Press Releases

InfuSystem Holdings, Inc. Reports $13.1 Million of Revenues and $3.8 Million of Adjusted EBITDA for the Second Quarter of 2011

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  • Revenues for the quarter increased 25% year over year
  • Adjusted EBITDA for the quarter increased to $3.8 million
  • Fifteenth straight quarter of year over year growth

MADISON HEIGHTS, Mich., Aug. 11, 2011 (GLOBE NEWSWIRE) -- InfuSystem Holdings, Inc. (NYSE Amex:INFU), the leading provider of infusion pumps and related services, today reported results for the second quarter ended June 30, 2011.

Revenues for the second quarter of fiscal 2011 were $13.1 million compared with $10.5 million for the prior year, up 25 percent. Adjusted EBITDA for the second quarter of fiscal 2011 was $3.8 million, versus $3.2 million a year ago.

Mr. Sean McDevitt, Chief Executive Officer and Chairman, commented, "We performed well against many of our internal business metrics this past quarter to achieve our growth of 25% year over year. On a quarter over quarter basis, we were slightly below our targeted growth due to the unanticipated impact of the nationwide generic oncology drug shortage. Specifically, we experienced lower growth this past quarter primarily due to the prolonged shortage of Leucovorin which meaningfully limited oncologists' ability to prescribe our pumps. Drug shortages that affect InfuSystem are not uncommon, and are typically brief and minor in nature. It has been more than ten years since a shortage has had a meaningful impact on our business and, based on manufacturers' estimates of when supplies will become widely available, we expect the impacts of the current shortages on InfuSystem to work themselves out by late Q3/early Q4. If not for the Leucovorin shortage, we believe that we would have exceeded our internal revenue growth targets."

Mr. McDevitt continued, "I am very encouraged that in every respect, our aggressive growth in the number of significant new account wins has helped to offset the impact of the Leucovorin at individual oncology practice sites. Looking at the number of practices and the volume of pumps we have deployed to generate revenue, we remain very optimistic about our future prospects."

"Also, while sharing with our stockholders frustration with the headwinds in the markets and our stock price," Mr. McDevitt continued, "InfuSystem remains committed to its core vision of becoming a significant leader in the infusion and pre-owned medical equipment markets, increasing revenue, maintaining attractive EBITDA margins, generating substantial free cash flow, paying down debt, and thus improving our overall financial profile."

"Lastly, while we would have hoped to have announced another acquisition by this time, we remain extremely disciplined in our approach and have made considerable strides in acquisitions discussions that would leverage our penetration in our markets, are synergistic, diversify our revenue streams, and maintain our historical EBITDA margins. Our goal remains to achieve top line revenues of several hundred million dollars in our target markets over the next several years and additive, synergistic acquisitions will be a key part of that growth," Mr. McDevitt concluded.

Revenues for the second quarter ending June 30, 2011 were $13.1 million, up 25 percent from $10.5 million in the prior year period. The increase in revenues is related to obtaining business at new customer facilities and expansion into new product lines associated with our acquisitions.

Gross profit for the three months ending June 30, 2011 was $9.0 million, up 20 percent from $7.5 million in the prior year period. Gross margins were 68 percent of revenues for the latest year compared with 72 percent in the prior year period. The decrease in the gross margin percentage was primarily related to a higher mix of pump sales, services, and rentals as compared to third party billings.

Selling, general and administrative expenses (SG&A) for the second quarter of 2011 were $8.2 million, excluding a goodwill and intangible assets impairment charge of $43.7 million, 5 percent higher than the prior period's $7.8 million. The increase was due to the added expenses associated with the acquired businesses, investments made in the sales organization, and amortization of intangibles which was partially offset by the decreases in stock based compensation, acquisition related expenses, and bad debt expenses. As a percent of revenues, SG&A was 62 percent compared to 74 percent for the prior period.

As of June 30, 2011, the company determined that there may be market conditions relating to the stock price, elimination of warrants, and business forecasts to conclude that there may be impairment. Based upon the preliminary impairment analysis performed as of June 30, 2011, the company concluded there was an impairment of goodwill and intangible assets that resulted in a Non-Cash charge of $43.7 million. The majority of this goodwill impairment charge was related to the original purchase of InfuSystem in 2007.   Although the analysis is preliminary and will need to be finalized, we do not anticipate further adjustments to this non-cash item.

Adjusted EBITDA was $3.8 million for the second quarter of 2011 versus $3.2 million in the prior period. The company utilizes Adjusted EBITDA as a means to measure its operating performance. A reconciliation of Adjusted EBITDA, a non-GAAP measure, to net income can be found in the appendix.

