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InfuSystem Holdings, Inc. Reports $14.1 Million of Revenues for the Second Quarter of 2012; Announces Annualized Cost Savings in Excess of $1 million

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MADISON HEIGHTS, Mich., Aug. 7, 2012 /PRNewswire/ -- InfuSystem Holdings, Inc. (NYSE MKT: INFU) ("InfuSystem" or the "Company"), the leading national provider of infusion pumps and related services for the healthcare industry in the United States, today reported revenues for the quarter ending June 30, 2012, were $14.1 million, up 7% from $13.1 million in the second quarter of 2011.  Total revenues for the six months ended June 30, 2012, were $28.4 million, a 9% improvement from $26.1 million in the 2011 period. 

Gross profit for the three months ending June 30, 2012, was $10.3 million, up 14% from $9.0 million in second quarter of last year.  Gross profit for the first six months of 2012 was $20.7 million, an increase of 15% compared to $18.0 million for the first six months of 2011. 

The second quarter net loss was $0.8 million, equal to a $0.04 loss per diluted share, compared to the $27.9 million net loss, equal to a $1.32 loss per diluted share in the prior period.  For the six months ended June 30, 2012, the Company's net loss was $1.7 million or $0.08 per diluted share, versus a net loss of $28.1 million or $1.33 per diluted share, for the year-ago period.  One-time net expenses of $1.7 million and $3.2 million for the three and six months ended June 30, 2012, hampered these results related, respectively, to the Settlement Agreement and Fifth Amendment, including debt extinguishment, as discussed below. 

The Company achieved a number of annualized cost-savings actions totaling in excess of $1 million in the second quarter, which also saw the installation of a new board and executive management team. 

"We have made important financial and operational progress," said Interim Chief Executive Officer Dilip Singh.  "Eliminating unnecessary management positions and reducing board cash compensation contributed significantly to the $1 million-plus in annual savings.  We expect to see additional cost-saving initiatives introduced in the third quarter.  At the same time, our management team and employees are focused on revenue growth." 

Mr. Singh added that these initial improvements represent the beginning of a broad strategic effort to deliver long-term growth and profitability.  "We will continue to concentrate our efforts on maximizing cash generation with EBITDA for sustained financial stability, while growing market share in our core markets.  Organic growth prospects remain strong.  Feedback from our customers, channels, and partners has been very positive.  They appreciate our commitment to further enhance customer service solutions that make their jobs easier."

Operating Results
The 7% increase in revenues compared to the second quarter of 2011 and the 9% increase for the six months ended June 30, 2012, are primarily related to the addition of new customers with larger patient bases, increased penetration into our existing customer accounts, and the cessation of the 2011 oncology drug shortage affecting certain products.

The $10.3 million in gross profit recorded in the second quarter of 2012 represented 73% of revenues for the current period compared with 68% in the prior year's period. For the first half of 2012, the $20.7 million in gross profit represented 73% of revenues compared to 69% for the same period last year.  This increase in the gross margin percentage was primarily related to lower pump depreciation and a higher mix of pump rentals as compared to pump sales and services.

Selling, general and administrative expenses ("SG&A") for the second quarter of fiscal 2012 were $10.2 million, significantly lower than the prior period's $52.4 million.  For the six months ended June 30, 2012, SG&A was $21.2 million compared with $61.2 million for the same period last year.  The drop in SG&A is due to prior years' numbers contained a charge for asset impairment of $44.2 million.  Excluding non-cash impairment charges, SG&A increased $2.1 million for the quarter and $4.2 million for the six months ended June 30, 2012. 

For the quarter, the major factors contributing to the increase in SG&A were expenses of $1.4 million related primarily to legal fees and $1.0 million of severance costs associated with the Settlement Agreement.  SG&A experienced an increase primarily, compared to the prior periods, in selling compensation and travel costs and an increase in our finance and accounting staffs.  These SG&A costs were partially offset by the reversal of previously recognized stock compensation expense of $1.3 million associated with the Settlement Agreement.  With regard to the first half of 2012, the increase in SG&A related primarily to $2.3 million in legal expenses, the aforementioned $1.0 million in severance costs and $0.6 million in retention payments to key employees – net of the aforementioned $1.3 million reversal of stock compensation expense. The Settlement Agreement is described in the 8-K the Company filed on April 26.  Additional increases in SG&A relate mainly to an increase in selling costs due to higher retention and travel costs.

During the second quarter of fiscal 2012, the Company entered into the Fifth Amendment to its Credit Facility, which resulted in one-time charge for an extinguishment of debt.  Previously capitalized debt issuance costs of $0.3 million and $0.3 million of certain payments made to secure the Fifth Amendment are shown as an extinguishment of debt for the period.

