InfuSystem Holdings, Inc. Reports Profit in Second Quarter 2013
Three and Six Month Results Show Year-to-Year Improvements
MADISON HEIGHTS, Mich.-- InfuSystem Holdings, Inc. (NYSE MKT: INFU) (“InfuSystem” or the “Company”), a leading national provider of infusion pumps and related services for the healthcare industry in the United States, today reported that net income in the second quarter was $0.1 million, equal to $0.00 per diluted share, compared to a $0.8 million net loss, or $0.04 loss per diluted share, in the prior year period. Net income for the six months ended June 30, 2013 was $0.2 million, equal to $0.01 per diluted share, compared to a $1.7 million net loss, or $0.08 per diluted share, in the prior year period.
The Company continues to strengthen its overall performance and we expect to build on these results in the second half of 2013, said Eric Steen, Chief Executive Officer. “Organic growth will drive the business as well as build shareholder value. InfuSystem’s strong market share and highly-differentiated customer service capabilities position us well to take advantage of a consolidating market. In particular, we are experiencing strong growth in the commercial payor market. We also expect to generate revenue growth from new therapies and services,” he concluded.
Revenues in the second quarter of 2013 were $14.7 million, up 4% from $14.1 million in the second quarter of 2012. Revenues for the six months ended June 30, 2013 were $29.4 million, a 3% increase, compared to $28.4 million for the same prior year period. The increase in revenues was primarily related to a 5% increase in rental revenue compared to prior year periods. Sales revenue was down 5% from prior year for the second quarter and down approximately 9% from prior year-to-date period. The increase in rental revenues was primarily related to the addition of larger customers, increased penetration into existing customer accounts, the increase in the colorectal cancer and other cancer patients treated with the Company’s services and the continuation of the revision to claims processing guidelines by a major group of third-party payors.
Gross profit for the three months ended June 30, 2013 was $10.3 million, which was consistent with the same period in the prior year. It represented 70% of revenues in the current period compared to 73% in the prior year. Gross profit for the six months ended June 30, 2013 was $20.8 million, which was also consistent with the same period in the prior year. It represented 71% of revenues in the current period compared to 73% in the prior year. The decrease in the gross margin as a percentage of revenue in 2013 was primarily related to a decrease in rental gross margins from direct pay customers.
Operating Results
SG&A decreased to $9.5 million from $10.2 million, down approximately 8%, when compared to the second quarter of 2012. For the six months ended June 30, 3012, SG&A decreased to $19.2 million from $21.2 million, down approximately 9%, when compared to the same prior year period.
During the three months ended June 30, 2013, general and administrative expenses were $5.0 million compared to $6.1 million for the same prior year period. General and administrative expenses have decreased from 44% to 34% of revenues for the second quarter of 2013 compared to the same period in the prior year. The decrease was primarily attributed to prior year costs of $2.4 million pertaining to the additional legal, accounting and outside services fees as a result of the special meeting, changes in the composition of the Board of Director’s, and severance costs associated with the Settlement Agreement offset by previously recognized stock compensation expense of $1.3 million, for which the requisite service was not rendered last year.
During the six months ended June 30, 2013, general and administrative expenses were $10.0 million compared to $12.4 million for the same six month period in 2012. The decrease between these periods was primarily related to prior year professional service and other costs for the Concerned Stockholder Group which totaled approximately $2.3 million; severance payments for a former CEO amounted to $1.0 million; $0.6 million was recorded during the three months ended March 31, 2012 for retention payments to key employees; and $1.3 million of previously recognized stock compensation expense was reversed due to the forfeiture and failure to meet the requisite service period.
Other expenses for the three months ended June 30, 2013 were $0.9 million compared to $1.2 million for the comparable prior year period. This decrease was mainly attributed to an increase of $0.2 million of additional interest expense due to the cost of the new debt facility offset by a prior year loss on the extinguishment of debt of $0.6 million.
