Record Net Revenues of $33.7 million
Representing 6% Growth from the Prior Year
Reaffirms Full-Year 2024 Guidance
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 second quarter ended June 30, 2024.
2024 Second Quarter
Overview:
- Net revenues totaled $33.7 million, an increase of 6% vs. prior
year.
- Patient Services net revenue was $20.2 million, an increase of
5% vs. prior year.
- Device Solutions net revenue was $13.5 million, an increase of
8% vs. prior year.
- Gross profit was $16.7 million, an increase of 5% vs. prior
year.
- Gross margin was 49.5%, a slight decrease of 0.4% vs. prior
year.
- Patient Services gross margin was 66.4%, an increase of 5.1%
vs. prior year.
- Device Solutions gross margin was 24.0%, a decrease of 8.1% vs.
prior year.
- Net income increased 64.8% to $0.7 million, or $0.03 per
diluted share vs. prior year net income of $0.4 million, or $0.02
per diluted share.
- Adjusted earnings before interest, income taxes, depreciation,
and amortization (“Adjusted EBITDA”) (non-GAAP) was $6.1 million,
an increase of 5% vs. prior year.
- Adjusted EBITDA margin was 18.0% vs. 18.2% prior year.
- Net operating cash flow was up 17% to $2.7 million, as of June
30, 2024.
- Company liquidity totaled $40.5 million, as of June 30,
2024.
Management Discussion
Richard DiIorio, Chief Executive Officer of InfuSystem, said,
“We are pleased with our second quarter financial results, which
included setting a new record high quarterly revenue of $33.7
million, an increase of 6% over the prior year period, a 17%
increase in net operating cash flow, and the anticipated
significant sequential increase in Adjusted EBITDA margin to 18%.
This quarter marked our 10th consecutive record-breaking revenue
achievement out of the last 12 quarters.”
“We are continuing to identify and implement strategic
partnerships that we believe will grow and diversify our business.
Most recently, this included entering into a new distribution
agreement with Smith+Nephew, a global leader in medical technology.
This collaboration expands our portfolio of medical equipment and
increases our opportunities in wound care. InfuSystem is quickly
becoming a diversified healthcare service provider, leveraging our
service platforms to offer unique capabilities that enhance patient
care both at home and in acute care facilities.”
As we look ahead, we see momentum building into the second half
of this year and into 2025. In Patient Services, Oncology continues
to be strong, we continue to make progress in developing Wound
Care, and Pain Management is ready for reimbursement to come
through the NOPAIN Act. Device Solutions secured a new pump rental
business win and in biomedical services, we undertook a significant
device remediation project for one of our important partners, a
large medical device manufacturer. We remain focused on enhancing
our margin and profitability profile. We believe we are well
positioned for sustainable long-term growth and profitability in
the coming quarters and years,” concluded Mr. DiIorio.
2024 Second Quarter Financial Review
Net revenues for the quarter ended June 30, 2024 were $33.7
million, an increase of $2.0 million, or 6.2%, compared to $31.7
million for the quarter ended June 30, 2023. The increase included
higher net revenues for both the Patient Services and Device
Solutions segments.
Patient Services net revenue of $20.2 million increased $0.9
million, or 4.8%, during the second quarter of 2024 compared to the
prior year period. This increase was primarily attributable to
additional treatment volume and increased third-party payer
collections totaling $2.1 million, offset partially by $1.2 million
lower revenue from sales-type leases of NPWT pumps. The improved
volume and collections benefited Oncology revenue by $1.5 million
or 8.9%, Pain Management revenue by $0.3 million, or 28.9%, and
Wound Care treatment revenue by $0.3 million, or 188.0%. Sales-Type
Lease revenue of NPWT pumps, which had a tough comparison to an
unusually strong prior year amount, decreased by $1.2 million.
Device Solutions net revenue of $13.5 million increased $1.0
million, or 8.3%, during the second quarter of 2024 compared to the
prior year period. This increase included higher biomedical
services revenue, which increased by $0.5 million, or 13.6%, higher
rental revenue totaling $0.4 million, or 9.2%, and higher
disposable medical supplies revenue which increased by $0.4
million, or 20.4%. These increases were partially offset by lower
medical equipment sales which decreased by $0.3 million, or 18.8%.
