UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended ~~September 30, 2021~~March 31, 2022

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from _____ to _____

Commission File Number: 001-35020

INFUSYSTEM HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware			20-3341405
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

3851 West Hamlin Road

Rochester Hills, Michigan 48309

(Address of Principal Executive Offices)

Registrant’s Telephone Number, including Area Code: (248) 291-1210

Securities Registered Pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
Common Stock, par value $0.0001 per share	INFU	NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~November 10, 2021, 20,649,447~~April 29, 2022, 20,540,143 shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.

Table of Contents

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

Index to Form 10-Q


		PAGE
PART I -	FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	-Unaudited Condensed Consolidated Balance Sheets as of ~~September~~March ~~30, 2021~~3 1 , 202 2 and December 31, ~~2020~~202 1	3
	-Unaudited Condensed Consolidated Statements of Operations and Comprehensive ~~(Loss)~~ Income for the three ~~and~~ ~~nine~~months ended ~~Sep~~March ~~tember~~ 3 ~~30, 2021~~1 , 202 2 and ~~2020~~202 1	4
	-Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three ~~and~~ ~~nine~~months ended ~~September~~March ~~30, 2021~~3 1 , 202 2 and ~~2020~~202 1	5
	-Unaudited Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September~~March ~~30, 2021~~3 1 , 202 2 and ~~2020~~202 1	6
	-Notes to the Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2119

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3227

Item 4.	Controls and Procedures	3228

PART II -	OTHER INFORMATION

Item 1.	Legal Proceedings	3229

Item 1A.	Risk Factors	3329

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3329

Item 3.	Defaults Upon Senior Securities	3329

Item 4.	Mine Safety Disclosures	3330

Item 5.	Other Information	3330

Item 6.	Exhibits	3431

	Signatures	3532

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


		As of					As of
(in thousands, except par value and share data)	(in thousands, except par value and share data)	September 30, 2021		December 31, 2020		(in thousands, except par value and share data)	March 31, 2022		December 31, 2021

ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	165	$	9,648	Cash and cash equivalents	$	405	$	186
Accounts receivable, net	Accounts receivable, net	15,845		14,720		Accounts receivable, net	16,392		15,405
Inventories	Inventories	3,705		3,001		Inventories	3,878		3,939
Other current assets	Other current assets	2,151		2,402		Other current assets	2,585		2,535

Total current assets	Total current assets	21,866		29,771		Total current assets	23,260		22,065
Medical equipment for sale or rental	Medical equipment for sale or rental	1,540		1,603		Medical equipment for sale or rental	1,987		1,742
Medical equipment in rental service, net of accumulated depreciation	Medical equipment in rental service, net of accumulated depreciation	36,431		35,611		Medical equipment in rental service, net of accumulated depreciation	39,113		39,871
Property & equipment, net of accumulated depreciation	Property & equipment, net of accumulated depreciation	4,426		4,296		Property & equipment, net of accumulated depreciation	4,375		4,523
Goodwill	Goodwill	3,710		—		Goodwill	3,710		3,710
Intangible assets, net	Intangible assets, net	11,928		11,177		Intangible assets, net	10,219		10,930
Operating lease right of use assets	Operating lease right of use assets	3,859		4,461		Operating lease right of use assets	3,916		4,241
Deferred income taxes	Deferred income taxes	10,819		9,967		Deferred income taxes	10,277		10,033
Other assets	Other assets	207		105		Other assets	1,380		471

Total assets	Total assets	$	94,786	$	96,991	Total assets	$	98,237	$	97,586

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	6,703	$	6,779	Accounts payable	$	8,242	$	7,862
Current portion of long-term debt	Current portion of long-term debt	336		9,423		Current portion of long-term debt	156		349
Other current liabilities	Other current liabilities	7,446		6,795		Other current liabilities	5,543		4,685

Total current liabilities	Total current liabilities	14,485		22,997		Total current liabilities	13,941		12,896
Long-term debt, net of current portion	Long-term debt, net of current portion	30,559		29,378		Long-term debt, net of current portion	34,792		32,748

Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	3,287		3,864		Operating lease liabilities, net of current portion	3,451		3,670

Total liabilities	Total liabilities	48,331		56,239		Total liabilities	52,184		49,314

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.0001 par value: authorized 1,000,000 shares; none issued	Preferred stock, $0.0001 par value: authorized 1,000,000 shares; none issued	—		—		Preferred stock, $0.0001 par value: authorized 1,000,000 shares; none issued	—		—
Common stock, $0.0001 par value: authorized 200,000,000 shares; issued and outstanding 24,125,687 and 20,607,198, respectively, as of September 30, 2021, and issued and outstanding 23,816,193 and 20,297,704, respectively, as of December 31, 2020		2		2
Common stock, $0.0001 par value: 200,000,000 shares authorized; 20,540,143 shares issued and outstanding as of March 31, 2022 and 20,699,546 shares issued and outstanding as of December 31, 2021						Common stock, $0.0001 par value: 200,000,000 shares authorized; 20,540,143 shares issued and outstanding as of March 31, 2022 and 20,699,546 shares issued and outstanding as of December 31, 2021	2		2
Additional paid-in capital	Additional paid-in capital	89,385		84,785		Additional paid-in capital	103,373		101,905
Accumulated other comprehensive income	Accumulated other comprehensive income	70		—		Accumulated other comprehensive income	955		268
Retained deficit	Retained deficit	(43,002)		(44,035)		Retained deficit	(58,277)		(53,903)

Total stockholders’ equity	Total stockholders’ equity	46,455		40,752		Total stockholders’ equity	46,053		48,272

Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	94,786	$	96,991	Total liabilities and stockholders’ equity	$	98,237	$	97,586

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE ~~(LOSS)~~ INCOME

(UNAUDITED)


(in thousands, except share and per share data)	(in thousands, except share and per share data)	Three Months Ended September 30,				Nine Months Ended September 30,				(in thousands, except share and per share data)	Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021

Net revenues	Net revenues	$	26,566	$	25,125	$	75,863	$	72,677	Net revenues	$	26,763	$	24,463
Cost of revenues	Cost of revenues	11,308		10,003		30,979		28,914		Cost of revenues	11,396		9,887
Gross profit	Gross profit	15,258		15,122		44,884		43,763		Gross profit	15,367		14,576

Selling, general and administrative expenses:	Selling, general and administrative expenses:									Selling, general and administrative expenses:
Provision for doubtful accounts	Provision for doubtful accounts	10		11		(99)		534		Provision for doubtful accounts	47		(70)
Amortization of intangibles	Amortization of intangibles	1,125		1,075		3,264		3,225		Amortization of intangibles	710		1,043
Selling and marketing	Selling and marketing	2,908		2,196		7,964		7,263		Selling and marketing	3,319		2,376
General and administrative	General and administrative	11,566		8,587		32,537		24,949		General and administrative	11,816		10,354

Total selling, general and administrative	Total selling, general and administrative	15,609		11,869		43,666		35,971		Total selling, general and administrative	15,892		13,703

Operating (loss) income	Operating (loss) income	(351)		3,253		1,218		7,792		Operating (loss) income	(525)		873
Other expense:	Other expense:									Other expense:
Interest expense	Interest expense	(270)		(283)		(909)		(1,018)		Interest expense	(277)		(322)
Other (expense) income		(44)		8		(150)		(20)
Other expense										Other expense	(28)		(69)

(Loss) Income before income taxes		(665)		2,978		159		6,754
Benefit from (provision for) income taxes		217		(38)		874		(92)
(Loss) income before income taxes										(Loss) income before income taxes	(830)		482
Benefit from income taxes										Benefit from income taxes	462		179
Net (loss) income	Net (loss) income	$	(448)	$	2,940	$	1,033	$	6,662	Net (loss) income	$	(368)	$	661
Net (loss) income per share	Net (loss) income per share									Net (loss) income per share
Basic	Basic	$	(0.02)	$	0.15	$	0.05	$	0.33	Basic	$	(0.02)	$	0.03
Diluted	Diluted	$	(0.02)	$	0.14	$	0.05	$	0.31	Diluted	$	(0.02)	$	0.03
Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	20,577,886		20,179,056		20,468,842		20,060,416		Basic	20,609,372		20,338,160
Diluted	Diluted	20,577,886		21,663,414		21,995,216		21,637,481		Diluted	20,609,372		21,937,639

Comprehensive income:	Comprehensive income:									Comprehensive income:
Net (loss) income	Net (loss) income	$	(448)	$	2,940	$	1,033	$	6,662	Net (loss) income	$	(368)	$	661
Other comprehensive income:	Other comprehensive income:									Other comprehensive income:
Unrealized gain on hedges	Unrealized gain on hedges	41		—		93		—		Unrealized gain on hedges	905		158
Provision for income tax on unrealized hedge gain	Provision for income tax on unrealized hedge gain	(10)		—		(23)		—		Provision for income tax on unrealized hedge gain	(218)		—
Net comprehensive (loss) income		$	(417)	$	2,940	$	1,103	$	6,662
Net comprehensive income										Net comprehensive income	$	319	$	819

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

STOCKHOLDERS’ EQUITY

(UNAUDITED)


		Common Stock			Additional Paid in Capital				Retained Deficit			Accumulated Other Comprehensive Income		Treasury Stock					Total Stockholders’ Equity					Common Stock				Additional Paid in Capital				Retained Deficit			Accumulated Other Comprehensive Income				Treasury Stock					Total Stockholders’ Equity
(in thousands)	(in thousands)	Shares	Par Value Amount								Shares			Par Value Amount		(in thousands)		Shares					Par Value Amount								Shares							Par Value Amount
Balances at June 30, 2020		23,651	$	2			$	83,845				$	(57,645)	$	—	(3,518)					$	—		$	26,202
Balances at December 31, 2020																						Balances at December 31, 2020		23,816		$	2		$	84,785			$	(44,035)		$	—			(3,518)		$	—		$	40,752
Stock-based shares issued upon vesting - gross	Stock-based shares issued upon vesting - gross	127	—		—				—			—		—		—			—			Stock-based shares issued upon vesting - gross		129		—		139				—			—				—		—			139
Stock-based compensation expense	Stock-based compensation expense	—	—		659				—			—		—		—			659			Stock-based compensation expense		—		—		1,635				—			—				—		—			1,635
Employee stock purchase plan	Employee stock purchase plan	15	—		116				—			—		—		—			116			Employee stock purchase plan		—		—		169				—			—				—		—			169
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation	Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation	(38)	—		(528)				—			—		—		—			(528)			Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation		(30)		—		(565)				—			—				—		—			(565)

Net income		—	—		—				2,940			—		—		—			2,940
Balances at September 30, 2020		23,755	$	2	$	84,092			$	(54,705)		$	—	(3,518)		$	—		$	29,389

Balances at June 30, 2021		24,084	$	2	$	87,213			$	(42,554)		$	39	(3,518)		$	—		$	44,700
Stock-based shares issued upon vesting - gross		25	—		38				—			—		—		—			38
Stock-based compensation expense		—	—		1,955				—			—		—		—			1,955
Employee stock purchase plan		16	—		179				—			—		—		—			179

Other comprehensive income	Other comprehensive income	—	—		—				—			31		—		—			31			Other comprehensive income		—		—		—				—			158				—		—			158
Net loss		—	—		—				(448)			—		—		—			(448)
Balances at September 30, 2021		24,125	$	2	$	89,385			$	(43,002)		$	70	(3,518)		$	—		$	46,455
Net income																						Net income		—		—		—				661			—				—		—			661
Balances at March 31, 2021																						Balances at March 31, 2021		23,915		$	2	$	86,163			$	(43,374)		$	158			(3,518)		$	—		$	42,949

Balances at December 31, 2019		23,401	$	2	$	83,699			$	(61,367)		$	—	(3,518)		$	—		$	22,334
Stock-based shares issued upon vesting - gross		419	—		—				—			—		—		—			—
Stock-based compensation expense		—	—		1,222				—			—		—		—			1,222
Employee stock purchase plan		29	—		190				—			—		—		—			190
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation		(122)	—		(1,269)				—			—		—		—			(1,269)
Common stock issued		28	—		250				—			—		—		—			250

Net income		—	—		—				6,662			—		—		—			6,662
Balances at September 30, 2020		23,755	$	2	$	84,092			$	(54,705)		$	—	(3,518)		$	—		$	29,389

Balances at December 31, 2020		23,816	$	2	$	84,785			$	(44,035)		$	—	(3,518)		$	—		$	40,752
Balances at December 31, 2021																						Balances at December 31, 2021		20,700		$	2	$	101,905			$	(53,903)		$	268			—		$	—		$	48,272
Stock-based shares issued upon vesting - gross	Stock-based shares issued upon vesting - gross	334	—		431				—			—		—		—			431			Stock-based shares issued upon vesting - gross		125		—		239				—			—				—		—			239
Stock-based compensation expense	Stock-based compensation expense	—	—		4,962				—			—		—		—			4,962			Stock-based compensation expense		—		—		1,047				—			—				—		—			1,047
Employee stock purchase plan	Employee stock purchase plan	32	—		348				—			—		—		—			348			Employee stock purchase plan		28		—		236				—			—				—		—			236
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation	Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation	(57)	—		(1,141)				—			—		—		—			(1,141)			Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation		(3)		—		(54)				—			—				—		—			(54)

Common stock repurchased as part of share repurchase program																						Common stock repurchased as part of share repurchase program		(310)		—		—				(4,006)			—				—		—			(4,006)

Other comprehensive income	Other comprehensive income	—	—		—				—			70		—		—			70			Other comprehensive income		—		—		—				—			687				—		—			687
Net income		—	—		—				1,033			—		—		—			1,033
Balances at September 30, 2021		24,125	$	2	$	89,385			$	(43,002)		$	70	(3,518)		$	—		$	46,455
Net loss																						Net loss		—		—		—				(368)			—				—		—			(368)
Balances at March 31, 2022																						Balances at March 31, 2022		20,540		$	2	$	103,373			$	(58,277)		$	955			—		$	—		$	46,053