EBITDA for the second quarter of fiscal 2012 was $1.6 million compared with $3.2 million a year ago, excluding asset impairment charges.  For the six months ended June 30, 2012, EBITDA was $3.2 million, compared with $5.6 million for the same period in 2011, excluding asset impairment charges.  Excluding the one-time fees associated with the Settlement Agreement and the Fifth Amendment described above, EBITDA for 2012 would have been $3.3 million and $6.4 million, respectively.  A Non-GAAP reconciliation from net income can be found in the appendix.

Financial Condition
Net cash provided by operations for the six months ended June 30, 2012, was $3.7 million, compared to $2.9 million in the prior-year period.  The latest quarter's results reflected increased professional fees associated with the concerned stockholder group and employee compensation costs.  In addition, the Company reported capital expenditures of $1.7 million, a decrease of $0.7 million compared to the prior-year period.  The Company had available $3.0 million on its $5.0 million revolving credit facility.  During the quarter, the Company reduced its draw under its revolving credit facility by $0.6 million in addition to the normal quarterly payment on its $19.6 million in long-term debt.  The Company ended the quarter with $0.8 million of cash compared to none in the previous quarter.

Conference Call
The Company will host a conference call to share the results of its second quarter fiscal 2012 results on Wednesday, August 8, at 9:00 a.m. Eastern Time. Dilip Singh, Interim Chief Executive Officer, and Jonathan P. Foster, 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 by telephone.  To participate, the dial-in number is (888)-895-5271 with confirmation number 33012557.  Those who wish to listen should dial in five minutes prior to the call to register.  An online audio replay of the conference call will be available 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 MKT 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 from 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.

INVESTOR CONTACT:
Jonathan P. Foster
Chief Financial Officer
Info@InfuSystem.com
800-962-9656

FINANCIAL TABLES FOLLOW


 

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

     
 

June 30,

December 31,

(in thousands, except share data)

2012

2011

 

(Unaudited)

 

ASSETS

   

Current Assets:

   

           Cash and cash equivalents

$                    804

$                799

           Accounts receivable, less allowance for doubtful accounts of $1,867 and 

7,752

7,350

                 $1,773 at June 30, 2012 and December 31, 2011, respectively

   

           Accounts receivable - related party

2

98

           Inventory

3,885

3,217

           Prepaid expenses and other current assets

746

934

           Deferred income taxes

646

682

     

                      Total Current Assets

13,835

13,080

Property & equipment, net

14,440

15,764

Deferred debt issuance costs, net

194

421

Intangible assets, net

26,924

28,221

Deferred income taxes

18,872

18,187

Other assets

458

590

     

           Total Assets

$               74,723

$           76,263

     

LIABILITIES AND STOCKHOLDERS' EQUITY

   

Current Liabilities:

   

           Accounts payable

$                 4,778

$             4,004

           Accounts payable - related party

-

59

           Derivative liabilities

236

258

           Other current liabilities

2,742

2,235

           Current portion of long-term debt

6,256

6,576

     

                      Total Current Liabilities

14,012

13,132

Revolving credit facility

1,940

-

Long-term debt, net of current portion

19,570

22,551

Other liabilities

-

415

     

          Total Liabilities

$               35,522

$           36,098

     

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 21,432,161 

2

2

    and 21,330,235, respectively; outstanding 21,234,471,and 21,132,545, respectively

   

Additional paid-in capital

88,184

87,541

Accumulated other comprehensive loss

-

(136)

Accumulated deficit

(48,985)

(47,242)

     

Total Stockholders' Equity

39,201

40,165

     

          Total Liabilities and Stockholders' Equity

$               74,723

$           76,263


 

 

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)

       
 

Three Months Ended

 

Six Months Ended

 

June 30

 

June 30

(in thousands, except share data)

2012

 

2011

 

2012

 

2011

Net revenues: 

             

Rentals

$        12,973

 

$        11,467

 

$        25,878

 

$        23,019

Product Sales

1,099

 

1,666

 

2,542

 

3,071

Net revenues

14,072

 

13,133

 

28,420

 

26,090

               

Cost of revenues:

             

Cost of revenues — Product, service and supply costs 

2,148

 

2,174

 

4,383

 

4,316

Cost of revenues — Pump depreciation and disposals 

1,650

 

1,971

 

3,327

 

3,732

               

Gross profit 

10,274

 

8,988

 

20,710

 

18,042

               

Selling, general and administrative expenses:

             

Provision for doubtful accounts 

893

 

927

 

2,140

 

2,149

Amortization of intangibles 

674

 

663

 

1,358

 

1,309

Asset impairment charges 

-

 

