this press release reflect preliminary results, which are not final until the Company's Form 10-Q for the quarter ended March 31, 2020 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, business plans, objectives and prospects, future operating or financial performance. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "should," "plan," "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 dependence on estimates of collectible revenue, potential litigation, changes in third-party reimbursement processes, changes in law 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. 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.


INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

  Three Months Ended
(in thousands, except share and per share data) March 31
    2020       2019  
       
Net revenues $ 21,553     $ 18,193  
Cost of revenues   8,890       7,852  
Gross profit   12,663       10,341  
       
Selling, general and administrative expenses:      
Provision for doubtful accounts   285       (98 )
Amortization of intangibles   1,075       1,125  
Selling and marketing   2,618       2,602  
General and administrative   8,652       7,132  
Total selling, general and administrative   12,630       10,761  
       
Operating income (loss)   33       (420 )
Other expense:      
Interest expense   (403 )     (460 )
Other expense   (19 )     (21 )
       
Loss before income taxes   (389 )     (901 )
Provision for income taxes   (29 )     (59 )
Net loss $ (418 )   $ (960 )
       
Net loss per share:      
Basic and diluted $ (0.02 )   $ (0.05 )
Weighted average shares outstanding:      
Basic and diluted   19,918,298       19,580,049  
       



INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SEGMENT REPORTING
(UNAUDITED)

    Three Months Ended    
    March 31   Better/
(in thousands)     2020       2019     (Worse)
             
Net revenues:            
ITS   $ 14,126     $ 11,306     $ 2,820  
DME Services     7,427       6,887       540  
Total     21,553       18,193       3,360  
Cost of revenues:            
ITS     3,782       3,430       (352 )
DME Services     5,108       4,422       (686 )
Total     8,890       7,852       (1,038 )
Gross profit:            
ITS     10,344       7,876       2,468  
DME Services     2,319       2,465       (146 )
Total     12,663       10,341       2,322  
             


INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(UNAUDITED)

NET LOSS TO ADJUSTED EBITDA:        
    Three Months Ended
    March 31
(in thousands)     2020       2019  
         
GAAP net loss     (418 )     (960 )
Adjustments:        
Interest expense     403       460  
Income tax provision     29       59  
Depreciation     2,328       1,780  
Amortization     1,075       1,125  
         
Non-GAAP EBITDA   $ 3,417     $ 2,464  
         
Stock compensation costs     206       246  
Office move expenses     17       -  
Early termination fees for capital leases     -       190  
Exited facility costs     -       6  
Management reorganization/transition costs     385       45  
Fees to integrate business of other provider     -       47  
Certain other non-recurring costs     28       121  
         
Non-GAAP Adjusted EBITDA   $ 4,053     $ 3,119  
         
GAAP Net Revenues   $ 21,553     $ 18,193  
Non-GAAP Adjusted EBITDA Margin     18.8%       17.1%  

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)

    March 31,   December 31,
(in thousands, except share and per share data)     2020       2019  
         
ASSETS        
Current assets:        
Cash and cash equivalents   $ 305     $ 2,647  
Accounts receivable, net     13,985       12,097  
Inventories     4,232       2,899  
Other current assets     2,002       1,662  
Total current assets     20,524       19,305  
Medical equipment for sale or rental     3,040       1,306  
Medical equipment in rental service, net of accumulated depreciation     34,806       33,225  
Property & equipment, net of accumulated depreciation     4,382       4,037  
Intangible assets, net     14,388       15,463  
Operating lease right of use assets     5,380       5,733  
Other assets     158       155  
Total assets   $ 82,678     $ 79,224  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Accounts payable   $ 12,795     $ 7,962  
Current portion of long-term debt     7,295       8,082  
Other current liabilities     3,708       5,803  
Total current liabilities     23,798       21,847  
Long-term debt, net of current portion     32,325       30,295  
Deferred income taxes     113       104  
Operating lease liabilities, net of current portion     4,422       4,644  
         
Total liabilities   $ 60,658     $ 56,890  
         
Stockholders' equity:        
Preferred stock, $.0001 par value: authorized 1,000,000 shares; none issued     -       -  
Common stock, $.0001 par value: authorized 200,000,000 shares; issued and outstanding 23,543,414 and 20,024,925, as of March 31, 2020, respectively, and issued and outstanding 23,400,625 and 19,882,136, as of December 31, 2019, respectively.     2       2  
Additional paid-in capital     83,803       83,699  
Retained deficit     (61,785 )     (61,367 )
Total stockholders' equity     22,020       22,334  
Total liabilities and stockholders' equity   $ 82,678     $ 79,224  
         


INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

  Three Months Ended
  March 31
(in thousands)              
2020   2019
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 557     $ 1,269  
       
INVESTING ACTIVITIES      
Purchase of medical equipment and property   (4,536 )     (3,535 )
Proceeds from sale of medical equipment and property   500       764  
NET CASH USED IN INVESTING ACTIVITIES   (4,036 )     (2,771 )
       
FINANCING ACTIVITIES      
Principal payments on term loans, equipment line, revolving credit facility and other financing   (9,229 )     (929 )
Cash proceeds from 2019 equipment line and revolving credit facility   10,468       -  
Debt issuance costs   -       (3 )
Common stock repurchased to satisfy statutory withholding on employee stock-based compensation plans   (426 )     (37 )
Cash proceeds - stock plans   74       53  
Common stock - issued   250       -  
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   1,137       (916 )
Net change in cash and cash equivalents   (2,342 )     (2,418 )
Cash and cash equivalents, beginning of period   2,647       4,318  
Cash and cash equivalents, end of period $ 305     $ 1,900  
       

CONTACT:
Joe Dorame, Joe Diaz & Robert Blum
Lytham Partners, LLC
602-889-9700

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