Full Press Release Details
Thursday, August 11, 2011
InfuSystem Holdings, Inc. Reports $13.1 Million of Revenues and $3.8 Million of Adjusted
EBITDA for the Second Quarter of 2011
MADISON HEIGHTS, MICHIGAN, August 11, 2011 InfuSystem Holdings, Inc. (NYSE Amex: INFU), the leading provider of infusion pumps and related services, today reported results for the second
quarter ended June 30, 2011.
Revenues for the second quarter of fiscal 2011 were $13.1 million compared with $10.5 million for the
prior year, up 25 percent. Adjusted EBITDA for the second quarter of fiscal 2011 was $3.8 million, versus $3.2 million a year ago.
Mr. Sean McDevitt, Chief Executive Officer and Chairman, commented, We performed well against many of our internal business metrics this past
quarter to achieve our growth. While our growth was 25% above last year s quarterly results, we did fall below our targeted growth due to the unanticipated impact of the nationwide generic oncology drug shortage. Specifically, we experienced
lower growth this past quarter primarily due to the prolonged shortage of the chemotherapy drug Leucovorin and to a lesser extent the chemotherapy drug, 5FU, which meaningfully limited oncologists ability to prescribe our pumps. Presently, it
is the combined effect of these two product shortages that is causing an impact. Drug shortages are not uncommon, and are typically brief and a product shortage of both drugs is extremely rare. It has been more than ten years since a shortage of
either of these drugs has had a meaningful impact on our business and, based on manufacturer s estimates of when supplies will become widely available, we expect the impact of these shortages on InfuSystem to work itself out by late Q3/early
Mr. McDevitt continued, I am very encouraged that in every respect, our aggressive growth in the
number of significant new account wins has helped to offset the impact of the drug shortage at individual oncology practice sites. Looking at the number of practices and the volume of pumps we have deployed to generate revenue, we remain optimistic
about our future prospects.
Also, while sharing, with our stockholders, the frustration with the headwinds in the markets and our
stock price, Mr. McDevitt continued, InfuSystem remains committed to its core vision of becoming a significant leader in the infusion and pre-owned equipment markets, increasing revenue, maintaining attractive EBITDA margins,
generating substantial free cash flow, paying down debt, thus improving our financial profile.
Lastly, while we would have hoped
to have announced another acquisition by this time, we remain extremely disciplined in our approach and have made considerable strides in acquisition discussions that would leverage our penetration in our markets, are synergistic, diversify our
revenue streams, and maintain our historical EBITDA margins. Our goal remains to achieve top line revenues of several hundred million dollars in our target markets over the next several years and additive, synergistic acquisitions will be a key part
of that growth, Mr. McDevitt concluded.
Revenues for the second quarter ending June 30, 2011 were $13.1 million, up 25
percent from $10.5 million in the prior year period. The increase in revenues is related to obtaining business at new customer facilities and expansion into new product lines associated with our acquisitions.
Gross profit for the three months ending June 30, 2011 was $9.0 million, up 20 percent from $7.5 million in the prior year period. It represented 68
percent of revenues for the latest year compared with 72 percent in the prior year period. The decrease in the gross margin percentage was primarily related to a higher mix of pump sales, services, and rentals as compared to third party billings.
Selling, general and administrative expenses (SG&A) for the second quarter of 2011 were $8.2 million, excluding a goodwill and intangible
assets impairment charge of $43.7 million, 5 percent higher than the prior period s $7.8 million. The increase was due to the added expenses associated with the acquired businesses, investments made in the sales organization, and amortization
of intangibles which was partially offset by the decreases in stock based compensation, acquisition related expenses, and bad debt expenses. As a percent of revenues, SG&A was 62 percent compared to 74 percent for the prior period.
As of June 30, 2011, the company determined that there may be market conditions relating to the stock price, elimination of warrants, and business
forecasts to conclude that there may be impairment. Based upon the preliminary impairment analysis performed as of June 30, 2011, the company concluded there was an impairment of goodwill and intangible assets that resulted in a non-cash charge
of $43.7 million, the majority relating to the original purchase in 2007. Although the analysis is preliminary and will need to be finalized, we do not anticipate further adjustments.
Adjusted EBITDA was $3.8 million for the second quarter of 2011 versus $3.2 million in the prior period. The company utilizes Adjusted EBITDA as a means to measure its operating performance. A
reconciliation of Adjusted EBITDA, a non-GAAP measure, to net income can be found in the appendix.
Other loss for the second quarter of 2011 was $0.5 million versus $0.3 million other loss in the prior
period, reflecting reduced interest expense and no gain on extinguishment of long term debt as incurred in the prior period. The provision for income taxes was a benefit of $15.8 million for the quarter compared to a benefit of $717 thousand in the
prior period. As a result, the second quarter net loss was $27.6 million, equal to $1.31 per diluted share, versus a $144 thousand net income, equal to $0.01 per diluted share in the prior period.
by operations for the six months ending June 30, 2011 was $2.9 million, compared to $3.4 million for the prior period. Principle and interest payments of $1.6 million were paid during the quarter and the company ended the quarter with a cash
balance of $1.7 million with $25.1 million in long-term debt, net of current.