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


		Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021

OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income		$	1,033	$	6,662
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income						Net (loss) income	$	(368)	$	661
Adjustments to reconcile net (loss) income to net cash provided by operating activities:						Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Provision for doubtful accounts	Provision for doubtful accounts	(99)		534		Provision for doubtful accounts	47		(70)
Depreciation	Depreciation	7,705		7,267		Depreciation	2,706		2,527
Loss on disposal of and reserve adjustments for medical equipment	Loss on disposal of and reserve adjustments for medical equipment	848		150		Loss on disposal of and reserve adjustments for medical equipment	275		597
Gain on sale of medical equipment		(1,588)		(2,949)
(Gain) loss on sale of medical equipment						(Gain) loss on sale of medical equipment	(228)		89
Amortization of intangible assets	Amortization of intangible assets	3,264		3,225		Amortization of intangible assets	710		1,043
Amortization of deferred debt issuance costs	Amortization of deferred debt issuance costs	132		13		Amortization of deferred debt issuance costs	18		96
Stock-based compensation	Stock-based compensation	4,962		1,222		Stock-based compensation	1,047		1,635
Deferred income taxes	Deferred income taxes	(875)		16		Deferred income taxes	(462)		(180)
Changes in assets - (increase)/decrease:	Changes in assets - (increase)/decrease:					Changes in assets - (increase)/decrease:
Accounts receivable	Accounts receivable	217		(1,490)		Accounts receivable	(1,278)		(420)
Inventories	Inventories	(630)		(1,074)		Inventories	61		(154)
Other current assets	Other current assets	251		75		Other current assets	(50)		(244)
Other assets	Other assets	(102)		(114)		Other assets	(41)		(40)
Changes in liabilities - (decrease)/increase:
Changes in liabilities - increase/(decrease):						Changes in liabilities - increase/(decrease):
Accounts payable and other liabilities	Accounts payable and other liabilities	(513)		(869)		Accounts payable and other liabilities	1,641		(2,889)
NET CASH PROVIDED BY OPERATING ACTIVITIES	NET CASH PROVIDED BY OPERATING ACTIVITIES	14,605		12,668		NET CASH PROVIDED BY OPERATING ACTIVITIES	4,078		2,651

INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Acquisition of business	Acquisition of business	(7,650)		—		Acquisition of business	—		(1,204)
Purchase of medical equipment	Purchase of medical equipment	(9,645)		(11,955)		Purchase of medical equipment	(2,931)		(2,336)
Purchase of property and equipment	Purchase of property and equipment	(607)		(865)		Purchase of property and equipment	(178)		(138)
Proceeds from sale of medical equipment, property and equipment	Proceeds from sale of medical equipment, property and equipment	2,214		3,870		Proceeds from sale of medical equipment, property and equipment	966		876
NET CASH USED IN INVESTING ACTIVITIES	NET CASH USED IN INVESTING ACTIVITIES	(15,688)		(8,950)		NET CASH USED IN INVESTING ACTIVITIES	(2,143)		(2,802)

FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Principal payments on long-term debt	Principal payments on long-term debt	(69,306)		(35,458)		Principal payments on long-term debt	(10,696)		(40,093)
Cash proceeds from long-term debt	Cash proceeds from long-term debt	61,654		31,861		Cash proceeds from long-term debt	12,529		34,000
Debt issuance costs	Debt issuance costs	(386)		—		Debt issuance costs	—		(386)
Common stock repurchased to satisfy statutory withholding on employee stock-based compensation plans	Common stock repurchased to satisfy statutory withholding on employee stock-based compensation plans	(1,141)		(1,269)		Common stock repurchased to satisfy statutory withholding on employee stock-based compensation plans	(54)		(565)
Common stock repurchased as part of share repurchase program						Common stock repurchased as part of share repurchase program	(4,006)		—
Cash proceeds from stock plans	Cash proceeds from stock plans	779		190		Cash proceeds from stock plans	511		308
Common stock - issued		—		250

NET CASH USED IN FINANCING ACTIVITIES	NET CASH USED IN FINANCING ACTIVITIES	(8,400)		(4,426)		NET CASH USED IN FINANCING ACTIVITIES	(1,716)		(6,736)

Net change in cash and cash equivalents	Net change in cash and cash equivalents	(9,483)		(708)		Net change in cash and cash equivalents	219		(6,887)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	9,648		2,647		Cash and cash equivalents, beginning of period	186		9,648
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	165	$	1,939	Cash and cash equivalents, end of period	$	405	$	2,761

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies

The terms “InfuSystem”, the “Company”, “we”, “our” and “us” are used herein to refer to InfuSystem Holdings, Inc. and its subsidiaries. InfuSystem is a leading provider of infusion pumps and related products and services for patients in the home, oncology clinics, ambulatory surgery centers, and other sites of care. The Company provides products and services to hospitals, oncology practices and facilities and other alternative site health care providers. Headquartered in Rochester Hills, Michigan, the Company delivers local, field-based customer support, and also operates pump service and repair Centers of Excellence in Michigan, Kansas, California, Massachusetts, Texas and Ontario, Canada.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and notes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The accompanying unaudited condensed consolidated financial statements include all adjustments, composed of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position and cash flows. The operating results for the interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 as filed with the SEC on March ~~22, 2021.~~15, 2022.

The unaudited condensed consolidated financial statements are prepared in conformity with GAAP, which requires the use of estimates, judgments and assumptions that affect the amounts of assets and liabilities at the reporting date and the amounts of revenue and expenses in the periods presented. The Company believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

~~Derivatives Accounting Policy~~

The Company recognizes all derivative financial instruments as cash flow hedges which are shown as either assets or liabilities on the Company’s consolidated balance sheets at fair value. For derivative contracts which can be classified as a cash flow hedge, the effective portion of the change in fair value of the derivative is recorded to accumulated other comprehensive income (“AOCI”) in the consolidated balance sheets. The underlying hedge transaction is realized when the interest payments on debt are accrued; the applicable amount of gain or loss included in AOCI is reclassified into earnings in the consolidated statements of operations on the same line as the gain or loss on the hedged item attributable to the hedged risk. The cash flows from derivatives are classified as operating activities.

~~The Company maintains a policy of requiring that all derivative instruments be governed by an International Swaps and Derivatives Association Master Agreement and settles on a net basis.~~

The fair values of the Company’s derivative financial instruments are categorized as Level 2 of the fair value hierarchy as the values are derived using the market approach based on observable market inputs including quoted prices of similar instruments and interest rate forward curves.

2.Recent Accounting Pronouncements and Developments

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-13, “Financial Instruments (Topic 326) Credit Losses”. Topic 326 changes the impairment model for most financial assets and certain other instruments. Under the new standard, entities holding financial assets and net ~~investment~~investments in leases that are not accounted for at fair value through net income are to be presented at the net amount expected to be collected. An allowance for credit losses will be a valuation account that will be deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. Topic 326 was originally effective as of January 1, 2020, although in November 2019, the FASB delayed the effective date until fiscal years beginning after December 15, 2022 for SEC filers eligible as of the FASB's deferral date to be smaller reporting companies under the SEC’s definition. The Company ~~qualifies~~qualified as a smaller reporting company ~~under~~in November 2019 when the ~~SEC’s definition.~~FASB delayed the effective date of Topic 326. Early adoption is permitted. The Company is currently evaluating the impact of Topic 326 on its consolidated balance sheets, statements of operations, statements of cash flows and related disclosures.

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3.Business Combinations

Acquisitions Accounted for Using the Purchase Method

On January 31, 2021, the Company ~~closed on~~acquired the ~~acquisition of substantially all~~business and the majority of the assets of FilAMed, a privately-held biomedical services company based in Bakersfield, California. ~~This~~In becoming a part of the Company’s Durable Medical Equipment Services ("DME Services") segment, this acquisition ~~will supplement~~supplements the ~~Company’s~~Company's existing biomedical recertification, maintenance and repair services for acute care facilities and other alternate site settings including home care and home infusion providers, skilled nursing facilities, pain centers and others.

On April 18, 2021, the Company acquired the business and substantially all of the assets of OB Healthcare Corporation (“OB Healthcare”), a privately-held biomedical services company based in ~~Austin,~~Mesquite, Texas. OB Healthcare specializes in on-site repair, preventative maintenance, and device physical inventory management to hospitals and healthcare systems nationwide. The acquisition further develops and expands InfuSystem’s ~~Durable Medical Equipment~~DME Services ~~(“DME Services”)~~ segment and complements the Company’s purchase of FilAMed.

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The results of operations for FilAMed and OB ~~Healthcare’s results of operations~~Healthcare are included in the Company’s consolidated statements of operations from the respective closing dates. ~~Revenues and earnings from these acquisitions have not been significant through September 30, 2021.~~

Final Purchase Price Allocation

Pursuant to FASB Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations,” the purchase price for each of the acquisitions was allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the respective acquisition dates. The purchase price allocations were primarily based upon a valuation using management’s estimates and assumptions. The purchase price allocation was completed for FilAMed and OB Healthcare as of ~~September 30,~~December 31, 2021. The purchase price allocation for OB Healthcare was based on a preliminary analysis and is subject to further adjustments related to the final working capital determination. Upon completion of the final purchase price allocation, the Company may need to adjust the accounts receivable. The following table summarizes the consideration paid and the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed as of the respective acquisition dates for both FilAMed and OB Healthcare (in thousands):

FilAMed
OB
Healthcare
Total
Consideration
Cash $ 1,400 $ 6,250 $ 7,650
Working capital (a) — 327 327
Contingent consideration — 750 750
Total - consideration $ 1,400 $ 7,327 $ 8,727

FilAMed
OB
Healthcare
Total
Acquisition Date
Fair Value
Accounts receivable (a) $ — $ 727 $ 727
Inventories 74 — 74
Medical equipment held for sale or rental 40 — 40
Property and equipment 102 59 161
Intangible assets 1,015 3,000 4,015
Goodwill 169 3,541 3,710
Operating lease right of use assets 281 7 288
Operating lease liabilities (281) (7) (288)
Total - purchase price (a) $ 1,400 $ 7,327 $ 8,727
(a) Amount based on preliminary working capital.

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	FilAMed		OB Healthcare		Total Consideration
Cash	$	1,400	$	6,250	$	7,650
Working capital adjustment, paid in cash	—		325		325
Contingent consideration	—		750		750
Total - consideration	$	1,400	$	7,325	$	8,725


	FilAMed		OB Healthcare		Total Acquisition Date Fair Value
Accounts receivable	$	—	$	725	$	725
Inventories	74		—		74
Medical equipment held for sale or rental	40		—		40
Property and equipment	102		59		161
Intangible assets	1,015		3,000		4,015
Goodwill	169		3,541		3,710
Operating lease right of use assets	281		7		288
Operating lease liabilities	(281)		(7)		(288)
Total - purchase price	$	1,400	$	7,325	$	8,725

The amount of acquisition costs for both transactions was ~~$0.2~~less than $0.1 million for the three months ended March 31, 2021 and iswas included in general and administrative ~~expenses for the nine months ended September 30, 2021.~~

During the three months ended September 30, 2021, the Company updated the valuation of OB Healthcare based on further analysis of the final working capital with an immaterial decrease in the consideration transferred and a corresponding decrease to goodwill. There was no impact to the condensed consolidated statement of operations.expenses.

The Company fully paid all consideration for FilAMed as of ~~September 30,~~December 31, 2021. On the OB Healthcare acquisition date, the Company made an initial cash payment of $6.1 million with a subsequent cash ~~payment of $0.1~~payments totaling $0.4 million during the ~~quarter~~year ended ~~September 30,~~December 31, 2021 and had an additional estimated amount due to the seller ~~of $0.3 million, related to a working capital adjustment, and~~for contingent consideration of $0.8 million, ~~both of~~ which ~~were~~was recorded in the balance sheet under the heading for other current liabilities. The contingent consideration arrangement, ~~requires~~as amended, required the Company to pay OB Healthcare $0.8 million if certain written contracts ~~are executed by December 31, 2021. The Company expects OB Healthcare to satisfy this requirement.~~were executed. As of ~~September 30, 2021,~~March 31, 2022, the Company had a ~~$1.1~~$0.8 million remaining liability relating to this acquisition. However, the requirement under the contingent consideration arrangement was satisfied on April 28, 2022, and the Company paid the remaining payment shortly thereafter.

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The following table shows the breakdown of the identified intangible assets acquired into major intangible asset classes for both acquisitions:


	Acquisition Date Fair Value (Thousands)		Weighted-Average Amortization Period (Years)
Customer relationships	$	2,300	15
Unpatented technology	943		7
Non-competition agreements	472		5
Internal-use software	300		5

Total intangible assets (a)	$	4,015	11.2

(a) There was no residual value, renewal terms or extensions associated with any intangible assets acquired.

The goodwill acquired consists of expected synergies from combining operations of FilAMed and OB Healthcare with the DME Services segment as well as their respective assembled workforce who have specialized knowledge and experience. All of the goodwill is deductible for tax purposes.

Unaudited Pro Forma Financial Information

The unaudited pro forma financial information in the table below summarizes the combined results of operations of the Company, FilAMed and OB Healthcare as though the companies’ businesses had been combined as of January 1, ~~2020.~~2021. The pro forma financial information for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 ~~has been~~was adjusted by less than $0.1 million ~~and $0.2 million, respectively,~~ for the tax effected amount of acquisition costs and non-recurring expenses directly attributable to the FilAMed and OB Healthcare acquisitions. ~~The three and nine months ended September 30, 2020 also included these charges.~~ The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of ~~each~~the period presented nor is it indicative of future results. The following pro forma financial information presented also includes the pro forma depreciation

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and amortization charges from acquired tangible and intangible assets for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 ~~and 2020~~ (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Revenue $ 26,566 $ 25,731 $ 76,633 $ 75,270
Net income $ (373) $ 2,691 $ 1,268 $ 6,120


	Three months ended
	March 31, 2021
Revenue	$	24,679
Net income	$	639

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4.Revenue Recognition

The following table presents the Company’s disaggregated revenue by offering type (in thousands):

Three Months Ended
September 30,
2021 2020

Total Net
Revenues
Percentage of
Total Net
Revenues
Total Net
Revenues
Percentage of
Total Net
Revenues
Third-Party Payer Rentals $ 13,512 50.9 % $ 12,672 50.4 %
Direct Payer Rentals 8,655 32.6 % 7,933 31.6 %
Product Sales 4,399 16.5 % 4,520 18.0 %

Total $ 26,566 100.0 % $ 25,125 100.0 %


		Nine Months Ended September 30,									Three Months Ended March 31,
		2021				2020					2022				2021
		Total Net Revenues		Percentage of Total Net Revenues		Total Net Revenues		Percentage of Total Net Revenues			Total Net Revenues		Percentage of Total Net Revenues		Total Net Revenues		Percentage of Total Net Revenues

Third-Party Payer Rentals	Third-Party Payer Rentals	$	39,436	52.0	%	$	36,660	50.4	%	Third-Party Payer Rentals	$	13,368	50.0	%	$	12,794	52.3	%
Direct Payer Rentals	Direct Payer Rentals	25,095		33.1	%	22,733		31.3	%	Direct Payer Rentals	7,962		29.7	%	7,398		30.2	%
Product Sales	Product Sales	11,332		14.9	%	13,284		18.3	%	Product Sales	3,744		14.0	%	3,583		14.7	%
Services										Services	1,689		6.3	%	688		2.8	%

Total	Total	$	75,863	100.0	%	$	72,677	100.0	%	Total	$	26,763	100.0	%	$	24,463	100.0	%

Third-Party Payer Rentals are entirely attributed to revenues of the Integrated Therapy Services (“ITS”) segment. ~~Product Sales are entirely attributed to revenues of the DME Services segment.~~ For the three months ended ~~September 30, 2021, $3.1~~March 31, 2022, $3.2 million and ~~$5.6~~$4.8 million of Direct Payer Rentals were attributed to the ITS and DME Services segments, respectively. For the three months ended ~~September 30, 2020, $3.0~~March 31, 2021, $3.1 million and ~~$4.9 million of Direct Payer Rentals were attributed to the ITS and DME Services segments, respectively.~~

~~For the nine months ended September 30, 2021, $9.4 million and $15.7~~$4.3 million of Direct Payer Rentals were attributed to the ITS and DME Services segments, respectively. For the ~~nine~~three months ended ~~September 30, 2020, $8.7~~March 31, 2022, $0.1 million and ~~$14.0~~$3.6 million of ~~Direct Payer Rentals~~Product Sales were attributed to the ITS and DME Services segments, respectively. For the three months ended March 31, 2021, all Product Sales were entirely attributed to the DME Services segment. For the three months ended March 31, 2022 and 2021, all Services revenues were entirely attributed to the DME Services segment.