Other loss for the second quarter of 2011 was $0.5 million versus $0.3 million other loss in the prior period, reflecting reduced interest expense and no gain on extinguishment of long term debt as incurred in the prior period. The provision for income taxes was a benefit of $15.8 million for the quarter compared to a benefit of $717 thousand in the prior period. As a result, the second quarter net loss was $27.6 million, equal to $1.31 per diluted share, versus a $144 thousand net income, equal to $0.01 per diluted share in the prior period.

Financial Condition

Net cash provided by operations for the six months ending June 30, 2011 was $2.9 million, compared to $3.4 million for the prior period. Principle and interest payments of $1.6 million were paid during the quarter and the company ended the quarter with a cash balance of $1.7 million with $25.1 million in long-term debt, net of current.

Conference Call

InfuSystem Holdings, Inc. will host a conference call to share the results of its second quarter fiscal 2011 results on Thursday, August 11, at 10:00 a.m. Eastern Time. Chairman and Chief Executive Officer Sean McDevitt and Jim Froisland, Chief Financial Officer, will discuss the company's financial performance and answer questions from the financial community.

The company invites interested investors to listen to the presentation, which will be carried live on the company's Web site: www.infusystem.com in the Investors section. To participate by telephone, the dial-in number is 800-447-0521 with confirmation number 30085852. Those who wish to listen should either dial in or go to the web site several minutes prior to the call to register. A replay of the call can be accessed by dialing 888-843-7419, passcode 30085852#. An online archive of the conference call will remain on the company's website for the following 30 days.

About InfuSystem Holdings, Inc.

InfuSystem Holdings, Inc. is the leading provider of infusion pumps and related services to hospitals, oncology practices and other alternate site healthcare providers.  Headquartered in Madison Heights, Michigan, the company delivers local, field-based customer support, and also operates Centers of Excellence in Michigan, Kansas, California, and Ontario, Canada. The company's stock is traded on the NYSE Amex under the symbol INFU.

Forward-Looking Statements

Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially form those predicted by such forward-looking statements. These risks and uncertainties include general economic conditions, as well as other risks, detailed from time to time in the company's publicly filed documents.

Additional information about InfuSystem Holdings, Inc. is available at www.infusystem.com.

FINANCIAL TABLES FOLLOW

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
     
  June 30, December 31,
(in thousands, except share data) 2011 2010
  (Unaudited)  
ASSETS    
Current Assets:    
Cash and cash equivalents  $ 1,723  $ 5,014
Accounts receivable, less allowance for doubtful accounts of $1,812 and $1,796 at June 30, 2011 and December 31, 2010, respectively  6,727  6,679
Inventory  1,406  1,699
Prepaid expenses and other current assets  976  750
Deferred income taxes  1,209  1,147
     
Total Current Assets  12,041  15,289
Property & equipment, net  16,934  16,672
Deferred debt issuance costs, net  536  658
Goodwill  21,824  64,092
Intangible assets, net  31,469  33,252
Deferred income taxes  10,243  -- 
Other assets  851  401
     
Total Assets  $ 93,898  $ 130,364
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current Liabilities:    
Accounts payable  $ 1,716  $ 2,016
Other current liabilities  2,579  4,631
Derivative liabilities  195  183
Current portion of long-term debt  6,419  5,551
     
Total Current Liabilities  10,909  12,381
Long-term debt, net of current portion  25,099  26,646
Deferred income taxes  --   5,788
Other liabilities  403  406
     
Total Liabilities  $ 36,411  $ 45,221
     
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 21,185,028 and 21,163,337, respectively; outstanding 21,052,269 and 21,117,516, respectively  2  2
Additional paid-in capital  87,103  87,004
Accumulated other comprehensive loss  (98)  (64)
Retained deficit  (29,520)  (1,799)
     
Total Stockholders' Equity  57,487  85,143
     
Total Liabilities and Stockholders' Equity  $ 93,898  $ 130,364
INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS 
(UNAUDITED) 
         
  Three Months Ended Six Months Ended
  June 30 June 30
(in thousands, except share data) 2011 2010 2011 2010
         
Net revenues  $ 13,133  $ 10,487  $ 26,090  $ 21,421
         
Cost of revenues:        
Cost of revenues — Product, service and supply costs  2,174  1,719  4,316  3,394
Cost of revenues — Pump depreciation, sales and disposals   1,971  1,248  3,732  2,387
 Gross profit  8,988  7,520  18,042  15,640
         