InfuSystem Holdings, Inc. will host a conference call to share the results of its second quarter fiscal 2011 results on Thursday, August 11, at 10:00
a.m. Eastern Time. Chairman and Chief Executive Officer Sean McDevitt and Jim Froisland, Chief Financial Officer, will discuss the company s financial performance and answer questions from the financial community.
The company invites interested investors to listen to the presentation, which will be carried live on the company s Web site:
www.infusystem.com in the Investors section. To participate by telephone, the dial-in number is 800-447-0521 with confirmation number 30085852. Those who wish to listen should either dial in or go to the web site several minutes prior to the
call to register. A replay of the call can be accessed by dialing 888-843-7419, passcode 30085852#. An online archive of the conference call will remain on the company s website for the following 30 days.
About InfuSystem Holdings, Inc.
InfuSystem Holdings, Inc. is the 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 Amex 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 at www.infusystem.com.
FINANCIAL TABLES FOLLOW
INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| (in thousands, except share data) | June 30, 2011 | December 31, 2010 | ||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 1,723 | $ | 5,014 | ||||
| Accounts receivable, less allowance for doubtful accounts of $1,812 and $1,796 at June 30, 2011 and December 31, 2010, respectively | 6,727 | 6,679 | ||||||
| Inventory | 1,406 | 1,699 | ||||||
| Prepaid expenses and other current assets | 976 | 750 | ||||||
| Deferred income taxes | 1,209 | 1,147 | ||||||
| Total Current Assets | 12,041 | 15,289 | ||||||
| Property & equipment, net | 16,934 | 16,672 | ||||||
| Deferred debt issuance costs, net | 536 | 658 | ||||||
| Goodwill | 21,824 | 64,092 | ||||||
| Intangible assets, net | 31,469 | 33,252 | ||||||
| Deferred income taxes | 10,243 | |||||||
| Other assets | 851 | 401 | ||||||
| Total Assets | $ | 93,898 | $ | 130,364 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 1,716 | $ | 2,016 | ||||
| Other current liabilities | 2,579 | 4,631 | ||||||
| Derivative liabilities | 195 | 183 | ||||||
| Current portion of long-term debt | 6,419 | 5,551 | ||||||
| Total Current Liabilities | 10,909 | 12,381 | ||||||
| Long-term debt, net of current portion | 25,099 | 26,646 | ||||||
| Deferred income taxes | 5,788 | |||||||
| Other liabilities | 403 | 406 | ||||||
| Total Liabilities | $ | 36,411 | $ | 45,221 | ||||
| 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 21,185,028 and 21,163,337, respectively; outstanding 21,052,269 and 21,117,516, respectively | 2 | 2 | ||||||
| Additional paid-in capital | 87,103 | 87,004 | ||||||
| Accumulated other comprehensive loss | (98 | ) | (64 | ) | ||||
| Retained deficit | (29,520 | ) | (1,799 | ) | ||||
| Total Stockholders Equity | 57,487 | 85,143 | ||||||
| Total Liabilities and Stockholders Equity | $ | 93,898 | $ | 130,364 |
INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| (in thousands, except share data) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
| Net revenues | $ | 13,133 | $ | 10,487 | $ | 26,090 | $ | 21,421 | ||||||||
| Cost of revenues: | ||||||||||||||||
| Cost of revenues Product, service and supply costs | 2,174 | 1,719 | 4,316 | 3,394 | ||||||||||||
| Cost of revenues Pump depreciation, sales and disposals | 1,971 | 1,248 | 3,732 | 2,387 | ||||||||||||
| Gross profit | 8,988 | 7,520 | 18,042 | 15,640 | ||||||||||||
| Selling, general and administrative expenses: | ||||||||||||||||
| Provision for doubtful accounts | 927 | 1,076 | 2,149 | 2,469 | ||||||||||||
| Amortization of intangibles | 663 | 534 | 1,309 | 991 | ||||||||||||
| Asset impairment charges | 43,668 | 43,668 | ||||||||||||||
| Selling and marketing | 2,326 | 1,595 | 4,769 | 3,036 | ||||||||||||
| General and administrative | 4,251 | 4,569 | 8,767 | 7,905 | ||||||||||||
| Total sales, general and administrative: | 51,835 | 7,774 | 60,662 | 14,401 | ||||||||||||
| Operating (loss) income | (42,847 | ) | (254 | ) | (42,620 | ) | 1,239 | |||||||||
| Other loss: | ||||||||||||||||
| Gain (loss) on derivatives | 83 | (71 | ) | 83 | (460 | ) | ||||||||||
| Interest expense | (564 | ) | (1,366 | ) | (1,105 | ) | (2,172 | ) | ||||||||
