INFU - Earnings call transcript Q2 2019 | InfuSystem Holdings, Inc.

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Operator

Good day and welcome to the InfuSystem Holdings Second Quarter Fiscal Year 2019 Financial Results. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Joe Dorame, Managing Partner. Please go ahead. Nicole. you, Thank thank the and joining today us Good results you of review financial InfuSystem to morning, for Holdings, Inc. quarter for XX, second of ended which the on XXXX. XXXX, June are: Officer; and Schulte, the representing call With Officer. Greg President us Executive the Chief on company Chief and Rich today Financial Dilorio,

you After the a anyone financial retrieve open today's participating or can call the call prepared press full a company's for does www.infusystem.com will of we today's have text websites. on of copy question-and-answers release, conclusion not the at from remarks, the session. it If website other numerous

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

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

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

Richard DiIorio

XXXX thank -- everybody Thanks, joining second Joe. to and the call. want Good everybody earnings morning, for I thank, quarter

thank I Before I would to the team InfuSystem. like at begin,

missed have revenue specifically on and the smoothly. to continue market to run taken haven't like beat and cycle I we teams. would significant our a as thank operations share We sales

in in sales The been share business, a for drive of team first XXXX revenue, of in resulting position flow. systems team new the revenue the EBITDA cycle us tremendous. that additive to to and during year a and growth practices half efforts sustained and The in cash the put continues execute through improved multiyear are strong on You earnings, market have XXXX. increases to collections upgrade and have continues

opportunities exactly Our like going as plan numbers. advantage to highlights market Schulte, to the through a of is Greg take couple gain in of planned. share I'd oncology our share CFO, walks before and

XX.X% of and additional saw The wins IPD At talk share discussed from elastomeric in starting that of result revenue growth management the that, our growth growth last late -- First, In elastomeric the year. time, in result quarter, to we revenue. believed about gains increase recently began InfuSystem we market the see strong that the strong we group we that plus in the and how our was program. to a are we would and second exit growth provider leading in pain that first completed XXXX. year-over-year exit market sales IPD the product

we share that second are is now exciting the of our market most What's gains. in phase

customers quarter first of the changed XXXX oncology, are taking we in on call, our discussed winning business full its As largest model competitor and has and new day. earnings advantage every

significant As see positive we'll revenue that even on future our an new business quarters, revenue. flows in process our cycle through impact and greater

we converting pleased growing, earnings. report just to we revenue that not am are into I Secondly, are

XX.X% of of $X.X in Our versus is second the increase adjusted which EBITDA XXXX. an QX was million quarter,

of EBITDA with our long-term net operating share a to As our improvement margins. goal grows XX% achieving maintain we discipline, our spending and see steady cost expect and control we margin in

I first, oncology, Greg second financials. review will quarter but will in the progress our add some color to

Gregory Schulte

prior income net net XX, second respectively, loss quarter same were increase, quarter from revenues for XXXX. million or $XX.X year million, for the year compared strong to period. to same pleased of June a $X.X XX% $X.X X for $X.X ended very million XX, was X or I'm and million the Rich. of June of million ended $XX.X compared $X.X you, performance. XX.X% respectively, million on and months loss periods. XXXX, XX, XX, -- the XXXX, prior XX.X% the $X to Net a Thank Net June million year-to-date year-to-date million Net our XXXX, and highlights a $X.X was report June the increase loss

$X.X a growth. cash improvements. periods. $X.X June Rich Cash net the $X.X increase As in related million and of year-to-date, support same increase, ended capital EBITDA our million operating minimized These adjusted or same flows respectively, XXXX, were million $X.X -- of cap the XX.X% and from was due working million months the significant XX.X% year been net decrease X change period and accounts by year primarily XX.X% outflows or our to million growth provided or overall respectively, a prior $X.X XX, $X.X receivable activities mentioned earlier, prior million, below X of from working for million a the $X.X have to to by an increase

flow $X.X cash by relocation arrangement. financing Our growth in necessitated a million have facilities internal million that year-to-year headquarters primarily capital improvements were and of $X and expenditures financed

second finance continue We of expect facilities. phase support half needs internal into existing credit the improving next and capital through flow to XXXX cash the that of to growth our expenditure we'll

the to call back now will I Rich. turn

Richard DiIorio

Thanks, Greg.

