Record Net Revenues of $32.0 million
Representing 5% Growth from the Prior Year
Gross Profit increased 10% - Gross Margin of
51.5%, an increase of 2.3%
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, 2024.
2024 First Quarter
Overview:
- Net revenues totaled $32.0 million, an increase of 5% vs. prior
year.
- Patient Services net revenue was $18.6 million, a decrease of
1% vs. prior year.
- Device Solutions net revenue was $13.4 million, an increase of
16% vs. prior year.
- Gross profit was $16.5 million, an increase of 10% vs. prior
year.
- Gross margin was 51.5%, an increase of 2.3% vs. prior year.
- Patient Services gross margin was 66.0%, an increase of 4.5%
vs. prior year.
- Device Solutions gross margin was 31.3%, an increase of 1.9%
vs. prior year.
- Net loss was $1.1 million, or $(0.05) per diluted share vs.
prior year net loss of $0.3 million, or $(0.02) per diluted
share.
- Adjusted earnings before interest, income taxes, depreciation,
and amortization (“Adjusted EBITDA”) (non-GAAP) was $3.9 million, a
decrease of 9% vs. prior year.
- Company liquidity totaled $45.4 million, as of March 31,
2024.
Management Discussion
Richard DiIorio, Chief Executive Officer of InfuSystem, said,
“We have started the year as planned, focusing on operating
efficiencies, particularly in our biomedical services business
where during the first quarter we completed the initial onboarding
of devices under the master services agreement with a leading
global healthcare technology and diagnostic company. These efforts
are working to both improve our margins and prepare our network for
the incremental growth we see coming later this year.”
“Biomedical services is just the first of several areas of our
business seeing strong positive momentum. Oncology continues to win
market share, securing incremental revenue and contribution that
will contribute later this year. The pain management team is
preparing for the impact of the NOPAIN Act which is expected to be
implemented in 2025. Wound Care revenue related to Sanara’s
advanced wound care products is ramping, even as the new business
opportunities with our joint-venture partner continue to expand. We
remain confident in our outlook and guidance for 2024 as we
continue to build off the strong fundamentals of our business,”
concluded Mr. DiIorio.
2024 First Quarter Financial Review
Net revenues for the quarter ended March 31, 2024 ("2024 First
Quarter") were $32.0 million, an increase of $1.6 million, or 5%,
compared to $30.4 million for the quarter ended March 31, 2023
("2023 First Quarter"). The increase included higher net revenues
for the Device Solutions segment offset partially by lower revenue
for the Patient Services segment.
Patient Services net revenue of $18.6 million decreased $0.2
million, or 1.0%, during the 2024 First Quarter compared to the
2023 First Quarter. This decrease was primarily attributable to
decreased third-party payer collections on billings totaling
approximately $0.5 million and lower revenue from sales-type leases
of NPWT pumps, which decreased by $0.3 million, both of which had
tough comparisons to strong prior year amounts. These decreases
were partially offset by higher treatment volume in both Oncology
and Wound Care.
Device Solutions net revenue of $13.4 million increased $1.8
million, or 15.6%, during the 2024 First Quarter compared to the
2023 First Quarter. This increase included higher biomedical
services revenue, which increased by $1.0 million, or 31%, higher
sales of medical equipment, which increased by $0.6 million, or 40%
and higher rental equipment revenue, which increased by $0.3
million. These increases were partially offset by lower sales of
disposable medical supplies which decreased by $0.1 million. The
increased biomedical revenue was mainly attributable to increased
revenue from the master services agreement that was entered into in
April 2022.
Gross profit of $16.5 million for the 2024 First Quarter
increased $1.5 million, or 10.2%, from $15.0 million for the 2023
First Quarter. This increase was due to the increase in net
revenues and by a higher gross margin. Gross margin increased to
51.5% during the 2024 First Quarter compared to 49.2% during the
2023 First Quarter. This increase was due to increases in gross
margin for both the Patient Services and Device Solutions
segments.
Patient Services gross profit was $12.3 million during the 2024
First Quarter, representing an increase of $0.7 million, or 6.4%,
compared to the 2023 First Quarter. The improvement reflected a
higher gross margin, which increased from the prior year by 4.5% to
66.0%. The higher gross margin was the result of a change in
product mix favoring higher margin revenues. These improvements
were partially offset by lower third-party payer collections on
billings. The favorable gross margin mix was mainly related to the
decrease in revenue related to NPWT equipment leases, which have a
lower average gross margin than other Patient Services revenue
categories.
Device Solutions gross profit during the 2024 First Quarter was
$4.2 million, representing a increase of $0.8 million, or 23.2%,
compared to the 2023 First Quarter. This increase was due to the
higher net revenue and due to an increase in gross margin. The
Device Solutions gross margin was 31.3% during the 2024 First
Quarter, which was 1.9% higher than the 2023 First Quarter. This
increase was due to an improvement in the absorption of direct
expenses for the master services agreement launched during 2022 and
accelerated during 2023. During the 2023 First Quarter, the Company
experienced 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 master services agreement. Some
of the additional labor costs included 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 have begun to
absorb a portion of these increased labor costs resulting in the
improved gross margin. We estimate that further gross margin
improvements will be gained as cost reduction and productivity
improvement activities continue to be developed and deployed.
