INFU - Earnings call transcript Q4 2018 | InfuSystem Holdings, Inc.

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Operator

Good morning, and welcome to the InfuSystem Holdings Inc. reports Fourth Quarter and Fiscal Year 2018 Financial Results Conference Call. All participants will be in listen-only mode [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. to conference like to now would turn over the Mr. I Partners. Managing Partner Dorame, of Joe Lytham Please ahead. go

Joe Dorame

Thank prepared Good After participating release, of are Officer. text open the today the year With other does Financial remarks, to Chief Chief the for websites. you, today's question-and-answer us joining and anyone fourth Rich XXXX, we'll the you review for call Andrea. of the Officer; If the December not Executive Schulte, from the Dilorio, morning, numerous it on financial which company's a for and press today ended President Greg retrieve copy financial XX, and on of company results quarter full InfuSystem on the Inc. at you Holdings conclusion website and or call fiscal can thank XXXX. have session. a today's us representing www.infusystem.com, call

with statements year Private constitute risks for begin within contain of the annual filed risk we Reform conference report statements on prepared and call meaning to forward-looking would may the like that December and XX-K XXXX. of Act detailed this including InfuSystem Litigation this XXXX. historical the Commission, of the of by Before ended team with the the made Securities XX, Exchange fact, the some everyone forward-looking during I certain call Securities the statements remarks, Except remind are statements company factors management of which conference by uncertainties, documents involve under and United for States Form

whether no prove not any a events and be result new made. as or future statements only correct. InfuSystem forward-looking otherwise. statements update statements disclaims of as of will the speak to were Forward-looking such The specifically to forward-looking give company can that date information, any assurance obligation does undertake statements the

of like call and to over the Officer Rich Rich? Dilorio, Executive I'd InfuSystem. Chief President Now turn to

Rich Dilorio

for you and and earnings everybody, excited year morning, XXXX I'm Good joining thank call. fiscal quarter our Joe. Thanks, call. fourth today's about

a fact, at I've it's accomplish of we been of As XX years able most foundation a what in XX last solid been to of a ahead the in us the great a and XXXX because as excited months over I'll matter built like call over on beyond. this over capitalize highlights team I'd to our go to are has Schulte, position and InfuSystem to opportunities Greg turn and in few the CFO. then

items. of couple a financial First,

$X and for over $XX.X versus Our about an XXXX to $X operating of of cash was million about increase million flow million historic XX% average a XXXX.

have But Our Greg? we the investment I in has standard target, EBITDA good short adoption quarter in Mobile set that to speak hospitals the the will about few attributed is, fourth if we front opportunities growth will as review that million developed growth to should contribute the in quarter. last of our responding rollout came upfront half first just is costs in The to of this InfuSystem news $XX elastomeric The opportunity of largely year and going patient feedback first, some practice also and The us safety. well year private a and to teaching for been Greg the continue that of in prior financials. both minutes. excellent. a year.

Greg Schulte

of pleased strong our Thank highlights you, report the very financial Rich. I am on XXXX to performance.

for same X% activities of of respectively, the year at year X.X% X% year the $XX.X the ended respectively. the the profitability, XXXX, capital topic $XX.X or price $X.X contracts million million. million, net million, of Standards decrease, and the certain XXXX, December the net cash up prior same shares $X.X periods. XX.X% same year XX.X% and and increase Net XX, approximately primarily non-GAAP the Codification ended Accounting up respectively, $XX.X to December Net from -- XX.X% period for $X.X XXXX, and respectively, effect XX.X%, customers, million totaling XXXX, December an XXXX, outstanding XXX, million, December by million from stock $X.X repurchase for and this and million million same have XX.X% quarter and of December million, ended to revenues representing $XX.X to and EBITDA net ended the periods, cash financial reconcile from from $X.X of respectively, revenues, Adjusted flows respectively, $X.X loss measure from activities the to our from from In million able year As represented Prior million operating prior due for increase, of to prior loss net also X.X% increase prior after million, improvement was quarter the working and XX, XX.X% was respectively, or same periods. year for XX, Rich provided decrease, of adjustments XX, we XXXX, XX, periods. XX.X% net adopting and and revenue loss mentioned, of were the would with were to a a $XX.X XXXX. year and and quarter XX.X% was respectively, $X.X $X.X year or increase operating

flow the expected our which finance will internal our to completed I agreement Additionally, to will to with the need through turn opportunities we give the the credit Chase, fifth back Rich. primarily amendment allow to growth recently cash now flexibility and us quickly in respond call us marketplace. we to JPMorgan also