Selling, general and administrative expenses:        
Provision for doubtful accounts  927  1,076  2,149  2,469
Amortization of intangibles  663  534  1,309  991
Asset impairment charges  43,668  --  43,668  --
Selling and marketing  2,326  1,595  4,769  3,036
General and administrative  4,251  4,569  8,767  7,905
         
Total sales, general and administrative:  51,835  7,774  60,662  14,401
         
Operating (loss) income   (42,847)  (254)  (42,620)  1,239
         
Other loss:        
Gain (loss) on derivatives  83  (71)  83  (460)
Interest expense  (564)  (1,366)  (1,105)  (2,172)
Gain on extinguishment of long term debt  --  1,118  --  1,118
Other income  2  --  --  --
         
Total other loss  (479)  (319)  (1,022)  (1,514)
         
(Loss) before income taxes  (43,326)  (573)  (43,642)  (275)
Income tax benefit  15,776  717  15,920  407
         
Net (loss) income   $ (27,550)  $ 144  $ (27,722)  $ 132
         
Net (loss) income per share:        
Basic  $ (1.31)  $ 0.01  $ (1.32)  $ 0.01
Diluted  $ (1.31)  $ 0.01  $ (1.32)  $ 0.01
Weighted average shares outstanding:        
Basic  21,059,292  18,566,748  21,080,683  19,353,638
Diluted  21,059,292  18,943,962  21,080,683  19,922,468
INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(UNAUDITED) 
     
  Six Months Ended
  June 30
(in thousands) 2011 2010
     
OPERATING ACTIVITIES    
Net (loss) income   $ (27,722)  $ 132
Adjustments to reconcile net (loss) income to net cash provided by operating activities:  
(Gain) loss on derivative liabilities  (83)  460
Gain on extinguishment of long-term debt  --  (1,118)
Provision for doubtful accounts  2,149  2,469
Depreciation  3,167  2,380
Loss on disposal of pumps  794  179
Amortization of intangible assets  1,309  991
Asset impairment charges  43,668  --
Amortization of deferred debt issuance costs  122  834
Stock-based compensation  502  997
Deferred income taxes  (16,031)  (814)
Changes in assets and liabilities, exclusive of effects of acquisitions:    
(Increase) in accounts receivable, net of provision  (2,197)  (2,682)
Decrease (increase) in other current assets  67  (404)
(Increase) in other assets  (166)  (860)
(Decrease) increase in accounts payable and other liabilities  (2,651)  1,165
Decrease in derivative liabilities from termination of interest rate swap  --  (365)
     
NET CASH PROVIDED BY OPERATING ACTIVITIES  2,928  3,364
     
INVESTING ACTIVITIES    
Capital expenditures  (2,383)  (343)
Acquisition of intangible assets  (942)  (400)
Cash paid for acquisition, net of cash acquired  --  (16,418)
     
NET CASH (USED IN) INVESTING ACTIVITIES  (3,325)  (17,161)
     
FINANCING ACTIVITIES    
Principal payments on term loan  (2,061)  (20,568)
Cash proceeds from term loan  --  30,000
Common stock repurchased to satisfy statutory witholding on stock based compensation  --  (38)
Treasury shares repurchased  (248)  --
Principal payments on capital lease obligations  (585)  (331)
     
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES  (2,894)  9,063
     
Net change in cash and cash equivalents  (3,291)  (4,734)
Cash and cash equivalents, beginning of period  5,014  7,750
     
Cash and cash equivalents, end of period  $ 1,723  $ 3,016
INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
GAAP RECONCILIATION 
(UNAUDITED)
         
  Three Months Ended Six Months Ended
  June 30 June 30
(in thousands, except share data) 2011 2010 2011 2010
         
Net (loss) income   $ (27,550)  $ 135  $ (27,722)  $ 123
Adjustments:        
Interest expense  564  1,366  1,105  2,172
Income tax (benefit) expense   (15,776)  (708)  (15,920)  (398)
Depreciation  1,609  1,209  3,167  2,380
Amortization  663  534  1,309  991
EBITDA  (40,490)  2,536  (38,061)  5,268
Adjustments:        
Asset impairment charges  43,668  --  43,668  --
(Gain) loss on derivatives  (83)  71  (83)  460
Stock based compensation  254  897  502  997
Sales and other incentives  308  --  699  --
Acquisition related expenses  62  785  247  785
Severance  65  --  65  --
Gain on debt extinguishment  --  (1,118)  --  (1,118)
Adjusted EBITDA  $ 3,784  $ 3,171  $ 7,037  $ 6,392
CONTACT:  INVESTOR CONTACT:
          Pat LaVecchia
          Vice Chairman
          Info@InfuSystem.com
          800-962-9656
Source: InfuSystem, Inc.