The increased biomedical revenue was mainly attributable to
increased revenue from the master services agreement that we
entered into in April 2022. The increases in rental revenue and
disposables are mainly attributable to a new customer added during
the period. Lower medical equipment sales reflects normal shipment
timing for large contracts.
Gross profit for the second quarter of 2024 of $16.7 million
increased by $0.8 million, or 5%, compared to the second quarter of
2023. This increase was due to the increase in net revenues offset
partially by a lower gross profit percentage of net revenue (“gross
margin”). During the second quarter of 2024, we identified and
corrected an immaterial error in our accrued liabilities associated
with travel expenses resulting in an unfavorable cumulative expense
adjustment to cost of revenues totaling $0.6 million during the
second quarter of 2024. The lower gross margin was attributable to
this adjustment which represented 1.6% of net revenue for the
second quarter of 2024. Gross margin was 49.5% during the second
quarter of 2024 compared to 49.9% during the prior year period, a
decrease of 0.4%. Gross profit and gross margin increased in the
Patient Services segment, but were both lower in the Device
Solutions segment.
Patient Services gross profit was $13.4 million during the
second quarter of 2024, representing an increase of $1.6 million
compared to the prior year period. The increase reflected the
higher net revenue and higher gross margin, which increased from
the prior year by 5.1% to 66.4%. The increase in gross margin
reflected increased third-party payer collections, favorable gross
margin mix, lower pump disposal expenses and improved coverage of
fixed costs from higher net revenue. 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. Pump disposal expenses, which
include retirements of damaged pumps and reserves for missing
pumps, decreased by $0.1 million during the second quarter of 2024
compared to the prior year period.
Device Solutions gross profit during the second quarter of 2024
was $3.2 million, representing a decrease of $0.8 million, or
19.1%, compared to the prior year. This decrease was due to the
$0.6 million error correction and a decrease in gross margin. These
decreases were partially offset by higher net revenue. The Device
Solutions gross margin was 24.0% during the current quarter, which
was 8.1% lower than the prior year period, which included a 4.1%
reduction related to the error correction. The remaining decrease
was due to unfavorable sales mix favoring lower margin products
including disposable medical supplies.
Selling and marketing expenses were $3.0 million for the second
quarter of 2024, representing an increase of $0.1 million, or 1.9%,
compared to the prior year. Selling and marketing expenses as a
percentage of net revenues decreased to 9.0% compared to 9.4% in
the prior year period. This decrease reflected a reduction in sales
team members and improved coverage of fixed costs from higher net
revenues.
General and administrative (“G&A”) expenses for the second
quarter of 2024 were $11.5 million, an increase of 1.5% from $11.4
million for the second quarter of 2023. G&A expenses as a
percentage of net revenues for the second quarter of 2024 decreased
to 34.2% compared to 35.8% for the prior year period, mainly
reflecting improved net revenue leverage over fixed costs.
Net income for the second quarter of 2024 was $0.7 million, or
$0.03 per diluted share, compared to net income of $0.4 million, or
$0.02 per diluted share, for the second quarter of 2023.
Adjusted EBITDA, a non-GAAP measure, for the second quarter of
2024 was $6.1 million, or 18.0% of net revenue, and increased by
$0.3 million, or 5.4%, compared to Adjusted EBITDA for the same
prior year quarter of $5.8 million, or 18.2% of prior period net
revenue.
Balance sheet, cash flows and liquidity
During the six-month period ended June 30, 2024, operating cash
flow increased to $2.7 million, a $0.4 million, or 17%, increase
over operating cash flow during the same prior year six-month
period. The increase reflected lower working capital growth during
2024 as compared to 2023. Capital expenditures during the first
half of 2024 included purchases of medical devices totaling $8.8
million, which was $1.8 million, or 26%, higher than the amount
purchased during the same prior year period.
