InfuSystem Holdings, Inc. Reports Higher Fourth Quarter 2012 Revenues and Second Straight Quarterly

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InfuSystem Holdings, Inc. Reports Higher Fourth Quarter 2012 Revenues and Second Straight Quarterly Profit

Company Improves Liquidity Position

MADISON HEIGHTS, Mich.--(BUSINESS WIRE)-- 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 its second consecutive quarter of profitability in the fourth quarter ending December 31, 2012.


Net income in the fourth quarter was $0.2 million, equal to $0.01 per diluted share, compared to a $0.8 million net loss, or $0.04 loss per diluted share, in the prior year period. For the full year ended December 31, 2012, the Company's net loss was $1.5 million, or $0.07 per diluted share, versus a net loss of $45.4 million, or $2.16 per diluted share, in 2011. The prior- year period included a $67.6 million asset impairment charge.

Gross profit for the three months ending December 31, 2012, was $12.0 million, up 48% from $8.1 million in the fourth quarter of 2011. Gross profit for the full year 2012 was $42.9 million, an increase of 21% compared to $35.4 million in 2011.

Revenues in the fourth quarter were $16.2 million, up 16% from $14.0 million in the fourth quarter of 2011. Total revenues for the year ended December 31, 2012, were $58.8 million, an 8% improvement from $54.6 million in 2011. The increase in revenues is primarily related to the addition of larger customers, increased penetration into existing customer accounts, and the resolution of the oncology drug shortage from 2011. Also, during the fourth quarter of 2012, a major group of third party payors revised their claim processing guidelines that affected all durable medical equipment providers, which pushed some claims to be billed at higher out-of-network rates directly to patients.

SG&A increased to $10.4 million from $8.8 million, in addition to other expenses of $1.2 million compared with $0.5 million of other income a year ago. Adjusted EBITDA for the latest quarter was $3.8 million, up from the $1.5 million for the prior-year period, as adjusted on a comparable basis.

"We are very pleased with our improved fourth quarter performance and fiscal year-over-year growth for the Company," said Dilip Singh, Interim Chief Executive Officer. "The Company has accumulated annualized cost-savings of approximately $1.6 million since the current management team took control in April of 2012. That, combined with our securing a new debt facility during the fourth quarter, has helped restore the Company's liquidity and create a far stronger balance sheet. Equally important, we have generated sufficient momentum to increase the number of third-party payor relationships and expand our provider footprint while delivering best in class service and patient satisfaction. Our efforts are now clearly focused on sustaining long-term growth," Singh added.

Operating Results

Gross profit for the year ended December 31, 2012 was $42.9 million, an increase of 21% compared to $35.4 million in the prior year. It represented 73% of revenues in the current year compared to 65% in the prior year. The increase in the gross margin as a percentage of revenue in 2012 was primarily related to the increase in rental revenue, specifically third party billings, which generally have a higher gross profit margin.

Selling and marketing expenses were $9.9 million compared to $9.4 million for the year ended December 31, 2011. The increase in selling and marketing expenses is primarily related to expenses incurred by the increase in associated revenues as well as increased retention and travel costs. Compared to the prior year, these expenses remained consistent at 17% of revenues.

During the year ended December 31, 2012, general and administrative expenses were $23.1 million, compared to $18.0 million for the year ended December 31, 2011. General and administrative expenses have increased from 33% to 39% of revenues for the year ended December 31, 2012 compared to the same period in the prior year. The increase was primarily due to an increase in professional service costs related to the Concerned Stockholder Group. Additional legal, accounting and outside service fees of $2.2 million were incurred during the year relating to this matter and the related early extinguishment of debt; severance payments for the former CEO amounted to $1.0 million; $0.6 million was recorded for retention payments to key employees during this ongoing matter; and we incurred $0.6 million associated with our decision to evaluate potential strategic alternatives.

Additional increases were mainly attributed to an increase in finance and accounting staff and several other general and administrative accounts. These costs were partially offset by the reversal of previously recognized stock compensation expense of $1.4 million.