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5.Medical Equipment

Medical equipment consisted of the following (in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Medical equipment for sale or rental	Medical equipment for sale or rental	$	1,592	$	1,636	Medical equipment for sale or rental	$	2,031	$	1,788
Medical equipment for sale or rental - pump reserve	Medical equipment for sale or rental - pump reserve	(52)		(33)		Medical equipment for sale or rental - pump reserve	(44)		(46)
Medical equipment for sale or rental - net	Medical equipment for sale or rental - net	1,540		1,603		Medical equipment for sale or rental - net	1,987		1,742

Medical equipment in rental service	Medical equipment in rental service	88,107		83,411		Medical equipment in rental service	92,630		91,891
Medical equipment in rental service - pump reserve	Medical equipment in rental service - pump reserve	(1,356)		(893)		Medical equipment in rental service - pump reserve	(1,246)		(1,074)
Accumulated depreciation	Accumulated depreciation	(50,320)		(46,907)		Accumulated depreciation	(52,271)		(50,946)
Medical equipment in rental service - net	Medical equipment in rental service - net	36,431		35,611		Medical equipment in rental service - net	39,113		39,871

Total	Total	$	37,971	$	37,214	Total	$	41,100	$	41,613

Depreciation expense for medical equipment for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 was $2.4 million, ~~and $7.0 million, respectively,~~ compared to $2.3 ~~million and $6.7~~ million for the same prior year ~~periods, respectively.~~period. This expense was recorded in “cost of revenues” for each period.

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6.Property and Equipment

Property and equipment consisted of the following (in thousands):


		September 30, 2021						December 31, 2020							March 31, 2022						December 31, 2021
		Gross Assets		Accumulated Depreciation		Total		Gross Assets		Accumulated Depreciation		Total			Gross Assets		Accumulated Depreciation		Total		Gross Assets		Accumulated Depreciation		Total
Furniture, fixtures, and equipment	Furniture, fixtures, and equipment	$	4,535	$	(2,411)	$	2,124	$	3,742	$	(2,018)	$	1,724	Furniture, fixtures, and equipment	$	4,924	$	(2,703)	$	2,221	$	4,812	$	(2,528)	$	2,284
Automobiles	Automobiles	117		(110)		7		117		(102)		15		Automobiles	110		(104)		6		110		(103)		7
Leasehold improvements	Leasehold improvements	3,418		(1,123)		2,295		3,416		(859)		2,557		Leasehold improvements	3,449		(1,301)		2,148		3,444		(1,212)		2,232

Total	Total	$	8,070	$	(3,644)	$	4,426	$	7,275	$	(2,979)	$	4,296	Total	$	8,483	$	(4,108)	$	4,375	$	8,366	$	(3,843)	$	4,523

Depreciation expense for property and equipment for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 was ~~$0.2~~$0.3 million, ~~and $0.7 million, respectively,~~ compared to $0.2 ~~million and $0.6~~ million for the same prior year ~~periods, respectively.~~period. This expense was recorded in “general and administrative expenses” for each period.

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7.Goodwill & Intangible Assets

The changes in the carrying value of goodwill by segment for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 are as follows (in thousands):

DME Services (a)
Balance as of December 31, 2020 $ —
Goodwill acquired 3,710
Balance as of September 30, 2021 $ 3,710
(a) No goodwill allocated to the ITS segment.


	DME Services (a)
Balance as of December 31, 2021	$	3,710
Goodwill acquired	—
Balance as of March 31, 2022	$	3,710

(a) The ITS segment has no recorded goodwill.

The carrying amount and accumulated amortization of intangible assets consisted of the following (in thousands):


		September 30, 2021						December 31, 2020							March 31, 2022						December 31, 2021
		Gross Assets		Accumulated Amortization		Net		Gross Assets		Accumulated Amortization		Net			Gross Assets		Accumulated Amortization		Net		Gross Assets		Accumulated Amortization		Net
Nonamortizable intangible assets	Nonamortizable intangible assets													Nonamortizable intangible assets
Trade names	Trade names	$	2,000			$	2,000	$	2,000	$	—	$	2,000	Trade names	$	2,000	$	—	$	2,000	$	2,000	$	—	$	2,000
Amortizable intangible assets:	Amortizable intangible assets:													Amortizable intangible assets:
Trade names	Trade names	23		(23)		—		23		(23)		—		Trade names	23		(23)		—		23		(23)		—
Physician and customer relationships	Physician and customer relationships	38,834		(30,769)		8,065		36,534		(28,924)		7,610		Physician and customer relationships	38,834		(32,033)		6,801		38,834		(31,401)		7,433
Non-competition agreements	Non-competition agreements	472		(43)		429		—		—		—		Non-competition agreements	472		(90)		382		472		(67)		405
Unpatented technology	Unpatented technology	943		(90)		853		—		—		—		Unpatented technology	943		(157)		786		943		(123)		820
Software	Software	11,530		(10,949)		581		11,230		(9,663)		1,567		Software	11,530		(11,280)		250		11,530		(11,258)		272

Total nonamortizable and amortizable intangible assets	Total nonamortizable and amortizable intangible assets	$	53,802	$	(41,874)	$	11,928	$	49,787	$	(38,610)	$	11,177	Total nonamortizable and amortizable intangible assets	$	53,802	$	(43,583)	$	10,219	$	53,802	$	(42,872)	$	10,930

Amortization expense for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 was ~~$1.1~~$0.7 million, ~~and $3.3 million, respectively,~~ compared to ~~$1.1 million and $3.2~~$1.0 million for the same prior year ~~periods, respectively.~~period. This expense was recorded in “amortization of intangibles expenses” for each period. Expected remaining annual amortization expense for the next five years for intangible assets recorded as of ~~September 30, 2021~~March 31, 2022 is as follows (in thousands):

2021 2022 2023 2024 2025 2026 and thereafter Total

Amortization expense $ 998 $ 2,494 $ 990 $ 990 $ 810 $ 3,646 $ 9,928


	2022		2023		2024		2025		2026		2027 and thereafter		Total

Amortization expense	$	1,783	$	990	$	990	$	810	$	524	$	3,122	$	8,219

8.Debt

On February 5, 2021, the Company entered into a Credit Agreement (the “2021 Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Agent”), sole bookrunner and sole lead arranger, and the lenders party thereto. The borrowers under the 2021 Credit Agreement are the Company, InfuSystem Holdings USA, Inc. (“Holdings”), InfuSystem,

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Inc. (“ISI”), First Biomedical, Inc. (“First Biomedical”), and IFC LLC (“IFC” and, collectively with the Company, Holdings, ISI and First Biomedical, the “Borrowers”).

The 2021 Credit Agreement provides for a revolving credit facility (the “Revolving Facility”) of $75.0 million ~~maturing~~that matures on February 5, 2026. The Revolving Facility may be increased by $25.0 million, subject to certain conditions, including the consent of the Agent and obtaining necessary commitments. The lenders under the 2021 Credit Agreement may issue up to $7.0 million in letters of credit subject to the satisfaction of certain conditions. On February 5, 2021, the Borrowers made an initial borrowing of $30.0 million under the Revolving Facility. Proceeds from the loan, along with approximately $8.2 million in cash, were used to repay all amounts due under the Company’s then existing credit facility dated March 23, 2015 (the “2015 Credit Agreement”).

The 2021 Credit Agreement has customary representations and warranties. The ability to borrow under the facility is subject to ongoing compliance with a number of customary affirmative and negative covenants, including limitations on indebtedness, liens, mergers, acquisitions, investments, asset sales, affiliate transactions and restricted payments, as well as financial covenants, including the following:

•a minimum fixed charge coverage ratio (defined as the ratio of consolidated EBITDA (as defined in the 2021 Credit Agreement) less 50% of depreciation expense), to consolidated fixed charges (as defined in the 2021 Credit Agreement)) for the prior four most recently ended calendar quarters of 1.20 to 1.00; and

•a maximum leverage ratio (defined as total indebtedness to EBITDA for the prior four most recently ended calendar quarters) of 3.50 to 1.00.

The 2021 Credit Agreement includes customary events of default. The occurrence of an event of default will permit the lenders to terminate commitments to lend under the Revolving Facility and accelerate payment of all amounts outstanding thereunder.

Simultaneous with the execution of the 2021 Credit Agreement, the Company entered into a Pledge and Security Agreement to secure repayment of the obligations of the Borrowers. Under the Pledge and Security Agreement, each Borrower has granted to the Agent, for the benefit of various secured parties, a first priority security interest in substantially all of the personal property assets of each of the Borrowers, including the shares of each of Holdings, ISI and First Biomedical and the equity interests of IFC.

On February 5, 2021, in connection with the execution and closing of the 2021 Credit Agreement, the Company, along with its wholly owned subsidiaries as borrowers, terminated the 2015 Credit Agreement. All outstanding loans under the 2015 Credit Agreement ~~have been~~were repaid and all liens under the 2015 Credit Agreement ~~have been~~were released, except that a letter of credit originally issued under the 2015 Credit Agreement in the amount of approximately $0.8 million was transferred to the 2021 Credit Agreement.

At December 31, 2020, the 2015 Credit Agreement, which would have matured on November 9, 2024, included three term notes totaling $37.9 million, with varying required quarterly amortization payments, and an undrawn $11.8 million revolving line of credit. The availability under the line of credit was reduced by outstanding letters of credit and reserves totaling $1.0 million and was subject to a borrowing base limitation as defined by the agreement. The borrowing base was approximately $15.6 million at December 31, 2020. At December 31, 2020 and on the date of the refinancing, the Company was in compliance with all affirmative and negative covenants, as outlined in the agreement, which included maintenance of a maximum leverage ratio and a minimum fixed charge coverage ratio, as defined in the agreement. Interest on the facility was payable at the Company’s option as a (i) Eurodollar Loan, which bore interest at a per annum rate equal to the applicable 30-day LIBOR plus an applicable margin ranging from 2.00% to 3.00% or (ii) CB Floating Rate (“CBFR”) Loan, which bore interest at a per annum rate equal to the greater of (a) the lender’s prime rate or (b) LIBOR plus 2.50%, in each case, plus a margin ranging from -1.00% to 0.25% based on our leverage ratio. The actual Eurodollar Loan rate at December 31, 2020 was 2.19% (LIBOR of 0.19% plus 2.00%). The actual CBFR Loan rate at December 31, 2020 was 2.25% (lender’s prime rate of 3.25% minus 1.00%).

The 2021 Credit Agreement was accounted for as a debt modification. As of ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with all debt-related covenants under the 2021 Credit Agreement.

On April 15, 2019, the Company sold for $2.0 million and immediately leased back certain medical equipment in rental service to a third party specializing in such transactions. The leaseback term is 36 months. Because the arrangement contains a purchase option that the Company is reasonably certain to exercise, this transaction did not qualify for the sale-leaseback accounting under ASC 842. The medical equipment remains recorded on the accompanying condensed consolidated balance

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sheet and the proceeds received have been classified as an other financing liability, which is being paid off monthly over the term of the lease. The balance of other financing as of ~~September 30, 2021~~March 31, 2022 was ~~$0.4~~$0.2 million.

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As referenced above, the Company executed and closed the 2021 Credit Agreement during the first quarter of 2021, and in connection with entering into that agreement, terminated the 2015 Credit Agreement. For the following tables, the figures related to the September 30, 2021 revolving credit facility balances relate to the 2021 Credit Agreement, while the December 31, 2020 revolving credit facility balances relate to the now-terminated 2015 Credit Agreement. The following table illustrates the net availability under the ~~revolving credit facilities~~Revolving Facility as of the applicable balance sheet date (in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021

Revolving Facility:	Revolving Facility:					Revolving Facility:
Gross availability	Gross availability	$	75,000	$	11,750	Gross availability	$	75,000	$	75,000
Outstanding draws	Outstanding draws	(30,804)		—		Outstanding draws	(35,000)		(32,974)
Letter of credit	Letter of credit	(800)		(800)		Letter of credit	(600)		(600)
Landlord reserves		—		(162)
Availability on Revolving Facility	Availability on Revolving Facility	$	43,396	$	10,788	Availability on Revolving Facility	$	39,400	$	41,426

The Company had future maturities of its long-term debt as of ~~September 30, 2021~~March 31, 2022 as follows (in thousands):


		2021		2022		2023		2024		2025 and thereafter		Total			2022		2023		2024		2025		2026 and thereafter		Total
Revolving Facility	Revolving Facility	$	—	$	—	$	—	$	—	$	30,804	$	30,804	Revolving Facility	$	—	$	—	$	—	$	—	$	35,000	$	35,000
Other financing	Other financing	188		222		—		—		—		410		Other financing	230		—		—		—		—		230
Total	Total	$	188	$	222	$	—	$	—	$	30,804	$	31,214	Total	$	230	$	—	$	—	$	—	$	35,000	$	35,230

The following is a breakdown of the Company’s current and long-term debt (in thousands):


		September 30, 2021						December 31, 2020							March 31, 2022						December 31, 2021
		Current Portion		Long-Term Portion		Total		Current Portion		Long-Term Portion		Total			Current Portion		Long-Term Portion		Total		Current Portion		Long-Term Portion		Total
Revolving Facility	Revolving Facility	$	—	$	30,804	$	30,804	$	—	$	—	$	—	Revolving Facility	$	—	$	35,000	$	35,000	$	—	$	32,974	$	32,974
Term loan		—		—		—		4,615		17,305		21,920
Equipment line		—		—		—		1,600		4,400		6,000
2019 equipment line		—		—		—		2,500		7,500		10,000
Other financing	Other financing	410		—		410		725		222		947		Other financing	230		—		230		423		—		423
		410		30,804		31,214		9,440		29,427		38,867			230		35,000		35,230		423		32,974		33,397
Unamortized value of debt issuance costs	Unamortized value of debt issuance costs	(74)		(245)		(319)		(17)		(49)		(66)		Unamortized value of debt issuance costs	(74)		(208)		(282)		(74)		(226)		(300)
Total	Total	$	336	$	30,559	$	30,895	$	9,423	$	29,378	$	38,801	Total	$	156	$	34,792	$	34,948	$	349	$	32,748	$	33,097

As of ~~September 30, 2021,~~March 31, 2022, amounts outstanding under the Revolving Facility provided under the 2021 Credit Agreement bear interest at a variable rate equal to, at the Company’s election, a LIBO Rate for Eurodollar loans or an Alternative Base Rate for ABR loans, as defined by the 2021 Credit Agreement, plus a spread that will vary depending upon the Company’s leverage ratio. The spread ranges from 2.00% to 3.00% for Eurodollar Loans and 1.00% to 2.00% for base rate loans. The weighted-average Eurodollar loan rate at ~~September 30, 2021~~March 31, 2022 was ~~2.09%~~2.37% (LIBO of ~~0.09%~~0.37% plus 2.00%). The actual ABR loan rate at ~~September 30, 2021~~March 31, 2022 was 4.25% (lender’s prime rate of 3.25% plus 1.00%).