As of June 30, 2024, available liquidity for the Company totaled
$40.5 million and consisted of $40.3 million in available borrowing
capacity under its revolving line of credit plus cash and cash
equivalents of $0.1 million. Net debt, a non-GAAP measure
(calculated as total debt of $34.2 million less cash and cash
equivalents of $0.1 million) as of June 30, 2024 was $34.0 million
representing an increase of $5.1 million 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 1.53 to 1.00 (calculated as net debt of $34.0 million
divided by Adjusted EBITDA of $22.3 million).
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 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. These estimates now include expected expenses related to
planned upgrades of the Company's information technology and
business applications. Our previous guidance excluded these
amounts. 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, August 8, 2024, at 9:00 a.m. Eastern Time to
discuss its second 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 (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, replay access code
6530466, through August 15, 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 June 30, 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 June
30,
Six Months Ended June
30,
(in thousands, except share and per
share data)
2024
2023
2024
2023
Net revenues
$
33,698
$
31,735
$
65,693
$
62,105
Cost of revenues
17,030
15,903
32,551
31,323
Gross profit
16,668
15,832
33,142
30,782
Selling, general and administrative
expenses:
Amortization of intangibles
247
247
495
495
Selling and marketing
3,042
2,985
6,418
6,209
General and administrative
11,524
11,352
25,219
22,937
Total selling, general and
administrative
14,813
14,584
32,132
29,641
Operating income
1,855
1,248
1,010
1,141
Other expense:
Interest expense
(484
)
(620
)
(940
)
(1,104
)
Other (expense) income
(63
)
2
(60
)
(33
)
Income before income taxes
1,308
630
10
4
(Provision for) benefit from income
taxes
(591
)
(195
)
(405
)
107
Net income (loss)
$
717
$
435
$
(395
)
$
111
Net income (loss) per share:
Basic
$
0.03
$
0.02
$
(0.02
)
$
0.01
Diluted
$
0.03
$
0.02
$
(0.02
)
$
0.01
Weighted average shares outstanding:
Basic
21,299,089
20,955,048
21,262,429
20,904,315
Diluted
21,711,198
21,600,346
21,262,429
21,565,667
INFUSYSTEM HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
SEGMENT REPORTING
(UNAUDITED)
Three Months Ended June
30,
Better/
(Worse)
(in thousands)
2024
2023
Net revenues:
Patient Services
$
20,246
$
19,319
$
927
Device Solutions
15,194
14,097
1,097
Less: elimination of inter-segment
revenues (a)
(1,742
)
(1,681
)
(61
)
Total Device Solutions
13,452
12,416
1,036
Total
33,698
31,735
1,963
Gross profit:
Patient Services
13,444
11,845
1,599
Device Solutions
3,224
3,987
(763
)
Total
$
16,668
$
15,832
$
836
(a)
Inter-segment allocations are for cleaning
and repair services performed on medical equipment.
Six Months Ended June
30,
Better/
(Worse)
(in thousands)
2024
2023
Net revenues:
Patient Services
$
38,837
$
38,093
$
744
Device Solutions
30,311
27,323
2,988
Less: elimination of inter-segment
revenues (a)
(3,455
)
(3,311
)
(144
)
Total Device Solutions
26,856
24,012
2,844
Total
65,693
62,105
3,588
Gross profit:
Patient Services
25,718
23,386
2,332
Device Solutions
7,424
7,396
28
Total
$
33,142
$
30,782
$
2,360
(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 INCOME (LOSS) TO EBITDA,
ADJUSTED EBITDA, NET INCOME (LOSS) MARGIN AND ADJUSTED EBITDA
MARGIN:
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands)
2024
2023
2024
2023
GAAP net income (loss)
$
717
$
435
$
(395
)
$
111
Adjustments:
Interest expense
484
620
940
1,104
Income tax provision (benefit)
591
195
405
(107
)
Depreciation
2,786
2,846
5,438
5,801
Amortization
247
247
495
495
Non-GAAP EBITDA
$
4,825
$
4,343
$
6,883
$
7,404
Stock compensation costs
998
1,016
2,055
1,736
Medical equipment reserve and disposals
(1)
231
336
127
766
