InfuSystem Holdings, Inc. Reports Third Quarter 2015 Financial Results

MADISON HEIGHTS, Mich., Nov. 12, 2015 /PRNewswire/ -- 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 financial results for the quarter ended September 30, 2015.

Highlights for the third quarter of 2015 included:

• Net Income increased 61% to $1.4 million, or diluted EPS of $0.06, compared to third quarter 2014 net income of $0.9 million or diluted EPS of $0.04.
• Net Collected Rental Revenues increased 16% over last year's comparable quarter.
• Net Revenues totaled $18.7 million, an increase of 13% versus third quarter 2014 net revenues of $16.6 million.
• Investment of approximately $1.6 million to expand our information technology capabilities, including InfuSystem EXPRESS and our Pain Management initiatives.
• The integration of Ciscura is essentially completed.  Revenue from these assets in the third quarter approximated $1 million. 

Net Revenues in the third quarter of 2015 were $18.7 million, an increase of $2.1 million, or 13%, compared to $16.6 million for the quarter ended September 30, 2014. During the period, net revenues from rentals increased $2.3 million, or 16%, compared to the same prior year period.  The increase in revenues can be attributed to greater rental volume with new and existing therapy sites, partially offset by an overall slight reduction in reimbursement rates from payors, and additional revenue of approximately $1.0 million from the Ciscura asset acquisition.    

The Company is focused on net rental revenues less bad debt ("Net Collected Rental Revenues") versus prior year. Net Collected Rental Revenues increased 16% to $15.4 million versus $13.2 million in the comparable quarter of 2014. Bad debt increased slightly for the quarter based on $2.1 million of additional revenue and is down 21% YTD compared to the prior year period, as a result of increased focus on new payor contracts and patient collections.

Net income in the third quarter increased 61% to $1.4 million, equal to $0.06 per diluted share, compared to net income of $0.9 million, or $0.04 per diluted share, in the same prior year period.  Adjusted net income, adding back integration costs associated with the Ciscura acquisition and other income and expenses was $1.4 million, or $0.06 per diluted share, compared to $0.8 million, or $0.04 per diluted share, in the same prior year period.

Gross profit for the three months ended September 30, 2015 was $13.3 million, an increase of $1.5 million, or 13%, compared to the quarter ended September 30, 2014.  Gross profit, as a percentage of revenues, was consistent with the same prior year period at 71%. 

Eric K. Steen, chief executive officer of InfuSystem, said, "We had solid financial results for both top and bottom lines in the third quarter of 2015, with double-digit increases in net collected revenue of 16%, gross margin that exceeded 70%, and a 61% increase in net income. We continue to gain traction on our electronic connectivity strategy as we added an additional 21 sites, bringing to 73 the number of sites connected on our EMR network. We are particularly pleased to have successful integrations with most of the major EMR platforms including EPIC, Cerner, Varian and Altos, with projects underway for Mosaiq, GE Centricity and All Scripts. Our solution gathers all the necessary data for insurance billings with little to no work for our customers.  Looking to the fourth quarter we have already shipped pump sales of $1.2 million.  All of this is a reflection of the focus of the team to get the job done effectively on a day-to-day basis. I am satisfied with the results of the quarter and believe we are well positioned for continued growth reinforcing our confidence in the long-term outlook for the Company."

Selling and marketing expenses was $2.7 million, an increase of $0.2 million, or 7%, compared to $2.5 million for the quarter ended September 30, 2014. These increases were largely attributable to increased efforts in the marketing and additional headcount as a result of our acquisition of Ciscura.

During the three months ended September 30, 2015, general and administrative ("G&A") expenses were $5.7 million, an increase of 16%, from $4.9 million for the quarter ended September 30, 2014.  The increase in G&A expenses versus the same prior year period was mainly attributable to increases in spending on IT and Pain Management initiatives of $0.2 million and increases in compensation and personnel associated with our most recent additions of centers of excellence in Houston and Atlanta of $0.5 million. 

During the quarter ended September 30, 2015, we recorded interest expense of $0.3 million, a decrease of $0.5 million, or 55%, compared to $0.8 million with the same prior year period. This is a direct result of the lower interest rates associated with the Company's new credit facility.

Adjusted EBITDA was $5.0 million for the third quarter of 2015 compared to $4.2 million for the same period in 2014 an increase of 19%. The Company utilizes Adjusted Net Income and Adjusted EBITDA as a means to measure its operating performance.  A reconciliation table from GAAP operating measures to Adjusted Net Income and Adjusted EBITDA, both non-GAAP measures, can be found in the appendix.

Financial Condition

Cash provided by operating activities for the nine months ended September 30, 2015 was $5.4 million compared to $4.2 million for the nine months ended September 30, 2014.  This increase is due to higher amounts of non-cash expenses (such as the loss on the extinguishment of debt, stock based compensation, depreciation and amortization) in the current period.

Cash used in investing activities was $12.7 million for the nine months ended September 30, 2015 compared to cash used of $2.0 million for the nine months ended September 30, 2014.  The increase in cash used was due to $5.9 million for the acquisition of Ciscura, a $0.7 million increase in spending on non-pump assets, which was a direct result of a significant ongoing investment in IT, $1.5 million increase in cash used to purchase medical equipment and $2.5 million less in cash proceeds from sale of medical equipment.  The Company bought $6.9 million of infusion pumps during the nine month period ended September 30, 2015 to serve new rental business anticipated for the remainder of 2015 and into 2016.

During the nine month period ended September 30, 2015, the Company entered into a new five-year senior secured credit agreement comprised of a $27.0 million Term Loan A, an $8.0 million Term Loan B and a $10.0 million revolving credit facility ("Revolver"). Term Loan B was unfunded at closing and as of September 30, 2015, had a balance of $6.3 million with an additional $1.7 million available to be drawn under certain conditions for acquisitions. The new credit facility strengthens the Company's balance sheet and reduced the Company's interest rate to 3.00% from the previous interest rate of 7.75%.

As of September 30, 2015, we had cash and cash equivalents of $1.0 million and $9.9 million of net availability under the Revolver compared to $0.5 million of cash and cash equivalents and $6.6 million of availability under our prior Revolver at December 31, 2014.

Jonathan P. Foster, chief financial officer, commented, "Interest expense for the third quarter of 2015 was reduced by 55% as a function of the refinancing of our credit facility, with JP Morgan Chase, in the previous quarter, favorably impacting the bottom line of the Company. During the quarter, we once again made optional pre-payments on our Term Loan A with Chase. We have now prepaid two quarters with regard to the Term Loan A with JP Morgan Chase, which will allow us to grow the Company effectively while responsibly servicing that debt and driving value for our shareholders."

Guidance

The Company reaffirms its 2015 Guidance of double-digit Net Collected Revenue growth for fiscal year 2015.

Conference Call

The Company will conduct a conference call for investors on Thursday, November 12, 2015 at 11:00 a.m. Eastern Time to discuss third quarter performance and results.  Eric K. Steen, chief executive officer, Jan Skonieczny, chief operating officer, Jonathan P. Foster, chief financial officer, and Michael McReynolds, chief information officer, will discuss the Company's financial performance and answer questions from the financial community.

To read full press release, please click here.

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