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InfuSystems Holdings Inc.$6.40($.10)(1.54%)

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 InfuSystem Holdings, Inc. Reports Fourth Quarter and Full Year 2018 Financial Results
   Thursday, March 07, 2019 6:30:00 AM ET

MADISON HEIGHTS, MICHIGAN, March 07, 2019 (GLOBE NEWSWIRE) -- InfuSystem Holdings, Inc. (NYSE American LLC: INFU) (“InfuSystem” or the “Company”), a leading national provider of infusion pumps and related services for the healthcare industry in the United States and Canada, today reported financial results for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter and Full Year Highlights:

  • Cash flows provided by operating activities were $11.4 million for the year ended December 31, 2018, up $3.7 million or 47.6% from the same period of 2017.
  • 2018 stock repurchases totaled $10.4 million, approximately 14.6% of the outstanding shares at December 31, 2017.
  • Net revenues for the quarter and year ended December 31, 2018 were $17.6 million and $67.1 million, respectively, a 7.0% and 5.5% decrease, respectively, from the same prior year periods. Prior to the effect of adopting ASC 606, this would have represented a net increase of $0.2 million or 1.0% increase and $2.4 million or 3.3% increase, respectively, from the same prior year periods.
  • Net loss for the quarter and year ended December 31, 2018 was $0.3 million and $1.1 million, respectively, a 98.5% and 94.7% decrease, respectively, from the net loss for the same prior year periods.
  • Adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) (a non-GAAP financial measure) for the quarter and year ended December 31, 2018 was $3.7 million and $13.8 million, respectively, an increase of 12.5% and 17.7%, respectively, from the same prior year periods and represented 21.3% and 20.5% of net revenues, respectively.             


Commenting on the fourth quarter and full year, Richard DiIorio, chief executive officer of InfuSystem, said, “I am pleased to announce that our improved efficiencies and strategic initiatives continue to favorably impact our financials.  We will continue working to improve our operations in 2019, with emphasis on managing our pump utilization, improving logistics, and managing our expenses.  This, along with an initiative to improve our revenue cycle management practices, should continue the positive trend in cash generation into 2019.”

Mr. DiIorio continued, “The InfuSystem team will continue the company’s agenda of superior patient care and customer service into the new fiscal year.  This, we believe, will help to drive significant market share gains in our core oncology business and customer adoption of our new InfuSystem Mobile patient-care application.”

Implementation of ASC 606:
Effective January 1, 2018, InfuSystem adopted, on a modified retrospective approach, Accounting Standards Codification Topic 606: Revenue from Contracts with Customers (“ASC 606”). The effect of this change is to remove from reported revenue, in this and future periods, the amount the Company recorded as a provision for doubtful accounts during such period. The adoption on a modified retrospective approach means that the Company will not restate its financials for the periods prior to the adoption of ASC 606.

The adoption of ASC 606 resulted in a reclassification of $1.5 million and $6.3 million for the three months and full year ended December 31, 2018, respectively. These amounts, which previously would have been reported as provision for doubtful accounts on the Company’s income statement, are instead reflected as reductions in reported net revenues - rentals.

Results for the Quarter and Year Ended December 31, 2018
Gregory Schulte, chief financial officer, commented, “Our significant increase in operating cash flows in 2018 was primarily due to:

  • Profitability, after adjustments to reconcile net loss to net cash provided by operating activities excluding the change in the provision for doubtful accounts, improved by $2.8 million, primarily attributable to net revenue growth and decreased selling, general and administrative costs; and,
  • Improved working capital net inflows of $0.9 million, primarily due to increased accounts receivable collections, including the change in the provision for doubtful accounts, and vendor management impact on accounts payable and other liabilities, partially offset by higher inventory levels.

These improved cash flows, plus net borrowings from our amended bank credit facility, allowed us to repurchase $10.4 million of our common stock during 2018. Also, in the second half of 2018, we used our improved cash flows from operations and equipment line borrowings to ramp up capital expenditure purchases of pumps to meet the demand of favorable oncology market growth in the foreseeable future and to make other necessary additions to our fleet.”