9.Derivative Financial Instruments and Hedging Activities

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~~During the quarter ended March 31,~~In February 2021, the Company adopted a derivative investment policy which provides guidelines and objectives related to managing financial and operational exposures arising from market changes in short term interest rates. In accordance with this policy, the Company can enter into interest rate swaps or similar instruments, will endeavor to evaluate all the risks inherent in a transaction before entering into a derivative financial instrument and will not enter into derivative financial instruments for speculative or trading purposes. Hedging relationships are formally documented at the inception of the hedge and hedges must be highly effective in offsetting changes to future cash flows on hedged transactions at the inception of a hedge and on an ongoing basis to be designated for hedge accounting treatment.

The Company is exposed to interest rate risk related to its variable rate debt obligations under the 2021 Credit Agreement. In order to manage the volatility in interest rate markets, in February 2021, the Company entered into 2 interest rate swap agreements to manage exposure arising from this risk. On a combined basis, the agreements have a constant notional amount over a five-year term that ends on February 5, 2026. The agreements both pay the Company 30-day LIBOR on the

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notional amount and the Company pays a fixed rate of interest equal to 0.73%. These derivative instruments are considered cash flow hedges. The Company does not have any other derivative financial instruments.

The ~~table~~tables below ~~presents~~present the location and gross fair value amounts of our derivative financial instruments and the associated notional amounts designated as cash flow hedges as of the applicable balance sheet date (in thousands):

September 30, 2021 (a)

March 31, 2022

Balance Sheet Location

Notional

Fair Value Derivative Assets

Balance Sheet Location

Notional

Fair Value Derivative Assets

Derivatives designated as hedges:

Cash flow hedges

Interest rate swaps

Other assets

20,000

Interest rate swaps

Other assets

20,000

1,260

(a) No derivative instruments existed at December 31, 2020.

December 31, 2021

Balance Sheet Location

Notional

Fair Value Derivative Assets

Derivatives designated as hedges:

Cash flow hedges

Interest rate swaps

Other assets

20,000

355

The table below presents the effect of our derivative financial instruments designated as hedging instruments in AOCI (in thousands):


							Three Months Ended March 31,
		Three Months Ended September 30, 2021 (a)		Nine Months Ended September 30, 2021 (a)			2022		2021
Gain on cash flow hedges - interest rate swaps	Gain on cash flow hedges - interest rate swaps					Gain on cash flow hedges - interest rate swaps
Beginning balance	Beginning balance	$	39	$	—	Beginning balance	$	268	$	—
Unrealized gain recognized in AOCI	Unrealized gain recognized in AOCI	9		20		Unrealized gain recognized in AOCI	877		148
Amounts reclassified to interest expense (b)(c)		32		73
Amounts reclassified to interest expense (a)(b)						Amounts reclassified to interest expense (a)(b)	28		10
Tax provision	Tax provision	(10)		(23)		Tax provision	(218)		—
Ending balance	Ending balance	$	70	$	70	Ending balance	$	955	$	158

(a) No derivative instruments existed for the three and nine months ended September 30, 2020.
(b) Positive amounts represented interest expense. Total interest expense as presented in the consolidated statement of operations for the three and nine months ended September 30, 2021 were $0.3 million and $0.9 million, respectively.
(c) $0.1 million of expense is expected to be reclassified into earnings within the next 12 months.
(a) Positive amounts represented interest expense. Total interest expense as presented in the condensed consolidated statement of operations and comprehensive income for the three months ended March 31, 2022 and 2021 were $0.3 million and $0.3 million, respectively.						(a) Positive amounts represented interest expense. Total interest expense as presented in the condensed consolidated statement of operations and comprehensive income for the three months ended March 31, 2022 and 2021 were $0.3 million and $0.3 million, respectively.
(b) As of March 31, 2022, $0.2 million of income is expected to be reclassified into earnings within the next 12 months.						(b) As of March 31, 2022, $0.2 million of income is expected to be reclassified into earnings within the next 12 months.

The Company did not incur any hedge ineffectiveness during the three ~~or nine~~ months ended ~~September 30, 2021.~~March 31, 2022 and 2021, respectively.

10.Income Taxes

~~During the three and nine months ended September 30, 2021, the~~The Company recorded a benefit from income taxes of $0.5 million and $0.2 million during the three months ended March 31, 2022 and ~~$0.9 million,~~2021, respectively. The income tax benefit during 2022 relates principally to a pre-tax loss whereas the benefit during 2021 relates to excess tax benefits on exercises of stock options and vesting of restricted stock during the ~~periods offset by~~period. Other differences in the effective tax rate include the estimate of the Company’s annual state and local taxes and taxes relating to its foreign operations in Canada. ~~For both the three and nine months ended September 30, 2020, the Company recorded provision for income taxes of less than $0.1 million.~~

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On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted in response to the COVID-19 pandemic. The CARES Act among other things, allows employers to defer the deposit and payment of the employer's share of Social Security taxes. Under the CARES Act, the Company deferred paying $0.7 million of applicable

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gross payroll taxes as of December 31, 2020, which iswas included in other ~~current liabilities as of September 30, 2021.~~liabilities. The $0.7 million balance of the deferred Social Security taxes iswas expected to be paid in two equal annual installments during the years ending December 31, 2021 and 2022, respectively. In December 2021, the Company made the first of these two equal annual installment payments. As of March 31, 2022, the remaining balance of approximately $0.3 million is included in other liabilities.

11.Commitments, Contingencies and Litigation

From time to time in the ordinary course of its business, the Company may be involved in legal and regulatory proceedings, the outcomes of which may not be determinable. The results of litigation and regulatory proceedings are inherently unpredictable. Any claims against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. The Company is not able to estimate an aggregate amount or range of reasonably possible losses for those legal matters for which losses are not probable and estimable, primarily for the following reasons: (i) many of the relevant legal proceedings are in preliminary stages and, until such proceedings develop further, there is often uncertainty regarding the relevant facts and circumstances at issue and potential liability; and (ii) many of these proceedings involve matters of which the outcomes are inherently difficult to predict. The Company has insurance policies covering potential losses where such coverage is cost effective.

The Company is not at this time involved in any proceedings that the Company currently believes could have a material effect on the Company’s financial condition, results of operations or cash flows.

12.(Loss) Earnings Per Share

Basic (loss) income per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted (loss) income per share assumes the issuance of potentially dilutive shares of common stock during the period. The following table reconciles the numerators and denominators of the basic and diluted (loss) income per share computations:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Numerator (in thousands):	Numerator (in thousands):	2021		2020		2021		2020		Numerator (in thousands):	2022		2021
Net (loss) income:		$	(448)	$	2,940	$	1,033	$	6,662
Net (loss) income										Net (loss) income	$	(368)	$	661
Denominator:	Denominator:									Denominator:
Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	20,577,886		20,179,056		20,468,842		20,060,416		Basic	20,609,372		20,338,160
Dilutive effect of common stock equivalents	Dilutive effect of common stock equivalents	—		1,484,358		1,526,374		1,577,065		Dilutive effect of common stock equivalents	—		1,599,479
Diluted	Diluted	20,577,886		21,663,414		21,995,216		21,637,481		Diluted	20,609,372		21,937,639
Net (loss) income per share:	Net (loss) income per share:									Net (loss) income per share:
Basic	Basic	$	(0.02)	$	0.15	$	0.05	$	0.33	Basic	$	(0.02)	$	0.03
Diluted	Diluted	$	(0.02)	$	0.14	$	0.05	$	0.31	Diluted	$	(0.02)	$	0.03

For the three months ended ~~September 30, 2021,~~March 31, 2022, all outstanding options and unvested restricted stock units were anti-dilutive due to the Company's net losses for the period and therefore are not included in the calculation. For the ~~nine~~three months ended ~~September 30,~~March 31, 2021, 0.3 million of outstanding options and restricted stock units with an exercise price above the current market value of the Company’s common stock were not included in the calculation because they would have an anti-dilutive effect. For both the three and nine months ended September 30, 2020, less than 0.1 million of outstanding options and unvested restricted stock units with an exercise price above the current market value of the Company’s common stock were not included in the calculation because they would have an anti-dilutive effect.

Share Repurchase Program

On June 30, 2021, our Board of Directors approved a stock repurchase program (the “Share Repurchase Program”) ~~authorizing~~that authorizes the Company to repurchase up to $20.0 million of the Company’s outstanding common stock through June 30, 2024. ~~The repurchase program will be~~Repurchases under the Share Repurchase Program are subject to market conditions, the periodic capital needs of the Company’s operating activities, and the continued satisfaction of all covenants under the Company’s existing 2021 Credit Agreement. Repurchases under the ~~program~~Share Repurchase Program may take place in the open market or in privately negotiated transactions and may be made under a Rule

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10b5-1 plan. The ~~repurchase program~~Share Repurchase Program does not obligate the Company to repurchase shares and may be suspended, terminated, or modified at any time. As of ~~September 30, 2021,~~March 31, 2022, the Company had ~~not~~ repurchased ~~any~~approximately $4.6 million, or 343,514 shares, of the Company's outstanding common stock under the Share Repurchase Program.

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13.Leases

The Company’s operating leases are primarily for office space, service facility centers and equipment under operating lease arrangements that expire at various dates over the next ten years. The Company’s leases do not contain any restrictive covenants. The Company’s office leases generally contain renewal options for periods ranging from one to five years. Because the Company is not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term, and payments associated with the option years are excluded from lease payments. The Company’s office leases do not contain any material residual value guarantees. The Company’s equipment leases generally do not contain renewal options.

Payments due under the Company’s operating leases include fixed payments as well as variable payments. For the Company’s office leases, variable payments include amounts for the Company’s proportionate share of operating expenses, utilities, property taxes, insurance, common area maintenance and other facility-related expenses. For the Company’s equipment leases, variable payments may consist of sales taxes, property taxes and other fees.

The components of lease costs for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ are as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Operating lease cost	Operating lease cost	$	302	$	410	$	998	$	1,238	Operating lease cost	$	329	$	348
Variable lease cost	Variable lease cost	65		64		180		253		Variable lease cost	74		57
Total lease cost	Total lease cost	$	367	$	474	$	1,178	$	1,491	Total lease cost	$	403	$	405

Supplemental cash flow information and non-cash activity related to the Company’s leases are as follows (in thousands):


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash paid for amounts included in the measurement of lease liabilities and right of use assets:	Cash paid for amounts included in the measurement of lease liabilities and right of use assets:					Cash paid for amounts included in the measurement of lease liabilities and right of use assets:
Operating cash flow from operating leases	Operating cash flow from operating leases	$	993	$	1,130	Operating cash flow from operating leases	$	359	$	375

Right of use assets obtained in exchange for lease obligations:	Right of use assets obtained in exchange for lease obligations:					Right of use assets obtained in exchange for lease obligations:
Operating leases	Operating leases	$	288	$	260	Operating leases	$	—	$	281

Weighted average remaining lease terms and discount rates for the Company’s operating leases are as follows:


		As of September 30,			As of March 31,
		2021	2020		2022	2021

		Years	Years		Years	Years
Weighted average remaining lease term:	Weighted average remaining lease term:	6.3	7.1	Weighted average remaining lease term:	6.2	6.6

		Rate	Rate		Rate	Rate
Weighted average discount rate:	Weighted average discount rate:	7.7%	7.8%	Weighted average discount rate:	7.6%	7.7%

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Future maturities of lease liabilities as of ~~September 30, 2021~~March 31, 2022 are as follows (in thousands):


		Operating Leases			Operating Leases
2021		$	276
2022	2022	1,183		2022	$	869
2023	2023	979		2023	1,065
2024	2024	949		2024	1,060
2025	2025	914		2025	1,029
2026 and thereafter		2,253
2026				2026	941
2027 and thereafter				2027 and thereafter	1,783
Total undiscounted lease payments	Total undiscounted lease payments	6,554		Total undiscounted lease payments	6,747
Less: Imputed interest	Less: Imputed interest	(2,290)		Less: Imputed interest	(2,374)
Total lease liabilities	Total lease liabilities	$	4,264	Total lease liabilities	$	4,373

14.Business Segment Information

The Company’s reportable segments are organized based on service platforms, with the ITS segment reflecting higher margin rental revenues that generally include payments made by third-party and direct payers and the DME Services segment reflecting lower margin product sales, ~~and~~ direct payer rental and services revenues. Resources are allocated and performance is assessed for these segments by the Company’s Chief Executive Officer, whom the Company has determined to be its chief operating decision-maker. The Company believes that reporting performance at the gross profit level is the best indicator of segment performance.

