From the Wires
InfuSystem Holdings Reports 14.5% Revenue Increase and Approximately $3.6 Million of Adjusted EBITDA for the Third Quarter of 2008
Nov. 5, 2008 07:30 AM
MADISON HEIGHTS, Mich., Nov. 5 /PRNewswire-FirstCall/ --InfuSystem Holdings, Inc. (OTC Bulletin Board: INHI; INHIW; INHIU), the leading provider of ambulatory infusion pumps and associated clinical services, today announced financial results and provided a business update for the third quarter ended September 30, 2008.
Mr. Steve Watkins, chief executive officer, commented, "We are pleased to report a solid 14.5% increase in revenue for the third quarter of 2008, compared to the results of InfuSystem, Inc. for the same period last year, while under its prior ownership. Since our acquisition of InfuSystem, Inc. during the fourth quarter of 2007, we have generated very strong cash flow. During the third quarter alone, we achieved $3.6 million of adjusted EBITDA and now have approximately $10.8 million of cash and cash equivalents as of September 30, 2008."
"During the third quarter, we signed agreements with 9 new managed care organizations. Our increasing number of contracts and covered lives is further evidence of our overall market penetration and acceptance. We are the only nationwide provider of ambulatory infusion pumps with contracts in place with most national and regional insurance providers. We see this as a significant competitive advantage, since physicians prefer to work with a single provider that can accept insurance from most or all of their patients. Other competitive advantages include: our vast pump selection; our nationwide sales force; and most importantly, our 24-hour staffed nurse hotline for patient questions and assistance. Given these strengths, we continue to explore acquisitions and strategic partnerships that should enable us to expand our product and service offering in order to leverage our deep penetration into oncologist practices across the U.S."
Mr. Watkins concluded, "We are also continuing to make headway on a number of operational initiatives designed to boost revenue and enhance efficiency within the organization. These initiatives include upgraded computer systems and software to: support our sales initiatives; improve inter-departmental communication; and streamline billing. In response to our customers' requests, we have also implemented an on-line ordering system whereby oncology practices can order pumps directly through our website. This simplifies the ordering process for our customers while providing operational benefits to our company."
Financial Results
Revenue for the third quarter ended September 30, 2008 was $9.0 million, versus $0 for the same period in 2007, which reflects the revenues recognized by InfuSystem Holdings, Inc. following the acquisition of InfuSystem, Inc. from I-Flow Corporation.
Operating income for the third quarter of 2008 was $1.6 million versus an operating loss of ($699,000) for the same period in 2007. The increase in operating income for the third quarter of 2008 reflects revenue and operating expenses recorded for InfuSystem, Inc. following the acquisition.
The net income for the third quarter of 2008 was $5.7 million, or $0.30 per diluted share, compared to net loss of ($505,000) or $(0.03) per diluted share, for the same period in 2007. The net income for the third quarter of 2008 included a $5.4 million gain on derivative financial instruments, which is predominantly attributable to the decrease in the publicly traded value of the Company's warrants during the quarter, compared to a ($675,000) loss for the third quarter of 2007.
Adjusted EBITDA for the third quarter ended September 30, 2008 was $3.6 million, as compared to an Adjusted EBITDA loss of approximately ($435,000) for the same period of 2007. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, and excludes gain (loss) on derivative financial instruments, and stock-based compensation. Adjusted EBITDA is not a measure of performance calculated in accordance with accounting principles generally accepted in the United States ("GAAP"), and should not be considered in isolation of, or as a substitute for, earnings as an indicator of operating performance, or cash flows from operating activities as a measure of liquidity. The Company believes the presentation of Adjusted EBITDA is relevant and useful by enhancing the readers' ability to understand the Company's operating performance. The Company's management utilizes Adjusted EBITDA as a means to measure performance. The Company's measurements of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. The tables below reconcile Adjusted EBITDA, a non-GAAP measure, to net income for the three and nine months ended September 30, 2008 and 2007.
