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InfuSystem Holdings, Inc. Reports Fourth Quarter and Full Year 2019 Financial Results

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“Revenue Increase of 23.6% in the Fourth Quarter vs. Same Prior Year Period; Up 20.8% for the Full Year”

ROCHESTER HILLS, Michigan, March 19, 2020 (GLOBE NEWSWIRE) -- 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 fourth quarter and full year ended December 31, 2019.

Fourth Quarter and Full Year Highlights

  • Net revenues for the fourth quarter and full year 2019 were $21.7 million and $81.1 million, respectively, an increase of 23.6% and 20.8%, from the same prior year periods.
  • Net income for the fourth quarter and full year of 2019 were $0.8 million and $1.4 million, respectively, an increase of 392.7% and 224.3%, from the same prior year periods.
  • Adjusted earnings before interest, income taxes, depreciation, and amortization (“Adjusted EBITDA”) for the fourth quarter and full year of 2019 were $5.4 million and $18.2 million, respectively, an increase of 44.7% and 32.4%, from the same prior year periods.
  • Adjusted EBITDA margins for the fourth quarter and full year of 2019 were 24.9% and 22.5%, respectively, an increase of 364 and 196 basis points, from the same prior year periods.
  • Net cash flows provided by operating activities for the full year were $13.9 million, an increase of 21.8%, from the same prior year period.

Management Discussion

Richard DiIorio, chief executive officer of InfuSystem, said, “We executed our plan and delivered financial results above our targets in 2019.  Revenue, earnings, Adjusted EBITDA, and operating cash flow were all up materially and our increased scale provided operating leverage that increased our Adjusted EBITDA margins to 24.9% in the fourth quarter and 22.5% for the full year.  This reflects the strength of our platform model.  As we grow revenue in our existing therapies and pursue opportunities in new therapies, we leverage the infrastructure already in place with the result being increased efficiencies and higher net operating returns.”

“As communicated last quarter, we have modified our segment reporting to improve visibility into the operations of our two business platforms - Integrated Therapy Services (“ITS”) and Durable Medical Equipment Services (“DME Services”). Our ITS segment is comprised of our Oncology business, Pain management, and Negative Pressure Wound Therapy (“NPWT”). Our DME Services segment is comprised of direct payor rentals, pump and consumable sales, and biomedical services and repair.  For the full year 2019, the ITS segment accounted for 63.5% of net revenues with gross margin of 71.5% and the DME Services segment accounted for 36.5% of net revenues with gross margin of 33.9%.”

“We continue to make progress in capturing market share in our oncology business and growing our pain management business.  In 2020, we are adding NPWT to our ITS platform, which has an addressable market in U.S. home healthcare estimated at $600 million.  We have begun treating patients in this therapy and expect a significant contribution from NPWT in the coming years.” 

Mr. DiIorio concluded, “The continued success of InfuSystem is due to the hard work and dedication displayed by our employees every day in providing industry leading service to our patients and partners and I greatly appreciate their ongoing efforts.”

Segment Reporting

    Year Ended   Year Ended    
    December 31,   December 31,   Increase/
(in thousands)   2019   2018   (Decrease)
             
Net revenues:            
ITS   $ 51,540   $ 41,443   $ 10,097  
DME Services     29,575     25,695     3,880  
Total     81,115     67,138     13,977  
Cost of revenues:                    
ITS     14,689     11,998     2,691  
DME Services     19,544     15,570     3,974  
Total     34,233     27,568     6,665  
Gross profit:                    
ITS     36,851     29,445     7,406  
DME Services     10,031     10,125     (94 )
Total     46,882     39,570     7,312  

Integrated Therapy Services Segment

ITS net revenue for the full year 2019 increased 24.4% to $51.5 million, compared to $41.4 million in the prior year. 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 and growth in its pain management business as well as an increase in third-party payor networks.  For the full year 2019, ITS gross profit increased 25.2% to $36.9 million, compared to $29.4 million in the prior year. ITS gross margin for the full year 2019 increased to 71.5% compared to the prior year at 71.0%. The Company finished the year with approximately 675 third-party payor contracts, a 15.0% increase, compared to the prior year.

Durable Medical Equipment Services Segment

DME Services net revenue for the full year 2019 increased 15.1% to $29.6 million, compared to $25.7 million in the prior year. This increase was largely due to an increase in product sales of $3.8 million. Product sales growth is largely attributable to the growth in the sales of pumps of $2.4 million, an increase in the sales of disposable products of $1.3 million, with the remaining $0.1 million contribution from the sales of accessories and other ancillary sales. DME Services gross profit for the full year 2019 decreased 0.9% to $10.0 million, compared to $10.1 million in the prior year. DME Services gross margin for the full year 2019 decreased to 33.9% compared to the prior year at 39.4%. The lower DME Services gross margin was largely the result of periodic changes in product mix.