Rich Dilorio

Thanks, Greg.

market. Now I'd you on in update to the oncology like give an growth opportunities the

indication news the our Last fall, was United States. that change in the will First, million to in of term. allowed $X contribute shy in annual first that starting half and just of the revenue we've is elastomerics good oncology into any The short should an ship for largest that year. growth case, That's the InfuSystem this won manufactures still we don't that, the update see elastomerics. one to not of for of on the

recent second will in our is story long-term be also seen half means begin our of higher this that this seen as opportunity will an costs to second to may today lead in decided to up expected our the The will growth so and and largest in to our is anticipated material what in that mostly year. pick mean for up that's that to heard infrastructure but InfuSystem? the support we QX I InfuSystem. release, has that a before, show in competitor future, its market offering It in lead realized growth sustained significant which different does update, have as hiring We investors oncology, this spending you the change to press have have investing growth.

still that, word priorities opportunity repeatedly million last pursuing see a our was and likely allow or flows, at to doorstep tell, update good opportunity of a the happy the us and the will story at currently we've answer that revenue very continue we've good $XX priority because and is in which middle in more and invest hope any forecast By it's and that those but to to InfuSystem With Those communicated and our cash and increase will years, I'm EBITDA the improve Over improving visibility, our will real. a our because million, questions. to we respectively. that delivered. believe, think $XX stands have opportunity year, on X.X operating are to we cases. significant efficiencies But we I this we not year,

Operator

We [Operator our comes DSW will Please Weiss now question go first question-and-answer from begin the of session. And Investment. Douglas ahead. Instructions]

Douglas Weiss

the to -- a of Thanks regarding Could little you bit talk more Could good happening Congrats on talk over a things little more give around morning. I guess detail turning competitor? kind what's on there? missed on that. the year. I you

Rich Dilorio

Sure.

the still the competitor oncology the market third-party service. So payer only that in was that was offering

get are market, we the bill provided their to company. left and customer to in pumps competitor the decided on only patient's they There's out of the the service. where behalf that X real insurance to So

they're a marketplace. the offering way. trend different really market We is So to to have don't that think to going going the

had those that So come most going of to our to customers is that they are feeling the side.

Douglas Weiss

insure are what business with? they replacing So the

Rich Dilorio

rental. marketplace -- do share that go sell but can there's single They a to in And going pumps is to them. the they'll if market digits. with They're buy of certainly customers customer small, the very the to pump wants that, just

Douglas Weiss

will -- opposed insurance. customer of full the getting cost the to The to as brunt carry Right. have pay

Rich Dilorio

Exactly.

Douglas Weiss

Okay. And is? how large of that a revenue do you opportunity think

Rich Dilorio

it's or We purchase this that in smaller pump A lot of the sure know much InfuSystem are, certainly than We in it'll think And -- to versus they're model. material the yet. how So increase it's of the be we'll comes year. end of a we're millions by we depend going our on see but significant. revenue rental taking of market not dollars. the it's

Douglas Weiss

Any they idea that? decided do to why

Rich Dilorio

a think from marketplace. payer I But speak InfuSystem the on to wanted in of lot think them the try pressure really that has they want Mobile model. to I No. do the don't I own third-party directly don't to invest compete put to we market, necessarily. And

Douglas Weiss

And guess for up I is maybe longer in guess show the a those Or revenue, of it I accurate? -- taking that terms Okay. manufacturer. you just miss to disposable last the exit talked I understood maybe had quarter, about in timing. little of it's the sales that

Rich Dilorio

the is what think we I timing So expected.

customers. start good like So months effectively X X And to it it so week the in in QX. happened revenue in X a from September, us see last to new or really takes to

definitely it the in it the definitely in But second this show right, quarter any have you're should see impact in up. year first we quarter really to start So and of QX. didn't

Douglas Weiss

of and is debt. I still certain there true kind the been that amount less today? true that QX for And where a point point historically, or guess below Is of had was also seasonality, bad high

Rich Dilorio

would I the say versus why don't Yes, change see probably I it's it would necessarily historic numbers. true.