Other expenses for the six months ended June 30, 2013 were $1.5 million compared to $1.8 million for the comparable prior year period. This decrease was mainly attributed to an increase of $0.5 million of additional interest expense due to the cost of the new debt facility offset by a prior year loss on the extinguishment of debt of $0.6 million and a one-time cash receipt of $0.3 million related to a mutual insurance policy we received in the first quarter of 2013.
Jonathan P. Foster, Chief Financial Officer, noted, “The combination of effective, on-going cost management practices, meaningful debt reduction of more than $2.5 million since December 31, 2012, and increasing free cash flow allows us to actively take advantage of growth opportunities. In particular, the increase of $1.3 million from medical equipment in rental service since year-end builds a strong base from which to generate even further rental revenue growth.”
Selling and marketing expenses were $2.5 million, which was consistent with the second quarter of 2012. For the six months ended June 30, 2013, selling and marketing expenses were $4.9 million compared to $5.3 million. The decrease in selling and marketing expenses was mainly attributed to lower travel, entertainment and salaries and commissions.
For the three months ended June 30, 2013, Adjusted EBITDA was $3.3 million for the second quarter of 2013 compared to $3.6 million in 2012. For the six months ended June 30, 2013, Adjusted EBITDA was $7.0 million, which was consistent with the same prior year period. The Company utilizes Adjusted EBITDA as a means to measure its operating performance. A reconciliation from Adjusted EBITDA, a non-GAAP measure, to net income can be found in the appendix.
Financial Condition
Net cash provided by operations for the six months ended June 30, 2013 was $2.2 million compared to $2.3 million for the prior year. Although net income is significantly improved from a year ago, increases in A/R are offsetting any cash improvement at June 30, 2013 when compared to the prior year.
As of June 30 2013, we had cash and cash equivalents of $0.1 million and $5.1 million of availability on the Credit Facility compared to $2.3 million and $4.7 million, respectively, at December 31, 2012. During the six months ended June 30, 2013, the Company paid down $2.5 million of total debt.
Conference Call
The Company will conduct a conference call for investors on Tuesday, August 13, 2013 at 9:00 a.m. Eastern Time to discuss second quarter performance and results. Eric Steen, Chief Executive Officer, and Jonathan P. Foster, Chief Financial Officer, will discuss the Company’s financial performance and answer questions from the financial community. To participate in this call, please dial in toll-free (877) 261-8992 inside the U.S. and (847) 619-6548 outside the U.S and use the confirmation number 35310595.
About InfuSystem Holdings, Inc.
InfuSystem Holdings, Inc. is a 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.
FINANCIAL TABLES FOLLOW
| INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||
| June 30, | December 31, | ||||||||||||||
| (in thousands, except share data) | 2013 | 2012 | |||||||||||||
| (Unaudited) | |||||||||||||||
| ASSETS | |||||||||||||||
| Current Assets: | |||||||||||||||
| Cash and cash equivalents | $ | 102 | $ | 2,326 | |||||||||||
| Accounts receivable, less allowance for doubtful accounts of $3,811 and | |||||||||||||||
| $3,136 at June 30, 2013 and December 31, 2012, respectively | 9,440 | 8,511 | |||||||||||||