Adjusted EBITDA was $13.1 million for the latest fiscal year. This compares to 2011's adjusted EBITDA, adjusted on a comparable basis, of $10.3 million. 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 fiscal 2012 was $5.5 million, down from the $6.7 million for the prior year. This decrease is mainly attributed to higher accounts receivable levels due to the higher revenue in the fourth quarter of 2012. As of December 31, 2012, we had cash and cash equivalents of $2.3 million and $4.7 million of availability on the revolving line-of-credit compared to $0.8 million and $4.9 million of availability on the revolving line-of-credit at December 31, 2011. This increase is due to the new credit facility and better cash management during the year.

Conference Call

The Company will conduct a conference call for investors on Thursday, March 28, 2013 at 9:00 a.m. Eastern Time to discuss fourth quarter performance and results. Dilip Singh, Interim 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 (888) 895-5479 and use the confirmation number 34394082.

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 atwww.infusystem.com.

 

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

     December 31,   December 31,
(in thousands, except share data)   20122011
 
ASSETS
Current Assets:
Cash and cash equivalents$2,326$799
Accounts receivable, less allowance for doubtful accounts of $3,136 and
$1,773 at December 31, 2012 and December 31, 2011, respectively8,5117,350
Accounts receivable - related party-98
Inventory1,3391,309
Other current assets684934
Deferred income taxes 1,971  682 
 
Total Current Assets14,83111,172
Medical equipment held for sale or rental2,6262,013
Medical equipment in rental service, net of accumulated depreciation13,07114,732
Property & equipment, net of accumulated depreciation867927
Deferred debt issuance costs, net2,362421
Intangible assets, net25,54128,221
Deferred income taxes17,80618,187
Other assets 419  590 
 
Total Assets$77,523 $76,263 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable$2,135$4,004
Accounts payable - related party959
Derivative liabilities-258
Current portion of long-term debt3,9536,576
Other current liabilities 4,098  2,235 
 
Total Current Liabilities10,19513,132
Long-term debt, net of current portion27,31522,551
 
Other liabilities -  415 
 
Total Liabilities$37,510 $36,098 
 
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

   21,990,000 and 21,802,515, as of December 31, 2012 and issued and outstanding

   21,330,235 and 21,132,545 as of December 31, 2011, respectively

 
22
Additional paid-in capital88,74287,541
Accumulated other comprehensive loss-(136)
Retained deficit (48,731) (47,242)
 
Total Stockholders' Equity 40,013  40,165 
 
Total Liabilities and Stockholders' Equity$77,523 $76,263 
 
 

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 
     Three Months Ended   Twelve Months Ended
December 31,December 31,
(Unaudited)   
(in thousands, except share data)   2012   201120122011
 
Net revenues:
Rentals$14,568$11,933$53,471$46,795
Product sales 1,665  2,109  5,357  7,842 
Net revenues16,23314,04258,82854,637
 
Cost of revenues:
Cost of revenues - Product, service and supply costs2,4052,4659,1659,128
Cost of revenues - Pump depreciation and loss on disposal 1,824  3,495  6,752  10,154 
Gross profit 12,004  8,082  42,911  35,355 
 
Selling, general and administrative expenses:
Provision for doubtful accounts2,1321,0665,2514,099
Amortization of intangibles7066712,7342,662
Asset impairment charges---67,592
Selling and marketing2,2292,2839,8649,371
General and administrative 5,374  4,759  23,062  17,987 
 
Total selling, general and administrative: 10,441  8,779  40,911  101,711 
 
Operating income (loss)1,563(697)2,000(66,356)
 
Other income (loss):
Gain on derivatives---83
Interest expense(1,105)(547)(3,340)(2,193)
Loss on extinguishment of long term debt(119)-(671)-
Other (expense) income (7) 8  (141) (111)
 
Total other loss (1,231) (539) (4,152) (2,221)
 
Income (loss) before income taxes332(1,236)(2,152)(68,577)
Income tax (expense) benefit
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