Effect of Coronavirus (COVID-19)

On March 11, 2020 the World Health Organization (“WHO”) recognized the emergence of the coronavirus (“COVID-19”) as a global pandemic.  As of March 16, 2020, over 213,000 cases of COVID-19 have been reported in more than 150 countries and territories, with major outbreaks in mainland China, Europe, Iran and South Korea, among others.  More than 8,700 people have died from the disease and over 84,000 have recovered.  Public health responses have included national pandemic preparedness and response plans, travel restrictions, quarantines, curfews, event postponements and cancellations and closures of facilities including local schools and businesses.  The implementation of these measures in the United States have only arisen over the past several weeks and have significantly increased in magnitude over the last few days.

While the healthcare sectors served by InfuSystem are largely insulated from economic cycles and periodic business disruptions, our ability to deliver services may be impacted by these ongoing pandemic containment measures.  We are implementing measures to protect the health and safety of our employees, in addition to maintaining the ability for clinics to properly treat their patients in the event there is a disruption to the supply chain.  These steps include acquiring additional infusion pumps, shipping reserve quantities of supplies to our customers, preparing a significant part of our workforce to work from home and providing additional personal protective equipment for our operations team.  We believe that these efforts will give us the ability and flexibility to maintain our operations throughout the duration of the current outbreak.  We have plans in place and are ready to implement additional actions if the duration of these challenges is prolonged.

Conference Call

The Company will also conduct a conference call for all interested investors on Thursday, March 19, 2020, at 9:00 a.m. Eastern Time to discuss its fourth quarter and full year 2019 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 10139545, through March 26, 2020.

Condensed Consolidated Financial Statements

Certain balances in the condensed consolidated financial statements for the quarter and full year ended December 31, 2018 have been reclassified to be consistent with the quarter and year-to-date ended December 31, 2019 presentation in accordance with GAAP.

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-K for the year ended December 31, 2019 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, the impact of the COVID-19 pandemic, 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.

FINANCIAL TABLES FOLLOW

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

    December 31,   December 31,
(in thousands, except share and per share data)     2019       2018  
         
ASSETS        
Current assets:        
Cash and cash equivalents   $ 2,647     $ 4,318  
Accounts receivable, net     12,097       9,593  
Inventories     2,899       2,254  
Other current assets     1,662       1,372  
                 
Total current assets     19,305       17,537  
Medical equipment for sale or rental     1,306       1,601  
Medical equipment in rental service, net of accumulated depreciation     33,225       23,488  
Property & equipment, net of accumulated depreciation     4,037       1,445  
                 
Intangible assets, net     15,463       19,865  
Operating lease right of use assets     5,733       -  
Other assets     155       137  
                 
Total assets   $ 79,224     $ 64,073  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable   $ 7,962     $ 7,091  
Current portion of long-term debt     8,082       4,903  
Other current liabilities     5,803       2,796  
                 
Total current liabilities     21,847       14,790  
                 
Long-term debt, net of current portion     30,295       28,842  
Deferred income taxes     104       -  
Operating lease liabilities, net of current portion     4,644       -  
                 
Total liabilities   $ 56,890     $ 43,632  
                 
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                
23,400,625 and 19,882,136, as of December 31, 2019, respectively, and issued and                
outstanding 23,095,513 and 19,577,024, as of December 31, 2018, respectively.     2       2  
Additional paid-in capital     83,699       83,167  
Retained deficit     (61,367 )     (62,728 )
                 
Total stockholders’ equity     22,334       20,441  
                 
Total liabilities and stockholders’ equity   $ 79,224     $ 64,073  
                 

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

    Three Months Ended   Twelve Months Ended
    December 31,   December 31,
             
(in thousands, except share data)   2019
  2018
  2019
  2018
                                 
                                 
Net revenues   $ 21,710     $ 17,563     $ 81,115     $ 67,138  
Cost of revenues     8,763       7,590       34,233       27,568  
Gross profit     12,947       9,973       46,882       39,570  
                 
Selling, general and administrative expenses:                
Amortization of intangibles     1,076       1,137       4,402       4,649  
Selling and marketing     2,452       2,157       9,932       9,107  
General and administrative     8,108       6,553       29,023       25,399  
                 
Total selling, general and administrative:     11,636       9,847       43,357       39,155  
                 