The financial information summarized below is presented by reportable segment for the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


2021
2022										2022
(in thousands)	(in thousands)	ITS		DME Services		Corporate/ Eliminations		Total		(in thousands)	ITS		DME Services		Corporate/ Eliminations		Total

Net revenues - external	Net revenues - external	$	16,581	$	9,985	$	—	$	26,566	Net revenues - external	$	16,641	$	10,122	$	—	$	26,763
Net revenues - internal	Net revenues - internal	—		1,440		(1,440)		—		Net revenues - internal	—		1,488		(1,488)		—
Total net revenues	Total net revenues	16,581		11,425		(1,440)		26,566		Total net revenues	16,641		11,610		(1,488)		26,763
Gross profit	Gross profit	10,574		4,684		—		15,258		Gross profit	10,738		4,629		—		15,367

Selling, general and administrative expenses	Selling, general and administrative expenses					15,609		15,609		Selling, general and administrative expenses					15,892		15,892
Interest expense	Interest expense					(270)		(270)		Interest expense					(277)		(277)
Other expense	Other expense					(44)		(44)		Other expense					(28)		(28)
Benefit from income taxes	Benefit from income taxes					217		217		Benefit from income taxes					462		462

Net loss	Net loss							$	(448)	Net loss							$	(368)

Total assets	Total assets	$	59,312	$	33,474	$	2,000	$	94,786	Total assets	$	61,991	$	34,246	$	2,000	$	98,237
Purchases of medical equipment	Purchases of medical equipment	$	4,058	$	644	$	—	$	4,702	Purchases of medical equipment	$	1,511	$	1,420	$	—	$	2,931
Depreciation and amortization of intangible assets	Depreciation and amortization of intangible assets	$	2,785	$	955	$	—	$	3,740	Depreciation and amortization of intangible assets	$	2,398	$	1,018	$	—	$	3,416

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2020
(in thousands) ITS DME Services Corporate/Eliminations Total

Net revenues - external $ 15,638 $ 9,487 $ — $ 25,125
Net revenues - internal — 1,459 (1,459) —
Total net revenues 15,638 10,946 (1,459) 25,125
Gross profit 10,095 5,027 — 15,122
Selling, general and administrative expenses 11,869 11,869
Interest expense (283) (283)
Other income 8 8
Provision for income taxes (38) (38)
Net income $ 2,940
Total assets $ 51,547 $ 26,761 $ 2,000 $ 80,308
Purchases of medical equipment $ 1,685 $ 1,487 $ — $ 3,172
Depreciation and amortization of intangible assets $ 2,694 $ 866 $ — $ 3,560

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~~The financial information summarized below is presented by reportable segment for the nine months ended September 30, 2021 and 2020:~~

2021
(in thousands) ITS DME Services
Corporate/
Eliminations
Total

Net revenues - external $ 48,826 $ 27,037 $ — $ 75,863
Net revenues - internal — 4,484 (4,484) —
Total net revenues 48,826 31,521 (4,484) 75,863
Gross profit 31,028 13,856 — 44,884
Selling, general and administrative expenses 43,666 43,666
Interest expense (909) (909)
Other expense (150) (150)
Benefit from income taxes 874 874
Net income $ 1,033
Total assets $ 59,312 $ 33,474 $ 2,000 $ 94,786
Purchases of medical equipment $ 7,550 $ 2,095 $ — $ 9,645
Depreciation and amortization of intangible assets $ 8,213 $ 2,756 $ — $ 10,969
2020
(in thousands) ITS DME Services
Corporate/
Eliminations
Total
Net revenues - external $ 45,369 $ 27,308 $ — $ 72,677
Net revenues - internal — 3,955 (3,955) —
Total net revenues 45,369 31,263 (3,955) 72,677
Gross profit 29,480 14,283 — 43,763
Selling, general and administrative expenses 35,971 35,971
Interest expense (1,018) (1,018)
Other expense (20) (20)
Provision for income taxes (92) (92)
Net income $ 6,662
Total assets $ 51,547 $ 26,761 $ 2,000 $ 80,308
Purchases of medical equipment $ 6,705 $ 5,250 $ — $ 11,955
Depreciation and amortization of intangible assets $ 8,042 $ 2,450 $ — $ 10,492


2021
(in thousands)	ITS		DME Services		Corporate/ Eliminations		Total

Net revenues - external	$	15,911	$	8,552	$	—	$	24,463
Net revenues - internal	—		1,446		(1,446)		—
Total net revenues	15,911		9,998		(1,446)		24,463
Gross profit	10,003		4,573		—		14,576

Selling, general and administrative expenses					13,703		13,703
Interest expense					(322)		(322)
Other expense					(69)		(69)
Benefit from income taxes					179		179

Net income							$	661

Total assets	$	62,508	$	26,079	$	2,000	$	90,587
Purchases of medical equipment	$	1,621	$	715	$	—	$	2,336
Depreciation and amortization of intangible assets	$	2,696	$	874	$	—	$	3,570

15.COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of coronavirus (“COVID-19”) as a pandemic, which has spread globally and throughout the United States. During the period of the pandemic, we took a number of precautionary and preemptive steps to protect the safety and well-being of our employees while ensuring continuity of service to our clients, including, transitioning our employees to a remote work environment, suspending employee travel, canceling participation in industry events and in-person group meetings, promoting social distancing and enhanced cleaning and

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sanitization efforts across office locations, and implementing protocols to quarantine employees who may have been exposed to COVID-19, or ~~show~~showed relevant symptoms. We also ~~continued to undertake~~undertook preparedness plans at our facilities to maintain continuity of operations, which provide for flexible work arrangements without any significant disruptions to our business or control processes. Our management team ~~is continuing~~continues to actively monitor the situation and is in constant communication with our workforce, customers and vendors. During the three months ended March 31, 2022, outbreaks of COVID-19, including the Delta and Omicron variants, unfavorably impacted our revenue growth initiatives in certain product lines including Pain Management and NPWT. The impacts included scattered restrictions on elective surgeries and delayed ramp-up in treatment volumes for new customers, both of which unfavorably impacted the Pain Management business, and restricted physical access to our customers facilities, which unfavorably impacted both the Pain Management and NPWT businesses. While the COVID-19 pandemic has not had any material unfavorable effects in our financial results for the three ~~or nine~~ months ended ~~September 30, 2021,~~March 31, 2022, beyond this delay to our revenue growth plans, the extent of any future impact will depend on future developments, which are highly uncertain, cannot be predicted and could have a material adverse impact on our financial position, operating results and cash flows.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The terms “InfuSystem”, the “Company”, “we”, “our” and “us” used herein refer to InfuSystem Holdings, Inc. and its subsidiaries.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this quarterly report on Form 10-Q are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company is identifying certain factors that could cause actual results to

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differ, perhaps materially, from those indicated by these forward-looking statements. Those factors, risks and uncertainties include, but are not limited to, the effect of the coronavirus (“COVID-19”) pandemic or any resurgence thereof on our business, potential changes in healthcare payer mix and overall healthcare reimbursement, including the Centers for Medicare and Medicaid Services (“CMS”) competitive bidding and fee schedule reductions, sequestration, concentration of customers, increased focus on early detection of cancer, competitive treatments, dependency on Medicare Supplier Number, availability of chemotherapy drugs, global financial conditions, changes and enforcement of state and federal laws, natural forces, competition, dependency on suppliers, risks in acquisitions & joint ventures, U.S. Healthcare Reform, relationships with healthcare professionals and organizations, technological changes related to infusion therapy, the Company’s ability to implement information technology improvements and to respond to technological changes, the ability of the Company to successfully integrate acquired businesses, dependency on key personnel, dependency on banking relations and the ability to comply with our credit facility covenants, and other risks associated with our common stock, as well as any litigation in which the Company may be involved from time to time; and other risk factors as discussed in the Company’s annual report on Form 10-K for the year ended December 31, ~~2020~~2021 filed on March ~~22, 2021,~~15, 2022, this quarterly report on Form 10-Q and in other filings made by the Company from time to time with the Securities and Exchange Commission (“SEC”). Our annual report on Form 10-K is available on the SEC’s EDGAR website at www.sec.gov, and a copy may also be obtained by contacting the Company. All forward-looking statements made in this Form 10-Q speak only as of the date of this report. We do not intend, and do not undertake any obligation, to update any forward-looking statements to reflect future events or circumstances after the date of such statements, except as required by law.

Overview

We are a leading national health care service provider, facilitating outpatient care for Durable Medical Equipment manufacturers and health care providers. We provide our products and services to hospitals, oncology practices, ambulatory surgery centers, and other alternate site health care providers. Our headquarters is in Rochester Hills, Michigan, and we operate our business from a total of seven locations in the United States and Canada. We deliver local, field-based customer support as well as operate pump service and repair Centers of Excellence in Michigan, Kansas, California, Massachusetts, Texas and Ontario, Canada. InfuSystem, Inc., a wholly-owned subsidiary of the Company, is accredited by the Community Health Accreditation Partner (CHAP) while First Biomedical, Inc., a wholly-owned subsidiary of the Company, is ISO 9001 certified at our Kansas, Michigan, Massachusetts, Canada and Santa Fe Springs, California locations and also ISO 13485 certified at our Bakersfield, California location.

InfuSystem competes for and retains its business primarily on the basis of its long participation and strong reputation in the Durable Medical Equipment space, its long-standing relationships with Durable Medical Equipment manufacturers and its health care provider customers, and the high levels of service it provides. Current barriers to entry for potential competitors are created by our: (i) growing number of third-party payer networks under contract; (ii) economies of scale, which allow for predictable reimbursement and less costly purchase and management of the pumps, respectively; (iii) established, long-standing relationships as a provider of pumps to outpatient oncology practices in the U.S. and Canada; (iv) pump fleet of ambulatory and large

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volume infusion pumps for rent and for sale, which may allow us to be more responsive to the needs of physicians, outpatient oncology practices, hospitals, outpatient surgery centers, homecare practices, patient rehabilitation centers and patients than a new market entrant; (v) seven geographic locations in the U.S. and Canada that allow for same day or next day delivery of pumps; and (vi) pump repair and service capabilities at all of these ~~facilities.~~facilities and at our customer's locations. We do not perform any research and development on pumps, but we have made, and continue to make investments in our information technology.

Integrated Therapy Services (“ITS”) Segment

Our ITS segment’s core purpose is to seek opportunities to leverage our unique know-how in clinic-to-home health care involving Durable Medical Equipment, our logistics and billing capabilities, our growing network of third-party payers under contract, and our clinical and biomedical capabilities. This leverage may take the form of new products and/or services, strategic alliances, joint ventures and/or acquisitions. The leading service within our ITS segment is to supply electronic ambulatory infusion pumps and associated disposable supply kits to private oncology clinics, infusion clinics and hospital outpatient oncology clinics to be utilized in the treatment of a variety of cancers, including colorectal cancer and other disease states (“Oncology Business”). Colorectal cancer is the third most prevalent form of cancer in the United States, according to the American Cancer Society, and the standard of care for the treatment of colorectal cancer relies upon continuous chemotherapy infusions delivered via ambulatory infusion pumps. One of the primary goals for the ITS segment is to expand into treatment of other types of cancers. There are a number of approved treatment protocols for pancreatic, head and neck, esophageal and other types of cancers, as well as other disease states which present opportunities for growth. There are also a number of other drugs currently approved by the U.S. Food and Drug Administration (the "FDA"), as well as agents in the pharmaceutical development pipeline, which we believe could potentially be used with continuous infusion protocols for the treatment of diseases other than colorectal cancer. Additional drugs or protocols currently in clinical trials may also obtain regulatory

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approval over the next several years. If these new drugs or protocols obtain regulatory approval for use with continuous infusion protocols, we expect the pharmaceutical companies to focus their sales and marketing efforts on promoting the new drugs and protocols to physicians.

Furthermore, our Oncology Business focuses mainly on the continuous infusion of chemotherapy. Continuous infusion of chemotherapy can be described as the gradual administration of a drug via a small, lightweight, portable infusion pump over a prolonged period of time. A cancer patient can receive his or her medicine anywhere from one to 30 days per month depending on the chemotherapy regimen that is most appropriate to that individual’s health status and disease state. This may be followed by periods of rest and then repeated cycles with treatment goals of progression-free disease survival. This drug administration method has replaced intravenous push or bolus administration in specific circumstances. The advantages of slow continuous low doses of certain drugs are well documented. Clinical studies support the use of continuous infusion chemotherapy for decreased toxicity without loss of anti-tumor efficacy. The 2015 National Comprehensive Cancer Network ("NCCN") Guidelines recommend the use of continuous infusion for treatment of numerous cancer diagnoses. We believe that the growth of continuous infusion therapy is driven by three factors: evidence of improved clinical outcomes; lower toxicity and side effects; and a favorable reimbursement environment.

We believe that oncology ~~practices~~practitioners have a heightened sensitivity to providing quality service and ~~whether they are reimbursed~~to their ability to obtain reimbursement for services they provide. Simultaneously, CMS and private insurers are increasingly focused on evidence-based medicine to inform their reimbursement decisions — that is, aligning reimbursement with clinical outcomes and adherence to standards of care. Continuous infusion therapy is a main component of the standard of care for certain ~~cancer~~ types of cancers because clinical evidence demonstrates superior outcomes. Payers’ recognition of this benefit is reflected in their relative reimbursement policies for clinical services related to the delivery of this care.

Additional areas of ~~growth~~focus for our ITS segment are as follows:

•Pain Management - providing our ambulatory pumps, products, and services for pain management in the area of post-surgical continuous peripheral nerve block.

•Negative Pressure Wound Therapy (“NPWT”) - ~~as announced in February 2020,~~ NPWT includes providing the Durable Medical Equipment and related consumables, overseeing logistics, providing biomedical services, and managing third-party billing of the U.S. home healthcare market, which as a subset of the broader NPWT market, has an estimated addressable home healthcare market of $600 million per year.

•Lymphedema Therapy – as announced in June 2021, Lymphedema therapy includes providing patient care and customer service, pneumatic compression devices and associated garments through our partnership with Bio Compression Systems, Inc. to outpatients, initially targeting our existing acute care and oncology customers, estimated to be 20% of the multi-billion-dollar Lymphedema market.

•Acquisitions - we believe there are opportunities to acquire smaller, regional health care service providers, in whole or part that perform similar services to us but do not have the national market access, network of third-party payer contracts or operating economies of scale that we currently enjoy.

~~Table~~ We may also pursue acquisition opportunities of ~~Contents~~companies that perform similar services, but offer different therapies or utilize different devices.

•Information technology-based services - we also plan to continue to capitalize on key new information technology-based services such as EXPRESS, InfuSystem Mobile, InfuBus or InfuConnect, Pump Portal and BlockPain Dashboard®.

The payer environment within our ITS segment is in a constant state of change. We continue to extend our considerable breadth of payer networks under contract as patients move into different insurance ~~coverages,~~coverage plans, including Medicaid and Insurance Marketplace products. In some cases, this may slightly reduce our aggregate billed revenues payment rate but result in an overall increase in collected revenues, due to a reduction in concessions. Consequently, we are increasingly focused on net revenues ~~net of~~less concessions.