Reconciliation from Net Income to Adjusted EBITDA:
(in thousands, except per share data)
Three Months Ended September 30
I-Flow Predecessor
2008 2007 2007
Net Income $5,704 $(505) $1,308
Adjustments:
Interest expense 937 18 -
Interest income (11) (1,210) -
Income tax expense 399 323 936
Depreciation -- Pumps 978 - 1,032
Depreciation -- Other 47 - 39
Amortization 456 - -
EBITDA $8,511 $(1,374) $3,315
Adjustments:
(Gain) loss on derivatives (5,381) 675 -
Stock based compensation 479 264 159
Adj. EBITDA $3,609 $(435) $3,474
Adj. EBITDA EPS - basic 0.20 (0.02) N/A
Adj. EBITDA EPS - diluted 0.19 (0.02) N/A
Reconciliation from Net Income to Adjusted EBITDA:
(in thousands, except per share data)
Nine Months Ended September 30
I-Flow Predecessor
2008 2007 2007
Net Income $8,700 $(928) $3,604
Adjustments:
Interest expense 2,828 33 (237)
Interest income (14) (3,534) -
Income tax expense 399 752 2,460
Depreciation -- Pumps 2,908 - 2,307
Depreciation -- Other 133 - 125
Amortization 1,370 - -
EBITDA $16,325 $(3,677) $8,259
Adjustments:
(Gain) loss on derivatives (8,665) 675 -
Stock based compensation 1,166 1,490 305
Adj. EBITDA $8,826 $(1,512) $8,564
Adj. EBITDA EPS - basic 0.50 (0.08) N/A
Adj. EBITDA EPS - diluted 0.47 (0.08) N/A
About InfuSystem Holdings, Inc.
InfuSystem is the leading provider of ambulatory infusion pumps and associated clinical services for oncology practices and their patients in the U.S. These pumps allow for the gradual delivery of a drug over a period of days in the privacy of one's home, compared to bolus infusion chemotherapy treatments that are given in a single high dose over a short period of time. Improved efficacy of the drugs, patient comfort, reimbursement to doctors for appropriate services and continuity of care all play a role in the growing trend toward this form of treatment. InfuSystem's pumps are primarily used for colorectal cancer, but they have been approved for other forms of cancer, thereby greatly enhancing the market opportunity for InfuSystem.
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 InfuSystem's publicly filed documents.
(Tables follow)
InfuSystem Holdings, Inc.
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
(in thousands, except share data) 2008 2007
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents 10,795 3,960
Accounts receivable, less allowance
for doubtful accounts of $1,935 and
$1,638 at September 30, 2008 and
December 31, 2007, respectively;
September 30, 2008 and December 31, 2007
include $40 and $103 due from I-Flow,
respectively 4,132 6,304
Inventory supplies 397 364
Prepaid expenses and other current assets 394 1,263
Deferred income taxes 4 4
Total Current Assets 15,722 11,895
Property & equipment, net 11,232 13,504
Deferred debt issuance costs, net 1,424 1,918
Deferred Income Taxes - -
Goodwill 56,580 56,544
Intangible assets, net 31,195 32,565
Total Assets 116,153 116,426
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable 1,213 1,076
Other current liabilities 776 1,886
Derivative liabilities 3,742 12,407
Current portion of long-term debt;
September 30, 2008 and December 31,
2007 include $3,270 and $2,044 payable
to I-Flow, respectively 3,348 2,044
Total Current Liabilities 9,079 17,413
Long-term debt, net of current portion;
September 30, 2008 and December 31, 2007
include $27,798 and $30,250 payable to
I-Flow, respectively 28,159 30,250
Deferred income taxes 403 4
Total Liabilities 37,641 47,667
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 18,426,421 and
18,315,430, respectively; outstanding
17,192,377 and 16,824,295, respectively 2 2
Additional paid-in capital 80,490 79,437
Retained deficit (1,980) (10,680)
Total Stockholders' Equity 78,512 68,759
Total Liabilities and Stockholders'
Equity 116,153 116,426
InfuSystem Holdings, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September 30,
I-Flow
(in thousands, except Predecessor
per share data) 2008 2007 2007
Net revenues $8,958 $- $7,822
Operating expenses:
Cost of Revenues -- Product
and supply costs 1,340 - 1,159