| Inventory | 1,379 | 1,339 | |||||||||||||
| Other current assets | 713 | 684 | |||||||||||||
| Deferred income taxes | 1,986 | 1,971 | |||||||||||||
| Total Current Assets | 13,620 | 14,831 | |||||||||||||
| Medical equipment held for sale or rental | 3,155 | 2,626 | |||||||||||||
| Medical equipment in rental service, net of accumulated depreciation | 14,005 | 13,071 | |||||||||||||
| Property & equipment, net of accumulated depreciation | 798 | 867 | |||||||||||||
| Deferred debt issuance costs, net | 2,106 | 2,362 | |||||||||||||
| Intangible assets, net | 24,221 | 25,541 | |||||||||||||
| Deferred income taxes | 17,689 | 17,806 | |||||||||||||
| Other assets | 157 | 419 | |||||||||||||
| Total Assets | $ | 75,751 | $ | 77,523 | |||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||
| Current Liabilities: | |||||||||||||||
| Accounts payable | $ | 3,833 | $ | 2,135 | |||||||||||
| Accounts payable - related party | - | 9 | |||||||||||||
| Current portion of long-term debt | 3,124 | 3,953 | |||||||||||||
| Other current liabilities | 2,782 | 4,098 | |||||||||||||
| Total Current Liabilities | 9,739 | 10,195 | |||||||||||||
| Long-term debt, net of current portion | 25,204 | 27,315 | |||||||||||||
| Total Liabilities | $ | 34,943 | $ | 37,510 | |||||||||||
| 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 | |||||||||||||||
| 22,088,731 and 21,891,041, respectively, as of June 30, 2013 and 21,990,000 and | |||||||||||||||
| 21,802,515, as of December 31, 2012, respectively | 2 | 2 | |||||||||||||
| Additional paid-in capital | 89,381 | 88,742 | |||||||||||||
| Retained deficit | (48,575 | ) | (48,731 | ) | |||||||||||
| Total Stockholders’ Equity | 40,808 | 40,013 | |||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 75,751 | $ | 77,523 | |||||||||||
| INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||||||||
| (in thousands, except share data) | 2013 | 2012 | 2013 |
2012 |
|||||||||||||||||||||||||
| Net revenues: | |||||||||||||||||||||||||||||
| Rentals | $ | 13,618 | $ | 12,973 | $ | 27,061 | $ | 25,878 | |||||||||||||||||||||
| Product sales | 1,044 | 1,099 | 2,302 | 2,542 | |||||||||||||||||||||||||
| Net revenues | 14,662 | 14,072 | 29,363 | 28,420 | |||||||||||||||||||||||||
| Cost of revenues: | |||||||||||||||||||||||||||||
| Cost of revenues - Product, service and supply costs | 2,845 | 2,148 | 5,424 | 4,383 | |||||||||||||||||||||||||
| Cost of revenues - Pump depreciation and loss on disposal | 1,487 | 1,650 | 3,186 | 3,327 | |||||||||||||||||||||||||
| Gross profit | 10,330 | 10,274 | 20,753 | 20,710 | |||||||||||||||||||||||||
| Selling, general and administrative expenses: | |||||||||||||||||||||||||||||
| Provision for doubtful accounts | 1,327 | 893 | 2,987 | 2,140 | |||||||||||||||||||||||||
| Amortization of intangibles | 652 | 674 | 1,324 | 1,358 | |||||||||||||||||||||||||
| Selling and marketing | 2,482 | 2,541 | 4,890 | 5,286 | |||||||||||||||||||||||||
| General and administrative | 5,008 | 6,137 | 10,039 | 12,410 | |||||||||||||||||||||||||
| Total selling, general and administrative: | 9,469 | 10,245 | 19,240 | 21,194 | |||||||||||||||||||||||||
| Operating income (loss) | 861 | 29 | 1,513 | (484 | ) | ||||||||||||||||||||||||
| Other (expense) income: | |||||||||||||||||||||||||||||
| Interest expense | (924 | ) | (663 | ) | (1,798 | ) | (1,264 | ) | |||||||||||||||||||||
| Loss on extinguishment of long term debt | - | (552 | ) | - | (552 | ) | |||||||||||||||||||||||