Operating income     1,311       126       3,525       415  
                 
Other expense:                
Interest expense     (468 )     (439 )     (1,904 )     (1,420 )
Other expense     (26 )     (18 )     (97 )     (37 )
                 
Income (loss) before income taxes     817       (331 )     1,524       (1,042 )
(Provision for) benefit from income taxes     (12 )     56       (163 )     (53 )
                 
Net income (loss)   $ 805     $ (275 )   $ 1,361     $ (1,095 )
                 
Net income (loss) per share:                
Basic   $ 0.04     $ (0.01 )   $ 0.07     $ (0.05 )
Diluted   $ 0.04     $ (0.01 )   $ 0.07     $ (0.05 )
Weighted average shares outstanding:                
Basic     19,852,450       19,561,272       19,731,498       21,417,628  
Diluted     21,321,415       19,561,272       20,839,396       21,417,628  
                                 

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

    Year Ended   Year Ended
    December 31,   December 31,
(in thousands)     2019       2018  
OPERATING ACTIVITIES        
Net income (loss)   $ 1,361     $ (1,095 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Provision for doubtful accounts     37       (218 )
Depreciation     7,940       6,659  
Loss on disposal of medical equipment     638       434  
Gain on sale of medical equipment     (1,453 )     (1,340 )
Amortization of intangible assets     4,402       4,649  
Amortization of deferred debt issuance costs     37       33  
Stock-based compensation expense     997       957  
Deferred income tax expense (benefit)     104       (62 )
Changes in Assets - (Increase)/Decrease:        
Accounts receivable     (1,560 )     1,909  
Inventories     (645 )     (490 )
Other current assets     (290 )     (222 )
Other assets     (129 )     (6 )
Changes in Liabilities - Increase:        
Accounts payable and other liabilities     2,436       183  
NET CASH PROVIDED BY OPERATING ACTIVITIES     13,875       11,391  
INVESTING ACTIVITIES        
Purchases of medical equipment     (19,669 )     (8,022 )
Purchases of property and equipment     (2,926 )     (281 )
Proceeds from sale of medical equipment     2,952       3,319  
         
NET CASH (USED IN) PROVIDED BY IN INVESTING ACTIVITIES     (19,643 )     (4,984 )
FINANCING ACTIVITIES        
Principal payments on term loans, capital lease obligations and other financing     (4,868 )     (6,319 )
Cash proceeds from term loans, equipment line and other financing     9,436       11,162  
Debt issuance costs     (6 )     (27 )
Cash proceeds from stock plans     252       91  
Common stock repurchased as part of Repurchase Program     -       (10,395 )
Common stock repurchased to satisfy statutory withholding on employee stock        
  based compensation plans     (717 )     (70 )
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES     4,097       (5,558 )
Net change in cash and cash equivalents     (1,671 )     849  
Cash and cash equivalents, beginning of year     4,318       3,469  
Cash and cash equivalents, end of year   $ 2,647     $ 4,318  
         

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

NET INCOME (LOSS) TO ADJUSTED EBITDA:                
    Three Months Ended   Twelve Months Ended
    December 31,   December 31,
(in thousands)     2019       2018       2019       2018  
                 
GAAP net income (loss)     805       (275 )     1,361       (1,095 )
Adjustments:                
Interest expense     468       439       1,904       1,420  
Income tax provision (benefit)     12       (56 )     163       53  
Depreciation     2,213       1,780       7,940       6,659  
Amortization     1,076       1,137       4,402       4,649  
                 
Non-GAAP EBITDA   $   4,574     $   3,025     $   15,770     $   11,686  
                 
Stock compensation costs     217       278       997       957  
ASC 842 accounting principle change     72       -       252       -  
Office move expenses     216       -       258       -  
Early termination fees for capital leases     -       98       190       98  
Exited facility costs     -       -       -       44  
Management reorganization/transition costs     24       41       76       250  
Fees to integrate business of other provider     11       -       163       -  
Contested proxy and other shareholder costs     -       17       23       251  
Certain other non-recurring costs     296       279       491       476  
                 
Non-GAAP Adjusted EBITDA   $   5,410     $   3,738     $   18,220     $   13,762  
                 
GAAP Net Revenues   $ 21,710     $ 17,563     $ 81,115     $ 67,138  
Non-GAAP Adjusted EBITDA Margin     24.9 %     21.3 %     22.5 %     20.5 %

Non-GAAP Adjusted EBITDA Margin is defined as Non-GAAP Adjusted EBITDA as a percentage of GAAP Net Revenues.

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

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Source: InfuSystem Holdings Inc.