Douglas Weiss

terms bad And restructuring ongoing Does contracts. an a of lot have in on happened collections debt, forward? all impact has that going you of -- there's your Okay. your

Greg Schulte

it's I Greg. of if our or we benefit design out designed I obviously, and team copays fight changes that everyday. debt make that's Yes, is the I to We headwind reflects the the are make and of we contracts ahead without getting contracts, We necessarily our all aggressive to control, planned battle sure but with the have contracts fight, think think -- adding. a we're very increase, and changes there we daily deductibles a new existing beyond staying do bad we from do -- planned any a contracts constantly that see we're to believe, agreements renew don't efforts there

Douglas Weiss

have recollection -- a from really are insurance. low, patient even pretty they're to from But not it maybe guess is XXX% had I -- but is high do your now? XXX%, that or mean, that component Is sense a has my insurance, is sense historically. pay -- historically, been pay -- from my close I you've patient your collections my you

Greg Schulte

We do component. pay patient have a

single from from it's You're patient pay, is of it's right, overall in digits -- where the it bad the is pay. the it's our and again, and -- generated debt

Douglas Weiss

So you're right.

million of So that's it? revenue, of the on the to how a is few that $XX of and patient million sort of bulk bad think debt. Is pay

Greg Schulte

be would time basically that Yes, adjusted.

Douglas Weiss

I mean sort Okay, at over point? at okay. debt have would a bad this of what full year do be you a guess

Greg Schulte

the comprehensive I we our look bad a it the digits, and on higher $X about was, that's think of sort so the revenue, XXXX, for total When it's over say but million why more XX-K. million. numbers, yes, $X in the But for by think debt it's we debt than bad was at gross just I year. single it'll we're be

Douglas Weiss

And you good of number? think go-forward kind that's a

Greg Schulte

but I it's or settled in It's there's said, -- pluses working -- any it's and are that down, bringing that's definitely area. -- there of it on minuses we that, like

Douglas Weiss

Okay.

quarter. growth that You didn't talk about you there still Is still this are optimistic -- business Is still there? the pain there?

Greg Schulte

Yes.

something So the with there's Being continue see out, a go this in year don't it to break to We it to at breaking great certainly this crisis we're to or point, pain through. is trying still just on without potential maybe But a still part of do. X lot side. we out, opioid not going we help will.

Douglas Weiss

seemed industry going kind that least from weren't to of they was it company On that going going that there a And reimburse, When to arbitrary has of over quick CMS' changed that appeal seemed CNS. sense of time? wonder Okay. is reconsider my decision how to at anything at I decided lot it. year appeal outside. given But And sort last arbitrary was, willingness process, the was the to CNS a terms and the the in if the optimism of that way decision. wasn't

Rich Dilorio

you the word. as switch Yes, much not know. It but expecting never or long so change We're to. short term it nothing changed. term. in will moving pretty Again, good not Arbitrary we're has back, could forward a though is

Douglas Weiss

Okay.

So there this point? nothing at there's in works really the

Rich Dilorio

No, not really.

Douglas Weiss

Okay.

guess I quick Let's questions. modeling see, of just couple

front. leverage So I you you dollar that guys see how on good Is Do on Yes, did that going do margins sort a margins? job think as -- you will additional much improve be the expense revenue? that higher you bring on get revenue? of incremental operating to your

Greg Schulte

third-party and operating profit. basis, business business. leverage strong that that of gross as payer SG&A ahead expenses expect a as is of view, are we has gross On -- margin a expect margin the the from gross we the And an point we normalizes. But -- the

from the definitely where SG&A point as it is in maintain For percentage leverage that a of to basis, revenues expect improve on we to was goal our view. But XXXX, percentage our 'XX. -- operating of a normalized

Douglas Weiss

in that you in big could -- theoretically? a 'XX, see margin a up would investment but pick of 'XX So more

Greg Schulte

Exactly.

Douglas Weiss

you net say -- the year? of was put sheet at didn't could the And the end what Okay. what data, balance debt you

Greg Schulte

can obviously, pull the it's -- We within fact, We -- talking, really statements. in let yes, Obviously, here. financial we me are that.

do net to But it. so been to couple debt be that'll included. didn't here. the really talking I don't haven't of the include last quarters, quick We math we for want

it's a at comfortable this very at -- definitely leverage we're So we're ratio with point. operating but --

Douglas Weiss

the guess Okay. flow free -- if what at question in I I is for XXXX? maintain current for sort the goal the a the to is mean, of -- is plan it's just cash rate? that's leverage And embedded that case,

Greg Schulte

pump Well, investments. past would kind to other of Chase restricted we in and of agreement. part our it the it in flow ability of to would our happen our -- order be would the -- our some meet in operating part cash covenants it to our invest We is, covenants, use fleet of

bank allowing agreement -- So to to us more in on a the big versus putting first borrow was to up the on and $X that flow Chase more putting us allowing pump. of the spend cash part million of use the our to book borrowing money,

we need we under expect future. in not investments required obviously, for we -- not to payment have, any we So debt foreseeable it. to will our will And have our expect as

opportunities. that -- -- our flexibility So during we year for as ratios the leverage expect look to will our debt improve we we future at and

Douglas Weiss

For investments M&A? in equipment future or opportunities, meaning additional

Greg Schulte

What do you think?