44,213

 

-

 

44,213

Selling and marketing 

2,541

 

2,326

 

5,286

 

4,769

General and administrative 

6,137

 

4,251

 

12,410

 

8,767

               

Total sales, general and administrative

10,245

 

52,380

 

21,194

 

61,207

               

Operating income (loss)

29

 

(43,392)

 

(484)

 

(43,165)

Other income (expense):

             

Gain on derivatives 

-

 

83

 

-

 

83

Interest expense 

(663)

 

(564)

 

(1,264)

 

(1,105)

Loss on extinguishment of long term debt 

(552)

 

-

 

(552)

 

-

Other income 

-

 

2

 

2

 

-

               

Total other loss 

(1,215)

 

(479)

 

(1,814)

 

(1,022)

               

Loss before income taxes 

(1,186)

 

(43,871)

 

(2,298)

 

(44,187)

Income tax benefit 

358

 

15,985

 

555

 

16,131

Net loss

$           (828)

 

$      (27,886)

 

$        (1,743)

 

$      (28,056)

               

Net loss per share:

             

Basic 

(0.04)

 

(1.32)

 

(0.08)

 

(1.33)

Diluted 

(0.04)

 

(1.32)

 

(0.08)

 

(1.33)

Weighted average shares outstanding:

             

Basic 

21,196,085

 

21,059,292

 

21,164,315

 

21,080,683

Diluted 

21,196,085

 

21,059,292

 

21,164,315

 

21,080,683

               

Comprehensive Loss

             

Net loss

$           (828)

 

$      (27,886)

 

$        (1,743)

 

$      (28,056)

Unrealized (loss) gain on interest rate swap, net of taxes

-

 

(81)

 

1

 

(34)

Reclassification of hedging losses, net of taxes

(111)

 

-

 

(111)

 

-

Comprehensive Loss

$           (939)

 

$      (27,967)

 

$        (1,853)

 

$      (28,090)



 

 

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

 

   
 

Six Months Ended

 

June 30

(in thousands)

2012

2011

OPERATING ACTIVITIES

   

Net loss

$     (1,743)

$   (28,056)

Adjustments to reconcile net loss to net cash provided by operating activities:

   

Loss on cash flow hedge

111

-

Gain on derivative liabilities 

-

(83)

Loss on extinguishment of long-term debt 

552

-

Provision for doubtful accounts 

2,140

2,149

Depreciation 

2,903

3,167

Amortization of intangible assets 

1,358

1,309

Asset impairment charges 

-

44,213

Amortization of deferred debt issuance costs 

137

122

Stock-based compensation 

310

502

Deferred income taxes 

(646)

(16,242)

Changes in assets - (Increase)/Decrease:

   

Accounts receivable, net of provision

(2,446)

(2,197)

Inventory

699

794

Other current assets

(480)

67

Other assets

(315)

(166)

Changes in liabilities - Increase/(Decrease):

   

Accounts payable and other liabilities 

1,084

(2,651)

NET CASH PROVIDED BY OPERATING ACTIVITIES 

3,664

2,928

     

INVESTING ACTIVITIES

   

Capital expenditures 

(1,733)

(2,383)

Other asset acquisitions

(76)

(942)

NET CASH USED IN INVESTING ACTIVITIES 

(1,809)

(3,325)

     

FINANCING ACTIVITIES

   

Principal payments on debt

(3,006)

(2,061)

Proceeds from draw on revolving credit facility

2,500

-

Common stock repurchased to satisfy statutory witholding on stock based compensation 

(32)

-

Treasury shares repurchased 

-

(248)

Principal payments on capital lease obligations 

(1,312)

(585)

     

NET CASH USED IN FINANCING ACTIVITIES 

(1,850)

(2,894)

     

Net change in cash and cash equivalents 

5

(3,291)

Cash and cash equivalents, beginning of period 

799

5,014

Cash and cash equivalents, end of period 

$         804

$      1,723

 

 

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

       
 

Three Months Ended

 

Six Months Ended

 

June 30

 

June 30

(in thousands, except share data)

2012

 

2011

 

2012

 

2011

               

Net loss

$           (828)

 

$      (27,886)

 

$        (1,743)

 

$      (28,056)

Adjustments:

             

  Interest expense

663

 

564

 

1,264

 

1,105

  Income tax benefit

(358)

 

(15,985)

 

(555)

 

(16,131)

  Depreciation

1,458

 

1,609

 

2,903

 

3,167

  Amortization

674

 

663

 

1,358

 

1,309

               

EBITDA

$          1,609

 

$      (41,035)

 

$          3,227

 

$      (38,606)

               

 

SOURCE InfuSystem Holdings, Inc.