Conference Call
The Company will conduct a conference call for investors on Thursday, March 7, 2019 at 9:00 a.m. Eastern Time to discuss fourth quarter and full year 2018 results. The conference call may also include a discussion of Company developments, forward-looking statements and other material information about business and financial matters. To participate in this call, please dial in toll-free (833) 366-1127 or (412) 902-6773. Additionally, a Web replay will be available on the Company’s website for 90 days or by calling (877) 344-7529 or (412) 317-0088, confirmation code 10129264, through March 14, 2019.

Condensed Consolidated Financial Statements
Certain balances in the condensed consolidated financial statements for the quarter and year ended December 31, 2017 have been reclassified to be consistent with the quarter and year ended December 31, 2018 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. 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 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, Massachusetts and Ontario, Canada. The Company’s stock is traded on the NYSE American LLC 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, 2018 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, 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
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) 

  December 31, December 31,
(in thousands, except share and per share data)  2018   2017 
     
ASSETS    
Current assets:    
     Cash and cash equivalents $  4,318  $  3,469 
     Accounts receivable, net    9,593     11,284 
     Inventories    2,254     1,764 
     Other current assets    1,372     1,150 
     
           Total current assets    17,537     17,667 
Medical equipment held for sale or rental    1,601     1,567 
Medical equipment in rental service, net of accumulated depreciation    23,488     23,369 
Property & equipment, net of accumulated depreciation    1,445     1,633 
     
Intangible assets, net    19,865     24,514 
Other assets    137     131 
     
     Total assets $  64,073  $  68,881 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities:    
     Accounts payable $  7,091  $  5,516 
     Capital lease liability, current    33     505 
     Current portion of long-term debt    4,903     3,039 
     Other current liabilities    2,763     3,414 
     
           Total current liabilities    14,790     12,474 
     
Long-term debt, net of current portion    28,842     25,352 
Capital lease liability, long-term    -      33 
Deferred income taxes    -      62 
Other long-term liabilities    -      7 
     
     Total liabilities $  43,632  $  37,928 
     
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    
  23,095,513 and 19,577,024, as of December 31, 2018, respectively, and issued and    
  outstanding 22,978,398 and 22,780,738, as of December 31, 2017, respectively.    2     2 
Additional paid-in capital    83,167     92,584 
Retained deficit    (62,728)    (61,633)
     
Total stockholders’ equity    20,441     30,953 
     
     Total liabilities and stockholders’ equity $  64,073  $  68,881 
     


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

  Three Months Ended Twelve Months Ended
  December 31, December 31,
       
(in thousands, except share data)  2018   2017   2018   2017 
         
Net revenues:        
    Rentals $  14,338  $  15,857  $  56,584  $  61,085 
    Product sales    3,225     3,036     10,554     9,992 
  Net revenues    17,563     18,893     67,138     71,077 
         
Cost of revenues:        
    Cost of revenues - Product, service and supply costs    5,152     4,755     19,332     18,367 
    Cost of revenues - Pump depreciation and loss on disposal     2,567     2,808     8,788     9,349 
 Gross profit    9,844     11,330     39,018     43,361 
         
Selling, general and administrative expenses:        
    Third-party payor provision for doubtful accounts    -     1,286     -     5,615 
    Amortization of intangibles    1,137     1,378     4,649     5,560 
    Asset impairment charges    -     993     -     993 
    Selling and marketing    2,157     2,336     9,107     9,779 
    General and administrative    6,424     6,648     24,847     25,226 
         
        Total selling, general and administrative:    9,718     12,641     38,603     47,173 
         
Operating income (loss)    126     (1,311)    415     (3,812)
         
Other expense:        
    Interest expense    (439)    (317)    (1,420)    (1,332)
    Other expense    (18)    (2)    (37)    (113)
         
        Total other expense    (457)    (319)    (1,457)    (1,445)
         