Selling and marketing expenses for the 2024 First Quarter were
$3.4 million, representing an increase of $0.2 million, or 4.7%,
compared to selling and marketing expenses for the 2023 First
Quarter. Selling and marketing expenses as a percentage of net
revenues was 10.6% for both the current and prior year periods.
G&A expenses for the 2024 First Quarter were $13.7 million,
an increase of $2.1 million, or 18.2%, from the 2023 First Quarter.
The increase included a one-time $0.6 million payment to a former
member of the board of directors related to a Cooperation Agreement
and a one-time payment to the Company's former audit firm for
services related to their consent to include their prior year audit
report in our 2023 annual report totaling $0.3 million. The
remaining increase of $1.2 million included timing-related higher
management incentive compensation and stock-based compensation
expenses of $0.4 million and $0.3 million, respectively, and other
increased expenses totaling $0.5 million. The other increases were
associated with revenue volume growth including the cost of
additional personnel, information technology and general business
expenses and included inflationary increases. G&A expenses as a
percentage of net revenues for the 2024 First Quarter increased to
42.8% compared to 38.1% for the 2023 First Quarter.
Net loss for the 2024 First Quarter was $1.1 million, or $(0.05)
per diluted share, compared to a net loss of $0.3 million, or
$(0.02) per diluted share for the 2023 First Quarter.
Adjusted EBITDA, a non-GAAP measure, for the 2024 First Quarter
was $3.9 million, or 12.1% of net revenue, and decreased by $0.4
million, or 8.9%, compared to Adjusted EBITDA for the 2023 First
Quarter of $4.2 million, or 13.9% of prior period net revenue.
Balance sheet, cash flows and liquidity
During the three-month period ended March 31, 2024, operating
cash flow provided cash totaling $0.4 million. During the same
period in 2023 operating cash flow was a use of cash totaling $0.2
million. The change reflected lower working capital increases
during 2024 offset partially by the increase in general and
administrative expenses. Capital expenditures, which include
purchases of medical devices, totaled $1.7 million during the
three-month period of 2024 which was $2.6 million, or 61%, lower
than the amount purchased during the same prior year period
reflecting slower revenue growth which was concentrated in business
lines that are less capital intensive.
As of March 31, 2024, available liquidity totaled $45.4 million
and consisted of $44.6 million in available borrowing capacity
under the Company's revolving line of credit plus cash and cash
equivalents of $0.8 million. Net debt, a non-GAAP measure
(calculated as total debt of $29.9 million less cash and cash
equivalents of $0.8 million) as of March 31, 2024 was $29.1 million
representing an increase of $0.2 million as compared to net debt of
$28.9 million as of December 31, 2023 (calculated as total debt of
$29.1 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 1.32 to 1.00 (calculated as net debt of $29.1 million
divided by Adjusted EBITDA of $22.0 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 2024 Guidance
InfuSystem is reaffirming its annual guidance for the full year
2024 with net revenue growth estimated to be in the
high-single-digit range and forecasting Adjusted EBITDA margin
(non-GAAP) to be in the high-teens, exceeding the Company's margin
of 17.8% in 2023. The Company intends to update its annual guidance
throughout the year.
The full year 2024 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 expenses related to planned
upgrades of the Company's information technology and business
applications. 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, 2023,
filed on April 10, 2024.
Conference Call
The Company will conduct a conference call for all interested
investors on Thursday, May 9, 2024, at 9:00 a.m. Eastern Time to
discuss its first quarter 2024 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 (800) 285-6670 or (713)
481-1320, 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 (888) 556-3470, replay access code 159874, through May 16,
2024.
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 Patient Services, providing the last-mile
solution for clinic-to-home healthcare where the continuing
treatment involves complex durable medical equipment and services.