Management reorganization/transition
costs
—
72
108
72
Cooperation Agreement payment and
associated legal expenses
—
—
649
—
Certain other non-recurring costs
20
(6
)
109
18
Non-GAAP Adjusted EBITDA
$
6,074
$
5,761
$
9,931
$
9,996
GAAP Net Revenues
$
33,698
$
31,735
$
65,693
$
62,105
Net Income (Loss) Margin (2)
2.1
%
1.4
%
(0.6
)%
0.2
%
Non-GAAP Adjusted EBITDA Margin
(3)
18.0
%
18.2
%
15.1
%
16.1
%
(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 Income (Loss) Margin is defined as
GAAP Net Income (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)
June 30, 2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
146
$
231
Accounts receivable, net
21,325
19,830
Inventories, net
6,839
6,402
Other current assets
4,603
4,157
Total current assets
32,913
30,620
Medical equipment for sale or rental
6,980
3,049
Medical equipment in rental service, net
of accumulated depreciation
36,262
34,928
Property & equipment, net of
accumulated depreciation
4,174
4,321
Goodwill
3,710
3,710
Intangible assets, net
6,951
7,446
Operating lease right of use assets
5,845
6,703
Deferred income taxes
8,644
9,115
Derivative financial instruments
1,714
1,442
Other assets
1,334
1,581
Total assets
$
108,527
$
102,915
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
9,940
$
8,009
Other current liabilities
5,940
7,704
Total current liabilities
15,880
15,713
Long-term debt, net of current portion
34,165
29,101
Operating lease liabilities, net of
current portion
4,995
5,799
Total liabilities
55,040
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; 21,315,046 issued and outstanding as
of June 30, 2024 and 21,196,851 issued and outstanding as of
December 31, 2023
2
2
Additional paid-in capital
111,493
109,837
Accumulated other comprehensive income
1,295
1,088
Retained deficit
(59,303
)
(58,625
)
Total stockholders’ equity
53,487
52,302
Total liabilities and stockholders’
equity
$
108,527
$
102,915
INFUSYSTEM HOLDINGS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
Six Months Ended June
30,
(in
thousands)
2024
2023
OPERATING ACTIVITIES
Net (loss) income
$
(395
)
$
111
Adjustments to reconcile net (loss)
income to net cash provided by operating activities:
Provision for doubtful accounts
(194
)
47
Depreciation
5,438
5,801
Loss on disposal of and reserve
adjustments for medical equipment
316
828
Gain on sale of medical equipment
(1,036
)
(1,402
)
Amortization of intangible assets
495
495
Amortization of deferred debt issuance
costs
39
78
Stock-based compensation
2,055
1,736
Deferred income taxes
405
(106
)
Changes in assets -
(increase)/decrease:
Accounts receivable
(1,203
)
(506
)
Inventories
(437
)
(885
)
Other current assets
(446
)
(994
)
Other assets
914
(1,719
)
Changes in liabilities -
(decrease)/increase:
Accounts payable and other liabilities
(3,265
)
(1,183
)
NET CASH PROVIDED BY OPERATING
ACTIVITIES
2,686
2,301
INVESTING ACTIVITIES
Purchase of medical equipment
(8,796
)
(6,994
)
Purchase of property and equipment
(519
)
(494
)
Proceeds from sale of medical equipment,
property and equipment
2,201
2,098
NET CASH USED IN INVESTING
ACTIVITIES
(7,114
)
(5,390
)
FINANCING ACTIVITIES
Principal payments on long-term debt
(26,744
)
(29,451
)
Cash proceeds from long-term debt
31,769
32,585
Debt issuance costs
—
(229
)
Common stock repurchased as part of share
repurchase program
(283
)
(153
)
Common stock repurchased to satisfy
statutory withholding on employee stock-based compensation
plans
(624
)
(523
)
Cash proceeds from exercise of options and
ESPP
225
829
NET CASH PROVIDED BY FINANCING
ACTIVITIES
4,343
3,058
Net change in cash and cash
equivalents
(85
)
(31
)
Cash and cash equivalents, beginning of
period
231
165
Cash and cash equivalents, end of
period
$
146
$
134
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808818926/en/
Joe Dorame, Joe Diaz & Robert Blum Lytham Partners, LLC
602-889-9700
InfuSystems (AMEX:INFU)
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