Durable Medical Equipment Services (“DME Services”) Segment

Our DME Services segment’s core service is to: (i) sell or rent new and pre-owned pole-mounted and ambulatory infusion ~~pumps;~~pumps and other Durable Medical Equipment; (ii) sell treatment-related consumables; and (iii) provide biomedical recertification, maintenance and repair services for oncology practices as well as other alternate site settings, including, home care and home infusion providers, skilled nursing facilities, pain centers and others. We also provide these products and services to customers in the hospital market. We purchase new and pre-owned pole-mounted and ambulatory infusion pumps from a variety of sources on a non-exclusive basis. We repair, refurbish and provide biomedical certification for the devices as needed. The pumps are then available for sale, rental or to be used within our ambulatory infusion pump management service. Our recent acquisition of FilAMed, a privately-held biomedical services company, on January 31, 2021 ~~will supplement~~supplements the

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Company’s existing biomedical recertification, maintenance and repair services for acute care facilities and other alternate site settings, including, home care and home infusion providers, skilled nursing facilities, pain centers and others. Our recent acquisition of OB Healthcare Corporation (“OB Healthcare”), a privately-held biomedical services company, on April 18, 2021 further develops and expands InfuSystem’s DME Services segment ~~and~~by extending our existing biomedical service capability into our customer's locations. OB Healthcare complements the Company’s purchase of FilAMed.

COVID-19 Update

On March 11, 2020, the World Health Organization declared the outbreak of ~~COVID-19~~coronavirus (“COVID-19”) as a pandemic, which has spread globally and throughout the United States. During the period of the pandemic, we took a number of precautionary and preemptive steps to protect the safety and well-being of our employees while ensuring continuity of service to our clients, including, transitioning our employees to a remote work environment, suspending employee travel, canceling participation in industry events and in-person group meetings, promoting social distancing and enhanced cleaning and sanitization efforts across office locations, and implementing protocols to quarantine employees who may have been exposed to COVID-19, or ~~show~~showed relevant symptoms. We also ~~continued to undertake~~undertook preparedness plans at our facilities to maintain continuity of operations, which provide for flexible work arrangements without any significant disruptions to our business or control processes. Our management team ~~is continuing~~continues to actively monitor the situation and is in constant communication with our workforce, customers and vendors. During the three months ended March 31, 2022, outbreaks of COVID-19, including the Delta and Omicron variants, unfavorably impacted our revenue growth initiatives in certain product lines including Pain Management and NPWT. The impacts included scattered restrictions on elective surgeries and delayed ramp-up in treatment volumes for new customers, both of which unfavorably impacted the Pain Management business, and restricted physical access to our customers facilities, which unfavorably impacted both the Pain Management and NPWT businesses. While the COVID-19 pandemic has not had any material unfavorable effects in our financial results for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, beyond this delay to our revenue growth plans, the extent of any future impact will depend on future developments, which are highly uncertain, cannot be predicted and could have a material adverse impact on our financial position, operating results and cash flows.

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InfuSystem Holdings, Inc. Results of Operations for the Three Months Ended ~~September 30, 2021~~March 31, 2022 Compared to the Three Months Ended ~~September 30, 2020~~March 31, 2021

The following represents the Company’s results of operations for the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended September 30,							Three Months Ended March 31,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2021		2020		Better (Worse)		(in thousands, except share and per share data)	2022		2021		Better (Worse)

Net revenues:	Net revenues:							Net revenues:
ITS	ITS	$	16,581	$	15,638	$	943	ITS	$	16,641	$	15,911	$	730
DME Services (inclusive of inter-segment revenues)	DME Services (inclusive of inter-segment revenues)	11,425		10,946		479		DME Services (inclusive of inter-segment revenues)	11,610		9,998		1,612
Less: elimination of inter-segment revenues	Less: elimination of inter-segment revenues	(1,440)		(1,459)		19		Less: elimination of inter-segment revenues	(1,488)		(1,446)		(42)
Total	Total	26,566		25,125		1,441		Total	26,763		24,463		2,300
Gross profit (inclusive of certain inter-segment allocations) (a):	Gross profit (inclusive of certain inter-segment allocations) (a):							Gross profit (inclusive of certain inter-segment allocations) (a):
ITS	ITS	10,574		10,095		479		ITS	10,738		10,003		735
DME Services	DME Services	4,684		5,027		(343)		DME Services	4,629		4,573		56
Total	Total	15,258		15,122		136		Total	15,367		14,576		791

Selling, general and administrative expenses	Selling, general and administrative expenses							Selling, general and administrative expenses
Provision for doubtful accounts	Provision for doubtful accounts	10		11		1		Provision for doubtful accounts	47		(70)		(117)
Amortization of intangibles	Amortization of intangibles	1,125		1,075		(50)		Amortization of intangibles	710		1,043		333
Selling and marketing	Selling and marketing	2,908		2,196		(712)		Selling and marketing	3,319		2,376		(943)
General and administrative	General and administrative	11,566		8,587		(2,979)		General and administrative	11,816		10,354		(1,462)
Total selling, general and administrative expenses	Total selling, general and administrative expenses	15,609		11,869		(3,740)		Total selling, general and administrative expenses	15,892		13,703		(2,189)

Operating (loss) income	Operating (loss) income	(351)		3,253		(3,604)		Operating (loss) income	(525)		873		(1,398)

Other expense	Other expense	(314)		(275)		(39)		Other expense	(305)		(391)		86

(Loss) income before income taxes	(Loss) income before income taxes	(665)		2,978		(3,643)		(Loss) income before income taxes	(830)		482		(1,312)
Benefit from (provision for) income taxes		217		(38)		255
Benefit from) income taxes								Benefit from) income taxes	462		179		283

Net (loss) income	Net (loss) income	$	(448)	$	2,940	$	(3,388)	Net (loss) income	$	(368)	$	661	$	(1,029)

Net (loss) income per share	Net (loss) income per share							Net (loss) income per share
Basic	Basic	$	(0.02)	$	0.15	$	(0.17)	Basic	$	(0.02)	$	0.03	$	(0.05)
Diluted	Diluted	$	(0.02)	$	0.14	$	(0.16)	Diluted	$	(0.02)	$	0.03	$	(0.05)
Weighted average shares outstanding:	Weighted average shares outstanding:							Weighted average shares outstanding:
Basic	Basic	20,577,886		20,179,056		398,830		Basic	20,609,372		20,338,160		271,212
Diluted	Diluted	20,577,886		21,663,414		(1,085,528)		Diluted	20,609,372		21,937,639		(1,328,267)
															(a) Inter-segment allocations are for cleaning and repair services performed on medical equipment.

Net Revenues

Net revenues for the quarter ended ~~September 30, 2021~~March 31, 2022 (“~~third~~first quarter of ~~2021”~~2022”) were ~~$26.6~~$26.8 million, an increase of ~~$1.4~~$2.3 million, or ~~5.7%~~9.4%, compared to ~~$25.1~~$24.5 million for the quarter ended ~~September 30, 2020~~March 31, 2021 (“~~third~~first quarter of ~~2020”~~2021”). The increase ~~was due to higher service and repair revenues and~~included higher net ~~revenue~~revenues for ~~all three~~both the ITS ~~Segment therapies. These increases were partially offset by decreases in~~and DME Services ~~rental revenues and sales of medical equipment.~~segments.

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ITS

ITS net revenue of $16.6 million increased ~~$0.9~~$0.7 million, or ~~6.0%~~4.6%, during the ~~third~~first quarter of ~~2021~~2022 as compared to the prior year period. This increase was primarily attributable to additional treatment volume in all three therapies including Oncology, Pain Management and NPWT, and improved third party payer collections on ~~billings for Oncology and additional treatment volume in Pain Management and NPWT.~~billings. Pain Management net revenue for the ~~third~~first quarter of ~~2021~~2022 increased slightly as compared to the prior year ~~third~~first quarter due to additional sites of care added over the last ~~year. NPWT was launched during the first quarter of 2020 but did not start~~year offset partially by decreased patient volume related to ~~have measurable quarterly revenues until the second half of 2020. On a combined basis, Pain Management and~~COVID-19 market impacts. NPWT net revenues increased ~~by $0.3 million during~~due to higher treatment volume and from the ~~third quarter~~sale of ~~2021 as compared~~equipment under lease contracts for the first time since the therapy was launched. We expect NPWT equipment sales to ~~the same period~~create new opportunities for patient treatment referrals in ~~2020, which represented an increase of 30.2%.~~future periods.

DME Services

DME Services net revenue of ~~$10.0~~$10.1 million increased ~~$0.5~~$1.6 million, or ~~5.2%~~18.4%, during the ~~third~~first quarter of ~~2021~~2022 as compared to the prior year period. This increase was mainly due to $1.0 million in additional net revenues ~~from~~contributed by the ~~acquisitions of~~ FilAMed and OB Healthcare businesses, which ~~were~~we acquired during the first ~~quarter~~and second quarters of 2021, respectively. Other net revenue increases included higher equipment rental and ~~second quarter of 2021,~~disposable medical supplies revenue, which increased by $0.5 million and $0.2 million, respectively. These increases were partially offset by lower ~~rental revenues and~~ equipment ~~sales due to a moderation in market demand for infusion pumps which was elevated during the third quarter of 2020 because of the COVID-19 pandemic.~~sales.

Gross Profit (inclusive of certain inter-segment allocations)

Gross profit for the ~~third~~first quarter of ~~2021~~2022 of ~~$15.3~~$15.4 million increased ~~$0.1~~$0.8 million, or ~~0.9%~~5.4%, from ~~$15.1~~$14.6 million for the ~~third~~first quarter of ~~2020.~~2021. The increase was driven by the increase in net revenues offset partially by a lower gross profit as a percentage of net revenue (“gross margin”). Gross margin was 57.4% during the ~~third~~first quarter of ~~2021~~2022 as compared to ~~60.2%~~59.6% during the prior year, a decrease of ~~2.8%~~2.2%. ~~Gross~~Decreased gross margin ~~decreased in both~~for the DME Services ~~and~~segment was partially offset by an increase in gross margin for the ITS ~~segments.~~segment.

ITS

ITS gross profit was ~~$10.6~~$10.7 million during the ~~third~~first quarter of ~~2021,~~2022, representing an increase of ~~$0.5~~$0.7 million compared to the prior year. The improvement reflected an increase in net revenues, ~~offset partially by~~as well as a ~~lower~~higher gross margin, which ~~decreased~~increased from the prior year by ~~0.8%~~1.6% to ~~63.8%~~64.5%. The ~~lower~~higher gross margin was the result of ~~higher pump maintenance expenses and pump disposal costs as compared to~~a more normalized expense for missing equipment for the ~~prior year. Pump maintenance expenses,~~first quarter of 2022, which ~~include preventative maintenance, cleaning and repair services mainly performed by the DME Services segment, were~~was unusually ~~low~~high during the ~~third~~first quarter of ~~2020 due to COVID-19 when we deployed a significant number of newly purchased pumps. Pump disposal expenses include retirements of damaged pumps~~2021, and ~~reserves for missing pumps.~~improved collections on billings.

DME Services

DME Services gross profit during the ~~third~~first quarter of ~~2021~~2022 was ~~$4.7~~$4.6 million, representing ~~a decrease~~an increase of ~~$0.3~~$0.1 million, or ~~6.8%~~1.2%, compared to the prior year. This ~~decrease~~increase was due to the increase in net revenues offset partially by a lower gross ~~margin offset partially by an increase in net revenues.~~margin. The DME gross margin was ~~46.9%~~45.7% during the current quarter, which was ~~6.1%~~7.8% lower than the prior year. This decrease was the result of ~~gross margin mix associated with lower rental revenues,~~ an increase in labor costs related to an increase in biomedical ~~technicians and an increase in freight expense.~~technicians. The increase in biomedical technician labor, which totaled $0.7 million, resulted from an increase in team members who were hired in order to increase the capacity in biomedical services in anticipation of increased biomedical services demand. These newly hired team members mainly spent their time training during the period but will be deployed to support higher demand and related revenue volumes in future quarters. The increase in freight expense was partially due to increased outbound shipping activities at the end of the third quarter of 2021 to deploy rental devices which will begin generating rental revenues during the 2021 fourth quarter.

Selling and Marketing Expenses

Selling and marketing expenses for the ~~third~~first quarter of ~~2021~~2022 were ~~$2.9~~$3.3 million, representing an increase of ~~$0.7~~$0.9 million, or ~~32.4%~~39.7%, as compared to the ~~third~~first quarter of ~~2020.~~2021. Selling and marketing expenses as a percentage of net revenues increased to ~~10.9%~~12.4% compared to 9.7% for the prior ~~year period at 8.7%.~~year. This increase reflected ~~$0.5~~$0.6 million in higher expenses for NPWT and Pain Management dedicated sales personnel hired during the 2021 second quarter and ~~higher customer travel~~increased digital marketing expenses. The additional sales team members and digital marketing expenses represent a strategic investment to accelerate revenue growth for these therapies in future periods and the expense included in selling and marketing is a portion of an overall expense increase of ~~$0.8~~$1.0 million ~~for~~incurred during the ~~third~~first quarter of ~~2021~~2022 associated with this ~~initiative, the~~initiative. The remainder of ~~which~~the expense increase totaling $0.4 million is included in general and administrative expense. ~~These increases were partially offset by a reduction~~The remaining increase in selling and marketing expenses ~~associated with a sales team reorganization completed in late 2020. The~~totaling $0.3 million reflected higher ~~travel~~marketing expenses ~~occurred as travel restrictions~~ related to our national sales meeting which was held in-person for the first time since the outbreak of COVID-19, ~~were lifted earlier during the year. During the third quarter of 2020, when the COVID-19 related travel restrictions were at their peak, our sales team generally did not travel. The selling~~increased participation in trade shows and

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other increased expenses. Selling and marketing expenses ~~during these periods consisted~~consists of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, travel and entertainment and other miscellaneous expenses.

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General and Administrative Expenses

General and administrative (“G&A”) expenses for the ~~third~~first quarter of ~~2021~~2022 were ~~$11.6~~$11.8 million, an increase of ~~34.7%~~14.1% from ~~$8.6~~$10.4 million for the ~~third~~first quarter of ~~2020.~~2021. G&A expenses during these periods consisted primarily of accounting, administrative, third-party payer billing and contract services, customer service, nurses on staff, new product services, service center personnel salaries, fringe benefits and other payroll-related items, professional fees, legal fees, stock-based compensation, insurance and other miscellaneous items. The increase of ~~$3.0~~$1.5 million was ~~largely~~ due to ~~an increase in stock-based compensation expense of $1.3 million, $0.3~~$0.4 million in additional expenses related to the investments in NPWT and Pain Management, ~~$0.2~~$0.1 million of additional G&A expenses for the FilAMed and OB Healthcare businesses and higher travel expenses and other increases including higher personnel, healthcare and general business expenses. These increases were partially offset by a decrease in stock-based compensation expense of $0.6 million. G&A expenses as a percentage of net revenues for the ~~third~~first quarter of ~~2021,~~2022 increased to ~~43.5%~~44.2% compared to ~~34.2%~~42.3% for the same prior year period, mainly reflecting the year-over-year increases partially offset by improved net revenue leverage over fixed costs.

Other Expenses

During the ~~third~~first quarter of ~~2021,~~2022, other expense included interest expense of $0.3 million, which was slightly lower than interest expense for the ~~third~~first quarter of ~~2020.~~2021. This decrease resulted from lower average outstanding debt balances offset by higher weighted average interest rates and additional commitment fees on a higher unused revolving line availability during the ~~third~~first quarter of ~~2021~~2022 as compared to ~~2020.~~the first quarter of 2021.