Rich Dilorio

the dependent on opportunity. Yes, it's all

we opportunity stock for. buybacks, So it could additional that we could see that makes growth be use in sense, equipment, cash if anything a there our flow

Just depends on the opportunity that presents itself.

Douglas Weiss

plausibly M&A I this that mean, at of be point? is would Is there any anything interest? there

Rich Dilorio

There's There's it. But do have if cash opportunity it, months always the presents in something go next couple and do interest. of that to nothing the we certainly that's an that's itself coming. we'll

Douglas Weiss

Okay.

appreciate well all And Okay, good on answers. year. congrats the a

Rich Dilorio

Doug. Thanks

Operator

Group. Michael from comes of question Monarch next Capital Our Potter

Michael Potter

guys. good Hey on Congratulations are year. good XXXX. a looks like very And there for forecast

questions. follow-up of size have Rich, fleet couple what's a currently? quick Just the

Rich Dilorio

XX,XXX Total devices. company ballpark is the the in fleet about of for

Michael Potter

to that does how compare then year-end And XX,XXX. XXXX?

Rich Dilorio

have thousand up my few pumps. on top It's up. number head, but the of a I don't

Michael Potter

okay. Okay,

thousand pump with opportunities do and have fleet? this that a elastomeric anticipate the The And pump size few to going pumps. fleet? of increase we're you competitor, between other our our Just

Rich Dilorio

question Yes. to to the have There's no pumps we'll fleet. add

Michael Potter

idea what to Any degree?

Rich Dilorio

if we No, squeeze much standpoint, utilization going improve mean, lot up on how from we to how then as I out much a we customer well. and it's a can depend pick our of

it's an not So apples-to-apples.

need a we can redeploy else we patient necessarily if don't For it. every somewhere a and pump find pump,

hard kind put it's a now. it So to on right number of

Greg Schulte

well. at of end some make those XXXX to as had of we investments So

Michael Potter

Got you.

anticipation size revenue? increasing of so in -- the additional started investments our already we And in making fleet some

Rich Dilorio

Yes.

we QX and and customers QX, up but not the opportunity, running. those the So to -- are elastomerics that current had into just

to back got some 'XX. we've pumps So in add

Michael Potter

of that's But revenue? million just Okay. of a couple dollars anticipated additional

Rich Dilorio

Correct.

Michael Potter

the for XXXX? is CapEx What budget Okay.

Rich Dilorio

market dependent million So CapEx on couple opportunity, addition, completely typical our -- maintenance is be growth of varies the the and is pretty going which year-to-year. need we're around What it's to for a us. going it to dollars, an

Michael Potter

we infrastructure any Okay. don't make point? at to this additional need investments And

Rich Dilorio

and Infrastructure as as far people

Michael Potter

offices, systems. lines, things People, along those

Rich Dilorio

couple this Yes, on going of year. absolutely, things

Heights up in Madison headquarters. is our Our lease

moving new are we a So to location.

people some will there's then we that to. Again, this not going we're this when all you'll growth money investment oncology to to and yes, the we'll people we'll it out from see adding So market. But year. spend add as side, people. just we add the We're be adding going need support changes go be definitely upfront, we some go. in these on And to the there

Michael Potter

Okay, in okay. back queue. Terrific. updates. the to get Thanks the I'll for

Rich Dilorio

Thank you.

Operator

Clayton. [Operator question Jason come our go next Please from Instructions] And Stan ahead. of will

Jason Stankowski

you Hey, guys. Can me? hear

Rich Dilorio

Jason. Yes,

Jason Stankowski

payoff a for question investments. framing just of on had some the Okay. I these

know a it Like, if million that how you're $X say, million sense other that you other and good million, the least got convert job? Just or $X I what little the people -- fighting knowledge have do how million? do or and you is do helping if million industry a of of better take $X us people a competitor. clean million options it it that is you frame you many of at But Or you do $X you for sense and many have you matters if $X slate it million the $X everybody? the a than -- $X any for kind with and a opportunity-ish,

Rich Dilorio

by it's than material a They're I company. definitely any but or means. a are, our Yes, than we million small smaller bigger $X to $X it's million. mean, not

$X million oncology but it's range, than smaller our north So $X sure. the of million, for business

we'll there between fall. in Somewhere where

Jason Stankowski

Okay.