Cost of Revenues -- Pump
depreciation 978 - 1,032
Provision for doubtful
accounts 702 - 619
Amortization of intangibles 456 - -
Selling and marketing 1,131 - 1,036
General and administrative 2,703 699 1,732
Total Operating Expenses 7,310 699 5,578
Other income (expense):
Gain (loss) on derivatives 5,381 (675) -
Interest income 11 1,210 -
Interest expense (937) (18) -
Total other income 4,455 517 -
Income (loss) before income taxes 6,103 (182) 2,244
Income tax expense (399) (323) (936)
Net income (loss) 5,704 (505) 1,308
Net income (loss) per share:
Basic 0.31 (0.03) N/A
Diluted 0.30 (0.03) N/A
Weighted average shares outstanding:
Basic 18,442,957* 18,625,252 N/A
Diluted 18,794,182 18,625,252 N/A
Nine Months Ended September 30,
I-Flow
(in thousands, except Predecessor
per share data) 2008 2007 2007
Net revenues $26,323 $- $23,528
Operating expenses:
Cost of Revenues -- Product
and supply costs 4,182 - 3,746
Cost of Revenues -- Pump
depreciation 2,908 - 2,307
Provision for doubtful accounts 2,477 - 3,278
Amortization of intangibles 1,370 - -
Selling and marketing 3,401 - 3,030
General and administrative 8,737 3,002 5,340
Total Operating Expenses 23,075 3,002 17,701
Other income (expense):
Gain (loss) on derivatives 8,665 (675) -
Interest income 14 3,534 -
Interest expense (2,828) (33) 237
Total other income 5,851 2,826 237
Income (loss) before income taxes 9,099 (176) 6,064
Income tax expense (399) (752) (2,460)
Net income (loss) 8,700 (928) 3,604
Net income (loss) per share:
Basic 0.49 (0.05) N/A
Diluted 0.47 (0.05) N/A
Weighted average shares
outstanding:
Basic 17,757,075* 18,625,252 N/A
Diluted 18,581,789 18,625,252 N/A
* Includes, from April 25, 2008, the 1,234,044 shares referenced in Notes 9 and 10 to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
InfuSystem Holdings, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
I-Flow
Predecessor
(in thousands) 2008 2007 2007
OPERATING ACTIVITIES
Net Income (Loss) 8,700 (928) 3,604
Items included in net income
not requiring cash:
(Gain) loss on derivative
liabilities (8,665) 675 -
Provision for doubtful
accounts 2,477 - 3,278
Depreciation 3,041 - 2,432
Amortization of intangible
assets 1,370 - -
Amortization of deferred
debt issuance costs 494 - -
Loss on disposal of assets 385 - 241
Interest Income on Investments
Held in Trust - (3,528) -
Withdrawal of interest earned
on investments held in trust - 422 -
Stock-based compensation 1,166 1,490 305
Deferred Income Taxes 399 - (517)
Changes in current assets and
liabilities:
Decrease (increase) in accounts
receivable (305) - (1,636)
Decrease (increase) in prepaid
expenses and other current
assets 836 439 (129)
(Decrease) increase in accounts
payable and other current
liabilities (628) 768 (953)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 9,270 (662) 6,625
INVESTING ACTIVITIES
Payment of deferred
acquisition costs (105) (252) -
Capital expenditures (951) - (2,664)
Proceeds from sale of property - - 231
NET CASH USED IN INVESTING
ACTIVITIES (1,056) (252) (2,433)
FINANCING ACTIVITIES
Net capital distributions to
parent - - (5,147)
Principal payments on term loan (1,226) - -
Common stock repurchased to
satisfy minimum statutory
withholding on stock-based
compensation (113) - -
Principal payments on capital
lease obligation (40) - -
Proceeds from issuance of
warrants - 514 -
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (1,379) 514 (5,147)
Net change in cash and cash
equivalents 6,835 (400) (955)
Cash and cash equivalents,
beginning of period 3,960 427 1,956
Cash and cash equivalents,
end of period 10,795 27 1,001
SUPPLEMENTAL DISCLOSURES
Cash paid for interest
(including swap payments/
proceeds, and excluding
capitalized interest) $2,334 $4 $-
Cash paid for income taxes $478 $695 $186
NON-CASH TRANSACTIONS
Additions to property $80 $- $241
Property acquired with a
capital lease $480 $- $-
Issuance of vested restricted
shares (number of shares) 150 - -
SOURCE InfuSystem Holdings, Inc.
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