Benefit From ~~(Provision For)~~ Income Taxes

During the ~~third~~first quarter of ~~2021,~~2022, the Company recorded a benefit from income taxes totaling ~~$0.2~~$0.5 million representing an effective tax rate of ~~32.6%~~55.7% on a pre-tax loss of ~~$0.7~~$0.8 million. This effective tax rate differed from the U.S. statutory rate mainly due to the effects of local, state and foreign jurisdiction income taxes.

As of December 31, 2020, the Company had generated significant pre-tax income on a three-year cumulative basis prompting management to assess available positive and negative evidence regarding the recovery of our net deferred tax assets. Due to this assessment, it was determined that it is more likely than not that the Company will recognize the benefits of its federal and state net deferred tax assets and, as a result, a previously recorded valuation allowance was released. Prior to this date, our tax provisions and benefits were significantly offset by adjustments to the valuation allowance.

During the third quarter of 2020, we recorded a provision for income taxes of less than $0.1 million, representing an effective tax rate of 1.3% on pre-tax earnings totaling $3.0 million. The effective tax rates differed from the U.S. statutory rates during this period due mainly to the availability of net operating losses almost fully offsetting the then current tax provision in most jurisdictions we operated in and a decrease in the valuation reserve recorded on our net deferred tax assets, which fully offset our deferred tax provision during that period.

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~~InfuSystem Holdings, Inc. Results of Operations for the Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020~~

~~The following represents the Company’s results of operations for the nine months ended September 30, 2021 and 2020:~~

Nine Months Ended
September 30,
(in thousands, except share and per share data) 2021 2020
Better/
(Worse)

Net revenues:
    ITS $ 48,826 $ 45,369 $ 3,457
    DME Services (inclusive of inter-segment revenues) 31,521 31,263 258
       Less: elimination of inter-segment revenues (4,484) (3,955) (529)
      Total 75,863 72,677 3,186
Gross profit (inclusive of certain inter-segment allocations) (a):
    ITS 31,028 29,480 1,548
    DME Services 13,856 14,283 (427)
      Total 44,884 43,763 1,121

Selling, general and administrative expenses
    Provision for doubtful accounts (99) 534 633
    Amortization of intangibles 3,264 3,225 (39)
    Selling and marketing 7,964 7,263 (701)
    General and administrative 32,537 24,949 (7,588)
      Total selling, general and administrative expenses 43,666 35,971 (7,695)

Operating income 1,218 7,792 (6,574)

Other expense (1,059) (1,038) (21)

Income before income taxes 159 6,754 (6,595)
Benefit from (provision for) income taxes 874 (92) 966

Net income $ 1,033 $ 6,662 $ (5,629)

Net income per share
Basic $ 0.05 $ 0.33 $ (0.28)
Diluted $ 0.05 $ 0.31 $ (0.26)
Weighted average shares outstanding:
Basic 20,468,842 20,060,416 408,426
Diluted 21,995,216 21,637,481 357,735
(a) Inter-segment allocations are for cleaning and repair services performed on medical equipment.

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~~Net Revenues~~

Net revenues for the nine-month period ended September 30, 2021 (“nine-month period of 2021”) were $75.9 million, an increase of $3.2 million, or 4.4%, compared to $72.7 million for the nine-month period ended September 30, 2020 (“nine-month period of 2020”). The increase was due to higher service volumes for all three ITS Segment therapies, improved collections on billings to third party payers and higher service and repair revenues. These increases were offset partially by lower medical equipment sales in the DME Services Segment.

~~ITS~~

ITS net revenue of $48.8 million increased $3.5 million, or 7.6%, during the nine-month period of 2021 as compared to the prior year period. This increase was primarily attributable to growth in the Company’s customer base due to favorable changes in the competitive environment for oncology services, higher service volumes for Pain Management and new revenues from NPWT. Adding to these increases was improved third-party payer collections on billings and other market-related organic growth. Pain Management net revenue for the nine-month period of 2021 increased as compared to the nine-month period of 2020 due to additional sites of care added over the last year and a recovery in the elective surgeries market which was negatively impacted by COVID-19 during the second quarter of 2020. The new NPWT business was launched during the first quarter of 2020 but did not start to have measurable quarterly revenues until the second half of 2020. On a combined basis, Pain Management and NPWT net revenues increased by $1.5 million during the nine-month period of 2021 as compared to the same period in 2020, which represented an increase of 72.6%.

~~DME Services~~

DME Services net revenue of $27.0 million, decreased $0.3 million, or 1.0%, during the nine-month period of 2021 as compared to the prior year period. This decrease was mainly due to a moderation in market demand for infusion pumps which was elevated during the second quarter of 2020 because of the COVID-19 pandemic partially offset by the expansion of our market share with national home infusion service providers, the addition of new devices to our product offerings stemming from new partnerships with certain medical device manufacturers and revenues from FilAMed and OB Healthcare which were acquired during the first quarter of 2021 and second quarter of 2021, respectively.

~~Gross Profit (inclusive of certain inter-segment allocations)~~

Gross profit for the nine-month period of 2021 of $44.9 million increased $1.1 million, or 2.6%, from $43.8 million for the nine-month period of 2020. This increase was due to the increase in net revenues offset by a lower gross margin. Gross margin decreased slightly to 59.2% during the nine-month period of 2021 as compared to 60.2% during the prior year. This decrease was due to a decrease in the gross margin for both the DME Services and ITS segments.

~~ITS~~

ITS gross profit was $31.0 million during the nine-month period of 2021, representing an increase of $1.5 million, or 5.3%, compared to the prior year. The improvement reflected an increase in net revenues offset partially by a lower gross margin, which decreased from the prior year by 1.5% to 63.5%. The lower gross margin was the result of a non-cash reserve adjustment of $0.4 million recorded for missing medical equipment, higher pump maintenance expenses offset partially by improved collections on billings during the current period. The reserve adjustment for missing equipment was significantly higher than normal during the first quarter of 2021. Pump maintenance expenses, which include preventative maintenance, cleaning and repair services mainly performed by the DME Services segment, were unusually low during the prior year due to COVID-19 when the Company deployed a significant number of newly purchased pumps.

~~DME Services~~

DME Services gross profit during the nine-month period of 2021 was $13.9 million, representing a decrease of $0.4 million, or 3.0%, over the prior year. This decrease was due to the decrease in net revenues and gross margin. The DME gross margin was 51.2% during the current period, which was 1.1% lower than the prior year. This decrease was the result of unfavorable gross margin mix associated with lower rental revenue, an increase in labor costs related to an increase in biomedical technicians who were being trained during the third quarter of 2021 and an increase in freight expense partially associated with shipments of rental units at the end of the third quarter of 2021.

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~~Provision for Doubtful Accounts~~

Provision for doubtful accounts for the nine-month period of 2021 included a favorable accrual reversal resulting in the net amount to be a benefit of $0.1 million during the period as compared to a $0.5 million expense recorded for the nine-month period of 2020. The accrual reversal was the result of improved collections on late accounts.

~~Selling and Marketing Expenses~~

Selling and marketing expenses for the nine-month period of 2021 were $8.0 million, representing an increase of $0.7 million or 9.7% as compared to selling and marketing expenses for the nine-month period of 2020. Selling and marketing expenses as a percentage of net revenues increased to 10.5% compared to the prior year period at 10.0%. This increase reflected $0.8 million in higher expenses for NPWT and Pain Management dedicated sales personnel hired during the 2021 second quarter and higher customer travel expenses. These increases were partially offset by a decrease that reflected a shift in the proportion of net revenue favoring the DME Services segment, which has a lower commission to sales ratio than the ITS segment, lower expenses associated with a management reorganization completed during the fourth quarter of 2020 and improved net revenue leverage of fixed selling and marketing expenses. Selling and marketing expenses during these periods consisted of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, travel and entertainment and other miscellaneous expenses.

~~General and Administrative Expenses~~

G&A expenses for the nine-month period of 2021 were $32.5 million, an increase of $7.6 million or 30.4% from the nine-month period of 2020. G&A expenses during these periods consisted primarily of accounting, administrative, third-party payer billing and contract services, customer service, nurses on staff, new product services, service center personnel salaries, fringe benefits and other payroll-related items, professional fees, legal fees, stock-based compensation, insurance and other miscellaneous items. The increase was largely due to an increase in stock-based compensation expense of $3.7 million, lower than normal expenses during the second quarter of 2020 due to COVID-19 related deferrals of various internal projects of nearly $1.0 million, $0.5 in additional expenses related to the investments in NPWT and Pain Management and the additional G&A expenses and acquisition expenses for FilAMed and OB Healthcare totaling $0.4 million. The additional increase of $2.0 million included higher personnel and general business expenses. G&A expenses as a percentage of net revenues for the nine-month period of 2021, increased to 42.9% compared to 34.3% for the prior year mainly reflecting the year-over-year increases partially offset by improved net revenue leverage over fixed costs.

~~Other Income and Expenses~~

During the nine-month period of 2021, other income and expense included interest expense of $0.9 million which was $0.1 million lower than interest expense for the nine-month period of 2020. This decrease resulted from lower average outstanding debt balances offset by higher weighted average interest rates and additional commitment fees on a higher unused revolving line availability during the nine-month period of 2021 as compared to 2020.

~~Benefit From (Provision For) Income Taxes~~

~~During the nine-month period~~ of 2021, the Company recorded a benefit from income taxes totaling ~~$0.9~~$0.2 million. This amount included a benefit of $0.3 million due to an excess tax benefit associated with a higher amount of equity compensation expense deductible for tax purposes as compared to amounts historically recognized for book purposes on exercises of stock options and vesting of restricted stock during the ~~first half of 2021.~~quarter. This benefit was partially offset by an estimated tax provision totaling $0.1 million representing an effective tax rate of ~~36.3%~~30.3% on pre-tax income totaling ~~$0.2~~$0.5 million. This effective tax rate differed from the U.S. statutory rate mainly due to the effects of local, state and foreign jurisdiction income taxes.

During the nine-month period of 2020, we recorded a provision for income taxes of less than $0.1 million, representing an effective tax rate of 1.4% on pre-tax earnings of $6.8 million. The effective tax rate during this period differed from the U.S. statutory rates during this period due mainly to the availability of net operating losses almost fully offsetting the then current tax provision in most jurisdictions we operated in and a decrease in the valuation reserve recorded on our net deferred tax assets, which fully offset our deferred tax provision during that period.

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Liquidity and Capital Resources

Overview:

We finance our operations and capital expenditures with ~~internally-generated~~ cash generated from operations and borrowings under our existing credit ~~facilities.~~agreement. On February 5, 2021, we and certain of our subsidiaries, as borrowers, entered into a Credit Agreement (the “2021 Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, sole bookrunner and sole lead arranger, and the lenders party thereto, which replaced our then existing credit facility, dated March 23, 2015 (the “2015 Credit Agreement”). See Note 8 (Debt) in the notes to the accompanying unaudited condensed consolidated financial statements for additional information regarding the 2021 Credit Agreement and 2015 Credit Agreement.

The following table summarizes our available liquidity (in millions):


Liquidity	Liquidity				Liquidity
		September 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	0.2	9.6	Cash and cash equivalents	$	0.4	0.2
Revolving line of credit	Revolving line of credit	43.4		10.8	Revolving line of credit	39.4		41.4
Available liquidity	Available liquidity	$	43.6	20.4	Available liquidity	$	39.8	41.6

Our liquidity and borrowing plans are established to align with our financial and strategic planning processes and ensure we have the necessary funding to meet our operating commitments, which primarily include the purchase of pumps, inventory, payroll and general expenses. We also take into consideration our overall capital allocation strategy, which includes investment for future organic growth, potential acquisitions and share repurchases. We believe we have adequate sources of liquidity and funding available to meet our liquidity requirements for at least the next ~~year.~~year from the filing date of this report, as well as for our currently anticipated long-term needs, including our long-term lease obligations discussed above in Note 13 (Leases) in the notes to the accompanying unaudited condensed consolidated financial statements. However, any projections of future earnings and cash flows are subject to substantial uncertainty, including factors such as the successful execution of our business plan and

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general economic conditions. We may need to access debt and equity markets in the future if unforeseen costs or opportunities arise, to meet working capital requirements, fund acquisitions or investments or repay indebtedness under the 2021 Credit Agreement. If we need to obtain new debt or equity financing in the future, the terms and availability of such financing may be impacted by economic and financial market conditions as well as our financial condition and results of operations at the time we seek additional financing.

Long-Term Debt Activities:

The Company executed and closed the 2021 Credit Agreement during the first quarter of 2021, and in connection with entering into that agreement, terminated the 2015 Credit Agreement. For the following table, the figures related to the September 30, 2021 revolving credit facility (the “Revolving Facility”) balances relate to the 2021 Credit Agreement, while the December 31, 2020 revolving credit facility balances relate to the now-terminated 2015 Credit Agreement. The following table illustrates the net availability under the revolving credit ~~facilities~~facility ("Revolving Facility") as of the applicable balance sheet date (in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Revolving Facility:	Revolving Facility:					Revolving Facility:
Gross availability	Gross availability	$	75,000	$	11,750	Gross availability	$	75,000	$	75,000
Outstanding draws	Outstanding draws	(30,804)		—		Outstanding draws	(35,000)		(32,974)
Letters of credit	Letters of credit	(800)		(800)		Letters of credit	(600)		(600)
Landlord reserves		—		(162)
Availability on Revolving Facility	Availability on Revolving Facility	$	43,396	$	10,788	Availability on Revolving Facility	$	39,400	$	41,426

Share Repurchase Program

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As of ~~September 30, 2021,~~March 31, 2022, the Company had ~~not~~ repurchased ~~any~~approximately $4.6 million, or 343,514 shares, of the Company's outstanding common stock under the Share Repurchase Program.