think by fair going you doing way it? $X you $X get a to the to clients. million to million -- million and it job good conservatively $X just frame and after that a for -- to conservatively Is a them million a able should $X be you're could $X as, it business So framing million hopefully be

Rich Dilorio

$X elastomeric is the on So side. million the

On $X they're a I it's than I year. bigger we the yes, competitive side, million that. think -- a mean, lot bigger should

Jason Stankowski

I what thought. that's Yes,

is in in the the million? to first So that start elastomeric we QX, roll guess seeing million that's quarter already invested I right revenue as ramp $X $X for through happening, that some and and an annualized and we you should then up, now,

Rich Dilorio

Yes.

shy about of just million, just $X million. it's So $X

and of QX, fully should some up in QX. see be that You'll but it in running

Jason Stankowski

Okay.

-- which what's there? the a business then million have all at so what them? $XX much larger you're to some try framed after I about I guess, year larger going much -- it? $XX the this it's you investment Is that portion a understand that And to the or that, or thought of And for opportunity, real capture big to million

Rich Dilorio

to investment. news scale is, we bit. going a have quite good it's going be So to is The economies a decent-sized already are of the that help

that. up need collections some we to people and we billing just So go don't to team sales build do and our add team, can incremental

shares, our an QX up. see come too certainly in we we already some ahead way, so And bit see news you'll -- the decent waves out little amount that really spend go and ramp QX, much there's in a is when time. business in The investment. have in because good can as start So of really, have of we people to ramp a just we up we QX to in don't

the But of customers we we we up an from it's see our opportunity as come team dollars ramp standpoint. and onboard, commit the millions in need infrastructure to. As definitely can and

Jason Stankowski

good a Right. In just you the conversion? high if single digits, get

Rich Dilorio

place spot start. a to That's decent

Jason Stankowski

years market, and opportunity seems pretty new Okay. leaving you And competitor job, fire add kind this throughout and bigger some kind you're a how in it it they that get process type Okay. you to -- how conversion what that out Well, level of the Or great find ramp X-year of that customers step that's get the think on the just and you of you a as come Do to stuff? exciting happen get? the you many would shakeout? couple function. or a going over year not to people from value do to a like of then based think quarters

Rich Dilorio

it. to over take away end good in be say But be pretty sure. some of take it'll in 'XX, would that jump people waves I come should I people that 'XX, it'll right to and longer and just place for we 'XX by do Yes, in mean, middle shape. there'll

So X-year year it's a to process.

Jason Stankowski

Keep this to how Okay, seeing great. up market the in jobs, and some share. capturing forward investments putting Good guys. numbers pay-off additional good look

Rich Dilorio

Great, thanks, Jason.

Operator

Abodeely next of Our Capital. Jon from question Please ahead. XLCR comes go

Jon Abodeely

give how us gentlemen. Could InfuSystem and comment, the Mobile? patient some satisfaction? you you Hi anecdotes in affecting Rich, about just the And it's marketplace if

Rich Dilorio

Yes.

their The about Patients -- implement they idea, So from have these lack that they to institutions, The patients we they didn't general that that slowly of that going they move that think that so Mobile launched correctly. the watching ago them generally kind although and has a been sure term teaching treatment lot it's somebody great. there's core things, have now and patient speaking, for love in you and of feedback going because it's great. going do implementation, is have clinic. the comfortable if love right, implementations a making in great of month InfuSystem gone the a patients, been have more better feel our

their patients more yes, themselves. patient, we So from not that the the but monitoring they feel feedback, that hear someone's from tremendous just comfortable clinic anecdotally, some

Jon Abodeely

you competitive do Rich? result believe this advantage, And a significant is going in to

Rich Dilorio

this to it. a take No that's I Yes, something to mean, it'll for question completely it. oncology long and the about time market respond changed is anybody

Jon Abodeely

color. Yeah, the thanks lot. a Appreciate

Rich Dilorio

John. Thanks Alright.

Operator

would question-and-answer over any I our turn concludes to session. conference closing back Dilorio the Rich This like for to remarks.

Rich Dilorio

Thank you.

an time is future a sharing calls for to our be forward as should to want thank know for exciting InfuSystem, looking will an time thank and is last their and they've that efforts a at listeners I This it done over the really moving This well. the team year. the you. progress. joining. and in do to I'm great great exciting job and I they months. the want so XX past all I Thank forward First,

Operator

presentation. now Thank today's you for concluded. has attending The conference

disconnect. You may now

InfuSystem (INFU) 8 Mar 192018 Q4 Earnings call transcript