The Patient Services segment is comprised of Oncology, Pain
Management and Wound Therapy businesses. The second platform,
Device Solutions, supports the Patient Services platform and
leverages strong service orientation to win incremental business
from its direct payer clients. The Device Solutions 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, 2024 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)
2024
2023
Net revenues
$
31,995
$
30,370
Cost of revenues
15,521
15,420
Gross profit
16,474
14,950
Selling, general and administrative
expenses:
Amortization of intangibles
248
248
Selling and marketing
3,376
3,224
General and administrative
13,695
11,585
Total selling, general and
administrative
17,319
15,057
Operating loss
(845
)
(107
)
Other expense:
Interest expense
(456
)
(484
)
Other income (expense)
3
(35
)
Loss before income taxes
(1,298
)
(626
)
Benefit from income taxes
186
302
Net loss
$
(1,112
)
$
(324
)
Net loss per share:
Basic
$
(0.05
)
$
(0.02
)
Diluted
$
(0.05
)
$
(0.02
)
Weighted average shares outstanding:
Basic
21,225,768
20,853,018
Diluted
21,225,768
20,853,018
INFUSYSTEM HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
SEGMENT REPORTING
(UNAUDITED)
Three Months Ended
March 31,
Better/
(Worse)
(in thousands)
2024
2023
Net revenues:
Patient Services
$
18,591
$
18,774
$
(183
)
Device Solutions
15,117
13,226
1,891
Less: elimination of inter-segment
revenues (a)
(1,713
)
(1,630
)
(83
)
Total Device Solutions
13,404
11,596
1,808
Total
31,995
30,370
1,625
Gross profit:
Patient Services
12,274
11,541
733
Device Solutions
4,200
3,409
791
Total
$
16,474
$
14,950
$
1,524
(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)
2024
2023
GAAP net loss
$
(1,112
)
$
(324
)
Adjustments:
Interest expense
456
484
Income tax benefit
(186
)
(302
)
Depreciation
2,652
2,955
Amortization
248
248
Non-GAAP EBITDA
$
2,058
$
3,061
Stock compensation costs
1,057
720
Medical equipment reserve and disposals
(1)
(104
)
430
Management reorganization/transition
costs
108
—
Cooperation Agreement payment and
associated legal expenses
649
—
Certain other non-recurring costs
89
24
Non-GAAP Adjusted EBITDA
$
3,857
$
4,235
GAAP Net Revenues
$
31,995
$
30,370
Net Loss Margin (2)
(3.5
)%
(1.1
)%
Non-GAAP Adjusted EBITDA Margin
(3)
12.1
%
13.9
%
(1)
Amounts represent a non-cash (recovery)
expense recorded to adjust the reserve for missing medical
equipment and is being (deducted) 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, 2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
822
$
231
Accounts receivable, net
20,543
19,830
Inventories, net
6,249
6,402
Other current assets
4,842
4,157
Total current assets
32,456
30,620
Medical equipment for sale or rental
4,084
3,049
Medical equipment in rental service, net
of accumulated depreciation
34,425
34,928
Property & equipment, net of
accumulated depreciation
4,231
4,321
Goodwill
3,710
3,710
Intangible assets, net
7,199
7,446
Operating lease right of use assets
6,206
6,703
Deferred income taxes
9,236
9,115
Derivative financial instruments
1,716
1,442
Other assets
1,587
1,581
Total assets
$
104,850
$
102,915
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
9,796
$
8,009
Other current liabilities
7,516
7,704
Total current liabilities
17,312
15,713
Long-term debt, net of current portion
29,931
29,101
Operating lease liabilities, net of
current portion
5,331
5,799
Total liabilities
52,574
50,613
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; 21,290,254 issued and outstanding as
of March 31, 2024 and 21,196,851 issued and outstanding as of
December 31, 2023
2
2
Additional paid-in capital
110,715
109,837
Accumulated other comprehensive income
1,296
1,088
Retained deficit
(59,737
)
(58,625
)
Total stockholders’ equity
52,276
52,302
Total liabilities and stockholders’
equity
$
104,850
$
102,915
INFUSYSTEM HOLDINGS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
Three Months Ended March
31,
(in
thousands)
2024
2023
OPERATING ACTIVITIES
Net loss
$
(1,112
)
$
(324
)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Provision for doubtful accounts
(130
)
114
Depreciation
2,652
2,955
(Gain) loss on disposal of and reserve
adjustments for medical equipment
(43
)
450
Gain on sale of medical equipment
(629
)
(883
)
Amortization of intangible assets
248
248
Amortization of deferred debt issuance
costs
19
18
Stock-based compensation
1,057
720
Deferred income taxes
(186
)
(302
)
Changes in assets -
(increase)/decrease:
Accounts receivable
(237
)
(961
)
Inventories
153
(823
)
Other current assets
(685
)
(830
)
Other assets
376
(846
)
Changes in liabilities -
(decrease)/increase:
Accounts payable and other liabilities
(1,106
)
313
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
377
(151
)
INVESTING ACTIVITIES
Purchase of medical equipment
(1,493
)
(3,968
)
Purchase of property and equipment
(182
)
(317
)
Proceeds from sale of medical equipment,
property and equipment
1,257
1,234
NET CASH USED IN INVESTING
ACTIVITIES
(418
)
(3,051
)
FINANCING ACTIVITIES
Principal payments on long-term debt
(15,258
)
(13,683
)
Cash proceeds from long-term debt
16,069
16,894
Debt issuance costs
—
—
Cash payment of contingent
consideration
—
—
Common stock repurchased as part of share
repurchase program
—
(153
)
Common stock repurchased to satisfy
statutory withholding on employee stock-based compensation
plans
(365
)
(324
)
Cash proceeds from exercise of options and
ESPP
186
559
NET CASH PROVIDED BY FINANCING
ACTIVITIES
632
3,293
Net change in cash and cash
equivalents
591
91
Cash and cash equivalents, beginning of
period
231
165
Cash and cash equivalents, end of
period
$
822
$
256
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240509823880/en/
Joe Dorame, Joe Diaz & Robert Blum Lytham Partners, LLC
602-889-9700
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