Cash Flows:

The following table summarizes our cash flows (in millions):


		Nine Months Ended September 30,							Three Months Ended March 31,
In millions	In millions	2021		2020		2021 vs. 2020		In millions	2022		2021		2021 vs. 2020
Net cash provided by operating activities	Net cash provided by operating activities	$	14.6	$	12.7	$	1.9	Net cash provided by operating activities	$	4.1	$	2.7	$	1.4
Net cash used in investing activities	Net cash used in investing activities	$	(15.7)	$	(9.0)	$	(6.7)	Net cash used in investing activities	$	(2.1)	$	(2.8)	$	0.7
Net cash used in financing activities	Net cash used in financing activities	$	(8.4)	$	(4.4)	$	(4.0)	Net cash used in financing activities	$	(1.7)	$	(6.7)	$	5.0

Operating Cash Flow. Net cash provided by operating activities for the ~~nine-month period~~first quarter of ~~2021~~2022 was ~~$14.6~~$4.1 million compared to ~~$12.7~~$2.7 million for the ~~nine-month period~~first quarter of ~~2020.~~2021. This ~~$1.9~~$1.4 million, or ~~15.3%~~53.8%, increase was primarily attributable to the positive cash flow effect of a ~~lower amount of~~swing from $3.7 million in cash ~~invested in~~being used to fund increased working capital ~~balances~~amounts during the first quarter of 2021 ~~as compared~~ to ~~2020~~cash being provided by reduced working capital amounts during the first quarter of 2022 of $0.3 million for a net improvement in cash flow totaling $4.1 million. This amount was partially offset ~~partially~~ by a decrease in net income adjusted for non-cash items of ~~$15.4~~$3.7 million during the ~~nine-month period~~first quarter of ~~2021~~2022 as compared to ~~$16.1~~$6.4 million during the ~~nine-month period~~first quarter of ~~2020,~~2021, a decrease of ~~$0.8~~$2.7 million. During 2022, cash received from net lower working capital balances included a $1.3 million ~~or 4.7%. During the nine month period ended~~increase

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in accounts receivable, a $0.1 million decrease in inventory and a $1.6 million increase in accounts payable and accrued liabilities. In 2021, ~~cash invested~~investments in working capital balances ~~totaled $0.8 million, which~~ included a ~~$0.2~~$0.4 million ~~decrease~~increase in accounts receivable, a ~~$0.6~~$0.2 million increase in ~~inventory~~inventories and a ~~$0.5~~$2.9 million decrease in accounts payable and accrued liabilities. ~~This amount represented a $2.7 million decrease as compared to the same period in 2020 when investments in working capital balances totaled $3.5 million and included a $1.5~~

The $1.3 million increase in accounts receivable ~~a $1.1 million increase in inventories and a $0.9 million decrease in accounts payable and accrued liabilities.~~

~~The $0.2 million decrease in accounts receivable~~ during the ~~nine-month~~first three-month period of ~~2021~~2022 as compared to the ~~$1.5~~$0.4 million increase during the same prior year period was mainly due to a ~~lower~~sequential quarterly growth in net revenues ~~and improved customer collections during~~for the ~~2021~~first three-month period of 2022 as compared to a sequential quarterly decrease in net revenues for the ~~prior year period. Inventory increased by $0.6 million during the nine-month~~first three-month period of 2021, which was lower than the prior year period amount of $1.1 million when the Company purchased a safety stock of disposable medical supplies in anticipation of potential supply disruptions as the COVID-19 pandemic began to unfold.2021. Accounts payable and other liabilities, net of capital items, ~~decreased~~increased by ~~$0.5~~$1.6 million during the ~~nine-month~~first three-month period of 2022, and decreased by $2.9 million during the first three-month period of 2021, ~~which was lower than~~a $4.5 million favorable cash flow swing, mainly due to a reduction in the ~~prior year decrease of $0.9 million~~amount paid in 2022 for the 2021 short-term incentive bonus plan as ~~a result of the increase in purchases of disposable medical supplies related~~compared to the ~~increase~~amount paid in ~~inventory and~~2021 for the ~~higher amount of revenue growth during 2020.~~2020 short-term incentive bonus plan.

Investing Cash Flow. Net cash used in investing activities was ~~$15.7~~$2.1 million for the ~~nine-month~~first three-month period of 2022 compared to $2.8 million for the first three-month period of 2021, ~~compared to $9.0 million for the nine-month period~~a decrease of ~~2020, an increase of $6.7~~$0.7 million. The ~~increase~~decrease was due to the ~~acquisitions~~acquisition of FilAMed ~~and OB Healthcare~~ totaling ~~$7.7~~$1.2 million during the ~~nine-month~~first three-month period of 2021. There were no acquisitions during ~~2020.~~2022. This amount was partially offset by ~~a decrease~~an increase in cash used to purchase medical equipment ~~and other property and equipment~~ of ~~$2.3 million and $0.3 million, respectively.~~$0.6 million. Purchases of medical equipment were higher during ~~2020 since,~~2022 due to an increase in expected future growth during ~~that period,~~ the ~~Company was adding additional equipment~~current year as compared to ~~prepare for the onset of COVID-19 which, at the time, was causing an increased market demand for the Company’s services while also potentially threatening the supply chain for new medical equipment.~~2021.

Financing Cash Flow. Net cash used in financing activities for the ~~nine-month~~three-month period of ~~2021~~2022 was ~~$8.4~~$1.7 million compared to ~~$4.4~~$6.7 million for the ~~nine-month~~first three-month period of ~~2020.~~2021. Amounts of cash used in financing activities during the first three-month period of 2022 included net revolving line of credit borrowings under the 2021 Credit Agreement totaling $2.0 million, $0.2 million in principal payments on our other financing and $4.0 million to buy back the Company's common stock. These amounts were partially offset by cash proceeds from employee stock option exercises totaling $0.5 million. The use of cash during 2021 was mainly related to the refinancing of our bank debt on February 5, 2021. Prior to that date, we operated under the 2015 Credit Agreement which included three term notes and a revolving line of credit. At the beginning of 2021, we had $9.6 million in cash on hand and no outstanding borrowings under the revolving line of credit. The 2015 Credit Agreement was completely repaid and replaced by the 2021 Credit Agreement, which has a new $75 million revolving line of credit and no term notes. This structure allowed the Company to use a portion of its available cash, totaling $7.9 million, to reduce its overall outstanding debt on the closing date of the financing. Other amounts of cash used in financing activities during the nine-month period of 2021 included net revolving line of credit repayments under the 2021 Credit Agreement made from our operating cash flows after the date of the February 5, 2021 refinancing totaling $6.8 million and $0.5 million in principal payments on our other financing. These amounts were

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~~partially offset by revolving line of credit borrowings totaling $7.7 million used to acquire FilAMed and OB Healthcare. Net~~ cash used in financing activities for the ~~nine-month~~first three-month period of ~~2020~~2021 included a $3.1 million net reduction in outstanding borrowings under the 2015 Credit Agreement, which included amortization installments on term notes totaling $5.8 million, debt issuance costs totaling $0.4 million and cash used to repurchase shares to satisfy statutory withholding on employee stock based compensation totaling $0.6 million. These amounts were partially offset by $2.7 million in borrowings under an equipment line of ~~credit.~~credit and $0.3 million in cash proceeds from employee stock option exercises.

Critical Accounting Policies and Estimates

The unaudited condensed consolidated financial statements are prepared in conformity with GAAP, which require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. The critical accounting estimates that affect the unaudited condensed consolidated financial statements and the judgments and assumptions used are consistent with those described in the notes to the audited consolidated financial statements in our annual report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the SEC on March ~~22, 2021.~~15, 2022. There have been no material changes to our critical accounting policies described in the notes to the audited consolidated financial statements in our annual report on Form 10-K for the year ended December 31, ~~2020.~~2021.

As of the date of the unaudited condensed consolidated financial statements presented in this Form 10-Q, there have been no material negative financial impacts on our operations resulting from the COVID-19 pandemic. However, the future effects of this pandemic or any resurgence thereof on economic and market conditions is uncertain and increases the subjectivity that will be involved in evaluating our estimates and assumptions underlying our critical accounting policies. Any events and changes in circumstances arising after ~~September 30, 2021,~~March 31, 2022, including those resulting from the impacts of the COVID-19 pandemic, will be reflected in management’s estimates for future periods.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in foreign currency exchange rates and short-term interest rates. Market risks for changes in interest rates relate primarily to our debt obligations under our 2021 Credit Agreement. Foreign currency

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exchange risks are attributable to sales to foreign customers and purchases from foreign suppliers not denominated in our functional currency which is the U.S. Dollar and include exposures primarily to the Canadian Dollar.

The Company periodically enters into derivative contracts with the objective of managing its financial and operational exposure arising from these risks by offsetting gains and losses on the underlying exposures with gains and losses on the financial instruments used to hedge them. We did not have any foreign currency derivative contracts outstanding at any time during the three months ended March 31, 2022. The maximum length of time over which we hedge our exposure to short-term interest rate risk is equal to the remaining term for the debt obligation being hedged. We had interest rate derivative contracts with a ~~smaller reporting company~~notional value of $20.0 million as ~~defined by Rule 12b-2~~of March 31, 2022 and December 31, 2021, respectively.

We do not enter into derivative financial instruments for speculative or trading purposes. Our hedging relationships are formally documented at the inception of the ~~Exchange Act~~hedge, and hedges must be highly effective in offsetting changes to future cash flows on hedged transactions both at the inception of a hedge and on an ongoing basis to be designated for hedge accounting treatment. For derivative contracts which can be classified as a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded to accumulated other comprehensive income in the consolidated balance sheet. When the underlying hedge transaction is realized, the gain or loss included in accumulated other comprehensive income is recorded in earnings in the consolidated statement of income on the same line as the gain or loss on the hedged item attributable to the hedged risk. We record the ineffective portion of interest rate hedging instruments, if any, to interest expense in the consolidated statements of income. See Note 9 to our consolidated financial statements for information related to the fair values of derivative instruments in our condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively, and information related to the effect of derivative instruments included in our condensed consolidated statements of operations and comprehensive income including the amount of unrealized gain associated with our interest rate derivatives reported in accumulated other comprehensive income that was reclassified into earnings during the three months ended March 31, 2022 and 2021, respectively.

The Company uses an income approach to value derivative instruments, analyzing quoted market prices to calculate the forward values and then discounting such forward values to the present value using benchmark rates at commonly quoted intervals for the instrument’s full term.

In July 2017, Financial Conduct Authority (the authority that regulates LIBOR) previously announced its intent to stop compelling banks to submit rates for the calculation of LIBOR after 2021, and the administrator of LIBOR announced its intention to cease the publication of the one week and two month USD LIBOR settings immediately following December 31, 2021, and the remaining USD LIBOR settings immediately following the LIBOR publication on June 30, 2023. The one week and two month USD LIBOR settings were last published on December 31, 2021. Additionally, it is expected that banks will no longer issue LIBOR-based debt after December 31, 2021. Accordingly, there is considerable uncertainty regarding the publication of such rates beyond these dates. The Alternative Reference Rates Committee ("ARRC") has proposed that the Secured Overnight Financing Rate ("SOFR") is the rate that represents best practice as the alternative to USD LIBOR for use in derivatives and other financial contracts that are currently indexed to USD LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD LIBOR. At this time, it is not ~~required~~known whether or when SOFR or other alternative reference rates will attain market traction as replacements for LIBOR. The Company's 2021 Credit Agreement, discussed in Note 8 to ~~provide~~ the ~~information required under~~condensed consolidated financial statements, and the Company's interest rate swap agreements, discussed in Note 9 to the condensed consolidated financial statements, are indexed to USD LIBOR and management is monitoring this ~~item.~~activity and evaluating the related risks.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures and Changes in Internal Control over Financial Reporting

We maintain a set of disclosure controls and procedures designed to ensure that material information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that material information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures. Our CEO and CFO have evaluated these disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q and have determined that such disclosure controls and procedures were effective.

There has been no change in our internal control over financial reporting during our most recent calendar quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

From time to time in the ordinary course of our business, we may be involved in legal and regulatory proceedings, the outcomes of which may not be determinable. The results of litigation and regulatory proceedings are inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. We are not able to estimate an aggregate amount or range of reasonably possible losses for those legal matters for which losses are not probable and estimable, primarily for the following reasons: (i) many of the relevant legal proceedings are in preliminary stages and until such proceedings develop further, there is often uncertainty regarding the relevant facts and circumstances at issue and potential liability; and (ii) many of these proceedings involve matters of which the outcomes are inherently difficult to predict. We have insurance policies covering potential losses where such coverage is cost effective.

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We are not at this time involved in any proceedings that we believe could have a material effect on our business, financial condition, results of operations or cash flows.

Item 1A. Risk Factors

For information regarding factors that could affect our results of operations, financial condition and liquidity, refer to the section entitled “Risk Factors” in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the SEC on March ~~22, 2021.~~15, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~Purchases of Equity Securities by the Issuer

A summary of our purchases of our common stock during the three months ended March 31, 2022 is as follows:


Period	Total Number of Shares Purchased (a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (b)
January 1, 2022 through January 31, 2022	79,625	$	15.69	76,297	$18,245,811
February 1, 2022 through February 28, 2022	177,071	$	12.69	177,071	$15,999,030
March 1, 2022 through March 31, 2022	56,677	$	9.85	56,677	$15,440,579
Total	313,373	$	12.94	310,045

(a) Of the 313,373 shares of common stock presented in the table above, 3,328 shares were originally granted to employees and directors as restricted stock awards. Our stock plans allow for the withholding of shares to satisfy tax obligations due upon the vesting of restricted stock. Pursuant to our stock plans, the 3,328 shares reflected above were relinquished by employees or directors in exchange for our agreement to pay U.S. federal, state and local tax withholding obligations resulting from the vesting of the Company's restricted stock.

(b) On June 30, 2021, our Board of Directors approved a stock repurchase program (the "Share Repurchase Program") authorizing the Company to repurchase up to $20.0 million of the Company's outstanding common stock through June 30, 2024 (which was announced on August 12, 2021). Repurchases under the Share Repurchase Program will be subject to market conditions, the periodic capital needs of the Company's operating activities, and the continued satisfaction of all covenants under the Company's existing credit agreement. Repurchases under the Share Repurchase Program may take place in the open market or in privately negotiated transactions and may be made under a Rule 10b5-1 plan. The Share Repurchase Program does not obligate the Company to repurchase shares and may be suspended, terminated, or modified at any time. As of March 31, 2022, the Company had repurchased 343,514 shares under the Share Repurchase Program.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits


Exhibits
3.1			Amended and Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on May 12, 2014).

3.2			Amended and Restated By-Laws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on July 9, 2018).

31.1*			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1***			Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2***			Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*			Inline XBRL Instance Document ~~– the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document~~

101.SCH*			Inline XBRL Taxonomy Extension Schema Document

101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*			Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*			Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*			Cover Page Interactive Data File ~~– formatted in Inline~~(formatted as inline XBRL and contained in Exhibit ~~101~~101)

* ***			Filed herewith Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	INFUSYSTEM HOLDINGS, INC.


Date: ~~November 15, 2021~~May 5, 2022		/s/ Richard DiIorio
		Richard DiIorio
		Chief Executive Officer and Director (Principal Executive Officer)


Date: ~~November 15, 2021~~May 5, 2022						/s/ Barry Steele
						Barry Steele Chief Financial Officer (Principal Accounting and Financial Officer)

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	DME Services (a)
Balance as of December 31, 2020	$	—
Goodwill acquired	3,710
Balance as of September 30, 2021	$	3,710

(a) No goodwill allocated to the ITS segment.