Loss before income taxes    (331)    (1,630)    (1,042)    (5,257)
Benefit from (provision for) income taxes    56     (16,364)    (53)    (15,450)
         
Net loss $  (275) $  (17,994) $  (1,095) $  (20,707)
         
Net loss per share:        
          Basic and diluted $  (0.01) $  (0.79) $  (0.05) $  (0.91)
Weighted average shares outstanding:        
          Basic and diluted    19,561,272     22,780,737     21,417,628     22,739,651 
        


INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

      
  Year Ended Year Ended 
  December 31, December 31, 
(in thousands)  2018   2017  
OPERATING ACTIVITIES     
Net loss $  (1,095) $  (20,707) 
Adjustments to reconcile net loss to net cash provided by operating activities:     
     Provision for doubtful accounts    6,104     5,641  
     Depreciation    6,659     6,963  
     Loss on disposal of medical equipment    434     207  
     Gain on sale of medical equipment    (1,340)    (1,662) 
     Amortization of intangible assets    4,649     5,560  
     Asset impairment charges    -     993  
     Amortization of deferred debt issuance costs    33     28  
     Stock-based compensation expense    957     682  
     Deferred income tax expense (benefit)    (62)    15,389  
Changes in Assets - (Increase)/Decrease:     
     Accounts receivable    (4,413)    (5,344) 
     Inventories    (490)    402  
     Other current assets    (222)    (201) 
     Other assets    (6)    119  
Changes in Liabilities - Increase/(Decrease):     
     Accounts payable and other liabilities    183     (352) 
NET CASH PROVIDED BY OPERATING ACTIVITIES    11,391     7,718  
INVESTING ACTIVITIES     
     Purchases of medical equipment    (8,022)    (2,652) 
     Purchases of property and equipment    (281)    (104) 
     Purchases of intangible assets    -     (192) 
     Proceeds from sale of medical equipment    3,319     3,866  
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES    (4,984)    918  
FINANCING ACTIVITIES     
     Principal payments on term loans and capital lease obligations    (6,319)    (37,466) 
     Cash proceeds from bank loans and revolving credit facility    11,162     28,866  
     Debt Issuance Costs    (27)    (38) 
     Cash Proceeds - Stock Plans    91     131  
     Common stock repurchased as part of Repurchase Program    (10,395)    -  
     Common stock repurchased to satisfy taxes on stock based compensation    (70)    (58) 
NET CASH USED IN FINANCING ACTIVITIES    (5,558)    (8,565) 
Net change in cash and cash equivalents    849     71  
Cash and cash equivalents, beginning of year    3,469     3,398  
Cash and cash equivalents, end of year $  4,318  $  3,469  
      


INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION
(UNAUDITED)

NET LOSS TO ADJUSTED EBITDA:        
  Three Months Ended Twelve Months Ended
  December 31, December 31,
(in thousands)  2018   2017   2018   2017 
         
GAAP net loss    (275)    (17,994)    (1,095)    (20,707)
Adjustments:        
  Interest expense    439     317     1,420     1,332 
  (Benefit from) provision for income taxes    (56)    16,364     53     15,450 
  Depreciation    1,780     1,797     6,659     6,963 
  Asset impairment    -     993     -     993 
  Amortization    1,137     1,378     4,649     5,560 
         
Non-GAAP EBITDA $   3,025   $   2,855   $   11,686   $   9,591  
         
Stock compensation costs    278     232     957     682 
Restatement costs    -     -     -     28 
Early termination fees for capital leases    98     -     98     292 
Exited facility costs    -     -     44     - 
Management reorganization/transition costs    41     76     250     737 
Contested proxy and other shareholder costs    17   -     251     200 
Certain other non-recurring costs    279     160     476     160 
Non-GAAP Adjusted EBITDA $   3,738   $   3,323   $   13,762   $   11,690  
         
GAAP Net Revenues $  17,563  $  18,893  $  67,138  $  71,077 
Non-GAAP Adjusted EBITDA Margin  21.3%  17.6%  20.5%  16.4%

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.


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