| Other income | 24 | - | 336 | 2 | |||||||||||||||||||||||||
| Total other expense | (900 | ) | (1,215 | ) | (1,462 | ) | (1,814 | ) | |||||||||||||||||||||
| Income (loss) before income taxes | (39 | ) | (1,186 | ) | 51 | (2,298 | ) | ||||||||||||||||||||||
| Income tax benefit | 144 | 358 | 105 | 555 | |||||||||||||||||||||||||
| Net income (loss) | $ | 105 | $ | (828 | ) | $ | 156 | $ | (1,743 | ) | |||||||||||||||||||
| Net income (loss) per share: | |||||||||||||||||||||||||||||
| Basic | $ | 0.00 | $ | (0.04 | ) | $ | 0.01 | $ | (0.08 | ) | |||||||||||||||||||
| Diluted | $ | 0.00 | $ | (0.04 | ) | $ | 0.01 | $ | (0.08 | ) | |||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||||||||
| Basic | 21,860,866 | 21,196,085 | 21,802,515 | 21,164,315 | |||||||||||||||||||||||||
| Diluted | 22,015,499 | 21,196,085 | 22,238,160 | 21,164,315 | |||||||||||||||||||||||||
| INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
| (UNAUDITED) | ||||||||||||||||
| Six Months Ended | ||||||||||||||||
| June 30, | ||||||||||||||||
| (in thousands) | 2013 | 2012 | ||||||||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 2,233 | 2,274 | ||||||||||||||
| INVESTING ACTIVITIES | ||||||||||||||||
| Purchases of medical equipment and property | (2,564 | ) | (2,964 | ) | ||||||||||||
| Proceeds from sale of medical equipment and property | 1,726 | 2,545 | ||||||||||||||
| NET CASH USED IN INVESTING ACTIVITIES | (838 | ) | (419 | ) | ||||||||||||
| FINANCING ACTIVITIES | ||||||||||||||||
| Principal payments on term loans and capital lease obligations | (16,918 | ) | (4,318 | ) | ||||||||||||
| Cash proceeds from bank loans and revolving credit facility | 13,340 | 2,500 | ||||||||||||||
| Common stock repurchased to satisfy statutory withholding on stock based compensation | (41 | ) | (32 | ) | ||||||||||||
| NET CASH USED IN FINANCING ACTIVITIES | (3,619 | ) | (1,850 | ) | ||||||||||||
| Net change in cash and cash equivalents | (2,224 | ) | 5 | |||||||||||||
| Cash and cash equivalents, beginning of period | 2,326 | 799 | ||||||||||||||
| Cash and cash equivalents, end of period | $ | 102 | $ | 804 | ||||||||||||
| INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
| NON-GAAP RECONCILIATION | |||||||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||||||||||
| (in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||
| Net income (loss) | $ | 105 | $ | (828 | ) | $ | 156 | $ | (1,743 | ) | |||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||
| Interest Expense | 924 | 663 | 1,798 | 1,264 | |||||||||||||||||||||||||||
| Income Tax Benefit | (144 | ) | (358 | ) | (105 | ) | (555 | ) | |||||||||||||||||||||||
| Depreciation | 1,343 | 1,458 | 2,645 | 2,903 | |||||||||||||||||||||||||||
| Amortization | 652 | 674 | 1,324 | 1,358 | |||||||||||||||||||||||||||
| EBITDA | $ | 2,880 | $ | 1,609 | $ | 5,818 | $ | 3,227 | |||||||||||||||||||||||
| Concerned Stockholder Group and Retention | - | 1,111 | - | 2,577 | |||||||||||||||||||||||||||
| Early extinguishment of debt | - | 552 | - | 552 | |||||||||||||||||||||||||||
| Stock compensation | 221 | 292 | 679 | 633 | |||||||||||||||||||||||||||
| Strategic alternative costs (including transition costs) | 247 | - | 519 | - | |||||||||||||||||||||||||||
| EBITDA - Adjusted | $ | 3,348 | $ | 3,564 | $ | 7,016 | $ | 6,989 | |||||||||||||||||||||||
The Dilenschneider Group
Rob Swadosh / Patrick Malone
212-922-0900
Source: InfuSystem Holdings, Inc.
Released August 13, 2013