| Gain on extinguishment of long term debt | 1,118 | 1,118 | ||||||||||||||
| Other income | 2 | |||||||||||||||
| Total other loss | (479 | ) | (319 | ) | (1,022 | ) | (1,514 | ) | ||||||||
| (Loss) before income taxes | (43,326 | ) | (573 | ) | (43,642 | ) | (275 | ) | ||||||||
| Income tax benefit | 15,776 | 717 | 15,920 | 407 | ||||||||||||
| Net (loss) income | $ | (27,550 | ) | $ | 144 | $ | (27,722 | ) | $ | 132 | ||||||
| Net (loss) income per share: | ||||||||||||||||
| Basic | $ | (1.31 | ) | $ | 0.01 | $ | (1.32 | ) | $ | 0.01 | ||||||
| Diluted | $ | (1.31 | ) | $ | 0.01 | $ | (1.32 | ) | $ | 0.01 | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 21,059,292 | 18,566,748 | 21,080,683 | 19,353,638 | ||||||||||||
| Diluted | 21,059,292 | 18,943,962 | 21,080,683 | 19,922,468 |
INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended June 30 | ||||||||
| (in thousands) | 2011 | 2010 | ||||||
| OPERATING ACTIVITIES | ||||||||
| Net (loss) income | $ | (27,722 | ) | $ | 132 | |||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
| (Gain) loss on derivative liabilities | (83 | ) | 460 | |||||
| Gain on extinguishment of long-term debt | (1,118 | ) | ||||||
| Provision for doubtful accounts | 2,149 | 2,469 | ||||||
| Depreciation | 3,167 | 2,380 | ||||||
| Loss on disposal of pumps | 794 | 179 | ||||||
| Amortization of intangible assets | 1,309 | 991 | ||||||
| Asset impairment charges | 43,668 | |||||||
| Amortization of deferred debt issuance costs | 122 | 834 | ||||||
| Stock-based compensation | 502 | 997 | ||||||
| Deferred income taxes | (16,031 | ) | (814 | ) | ||||
| Changes in assets and liabilities, exclusive of effects of acquisitions: | ||||||||
| (Increase) in accounts receivable, net of provision | (2,197 | ) | (2,682 | ) | ||||
| Decrease (increase) in other current assets | 67 | (404 | ) | |||||
| (Increase) in other assets | (166 | ) | (860 | ) | ||||
| (Decrease) increase in accounts payable and other liabilities | (2,651 | ) | 1,165 | |||||
| Decrease in derivative liabilities from termination of interest rate swap | (365 | ) | ||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 2,928 | 3,364 | ||||||
| INVESTING ACTIVITIES | ||||||||
| Capital expenditures | (2,383 | ) | (343 | ) | ||||
| Acquisition of intangible assets | (942 | ) | (400 | ) | ||||
| Cash paid for acquisition, net of cash acquired | (16,418 | ) | ||||||
| NET CASH (USED IN) INVESTING ACTIVITIES | (3,325 | ) | (17,161 | ) | ||||
| FINANCING ACTIVITIES | ||||||||
| Principal payments on term loan | (2,061 | ) | (20,568 | ) | ||||
| Cash proceeds from term loan | 30,000 | |||||||
| Common stock repurchased to satisfy statutory witholding on stock based compensation | (38 | ) | ||||||
| Treasury shares repurchased | (248 | ) | ||||||
| Principal payments on capital lease obligations | (585 | ) | (331 | ) | ||||
| NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (2,894 | ) | 9,063 | |||||
| Net change in cash and cash equivalents | (3,291 | ) | (4,734 | ) | ||||
| Cash and cash equivalents, beginning of period | 5,014 | 7,750 | ||||||
| Cash and cash equivalents, end of period | $ | 1,723 | $ | 3,016 |
INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| (in thousands, except share data) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
| Net (loss) income | $ | (27,550 | ) | $ | 135 | $ | (27,722 | ) | $ | 123 | ||||||
| Adjustments: | ||||||||||||||||
| Interest expense | 564 | 1,366 | 1,105 | 2,172 | ||||||||||||
| Income tax (benefit) expense | (15,776 | ) | (708 | ) | (15,920 | ) | (398 | ) | ||||||||
| Depreciation | 1,609 | 1,209 | 3,167 | 2,380 | ||||||||||||
| Amortization | 663 | 534 | 1,309 | 991 | ||||||||||||
| EBITDA | (40,490 | ) | 2,536 | (38,061 | ) | 5,268 | ||||||||||
| Adjustments: | ||||||||||||||||
| Asset impairment charges | 43,668 | 43,668 | ||||||||||||||
| (Gain) loss on derivatives | (83 | ) | 71 | (83 | ) | 460 | ||||||||||
| Stock based compensation | 254 | 897 | 502 | 997 | ||||||||||||
| Sales and other incentives | 308 | 699 | ||||||||||||||
| Acquisition related expenses | 62 | 785 | 247 | 785 | ||||||||||||
| Severance | 65 | 65 | ||||||||||||||
| Gain on debt extinguishment | (1,118 | ) | (1,118 | ) | ||||||||||||
| Adjusted EBITDA | $ | 3,784 | $ | 3,171 | $ | 7,037 | $ | 6,392 |