oncology update growth we on to market. Now starting to come an are that I'd opportunity in to see give the like additional fruition the

its of progressing are late business: last As first from started oncology in changing which phases which elastomerics, year; model, second X the quarter gains the largest business our and in year. competitor I we of from the mentioned, market this our started through share second

service way revenue revenues we the billing until start process oncology is recognize then Because don't we work, and the our the billing process, of provide and completed. the that

that XX% business of call revenue phase will second this this from won million that the still second the we on process explained and is What during $X.X and about the XXXX, over is the then versus grew growth the and form. that revenue the $XXX,XXX was we will year year, of by have direct up quarter early revenue in competitor second from means in our to quarterly earnings our oncology I to start to are into through last second While and of holding phase. half true that our timing XXXX. show ramp continue only of

revenue fleet These the affected investments scale profitability handle as best-in-class negatively to of to outstanding already in team, With facilities higher we volume have operations, first business. the when material but new our pump we half invest expected, costs year, continue and our yet our recognized. the a year has half the to expect were of to begin be in we and incurred earnings the normalize revenue improve. in the the will to of second This matching

in On in XXXX in gave targets preliminary $XX the for and May, call revenue million $XX last of I million adjusted EBITDA.

better updated $XX adjusted time $XX customers XXXX revenue, are of are that get to the have targets a revenue million new million onboard of sense we the timing for targets. EBITDA. and plus Now more annual the in and The XXXX in had we revising

questions. any being to that answer With I'm happy said,

Operator

[Operator Instructions].

first comes Markets. of Our question Street Brooks from Capital O'Neil Lake

Brooks O'Neil

why little detail the you might competitor hoping doing. of it's you're bit describe work that I'm how a opportunity. terrific the the change see your guys on backtrack just benefiting made, more and you longer-term and bit in Congratulations you sort little a

continuing this to as you I'm and beyond. seem you if great You opportunity first of curious in a on back the describe of that see the growth half half through and year and move XXXX next year,

Richard DiIorio

Thanks, Brooks.

customers reason. financial were using effectively payer they expected, got decided that directly payer and the So company third-party they the the liked change model to they just rent patient's because model over out was workflow, decided piece customers They that liked side and the as of us -- customer. model made behalf. a to their of the for the we We it. they on to on changed to knew the just their come bill our where third-party competitor liked model, they most And the our the insurance most model

why it's far kind the of that's rate. to holding form as So as true conversion

huge their to that's market benefit. share gain it's opportunity business. Also, So a the for us

I think board. see in through bake year back long-term we're it all We the all half this all that the as yes, -- it'll and take to on to mean, and actually customers fully a of probably them far As certainly XXXX. going of years those opportunity, couple get

So this -- for opportunity to XX-month XX us. should be opportunity an XX-

Brooks O'Neil

merger there's Great. affecting Care. I'm in the between curious, and just either And business see or big not that infusion home at the Option negatively, positively or all? you you a Do been guys BioScrip then obviously,

Richard DiIorio

continue we day. disruption won't a some a They merger the business, like from there be to there's there's positive. to them If it from don't share. love help business but could effect, decent market could Any Home has be be in this and any substantial, -- would tends it. still it win market, time us. benefit be this it some which I every infusion happens, mean

Brooks O'Neil

all? I'm growth the and And that how? constraints then at so, there strong topic in affect And some other if guys Sure. both one apparently, about, curious supply you IG is Does business.

Richard DiIorio

all. at us affect doesn't It

Operator

[Operator Instructions].

next question DSW Our Weiss from Douglas Investment. comes of

Douglas Weiss

Can Is good break sales quarter. possible? out the and Congrats on you that number? rental a the

Gregory Schulte

follow in up. that. me that front We'll right now, We'll have don't Doug. I see on

Douglas Weiss

is quarter, I -- I composition pumps the fleet? point? And becoming is well, of that, more sales which -- have assume consumable at -- been the in if at changing a line is qualitative sale there of that, question mix of in this looking related it out of primarily the a historically, last to more sense is consumables the it your there it's had is the

Richard DiIorio

Yes.

a that's Doug, good So question.

they growth on hasn't year. rentals But a is rent IPD they as products up from far that much. as of sales, growth dramatically has The mix they changed trajectory the standpoint, but changed at haven't this -- a the consumable over the which business, happened, decent the they are side obviously But percentage and infusion consumable those helpful. definitely sell division, So pumps has and sell consumables. gone pumps,

Douglas Weiss

further? opportunity? that And expand is that think can that Do an you you

Richard DiIorio

product margins is, we're the I most the the it think the growth touch that oncology no down. that in side, as it cases, And mean good is it's but the now, reason never growth seeing there's it so as turn. high aren't so, of see slowing I a we beauty on to business substantial yes.

definitely So that growth we that growth want. is

Douglas Weiss

mean, guess, the can to are I that salespeople you products -- add other could as can -- the you doctor's office? bring I there

Richard DiIorio

clinics into the we point, margins absolutely. bag, providers their Sure. sales and when product mean want team med decent get care. with good this X,XXX at it's I long-term with infusion supply oncology business out a We home to distribution every so tiny in that surge put don't relationships margins, and the there. could true But in over have, and

relationships we So certainly new leverage look is that, to with at. those products something continue to

Douglas Weiss

your for Okay. this And what's CapEx estimate year?

Gregory Schulte

the expect opportunity. line we've we on we second to so discussed, the our Doug, little be as first the larger obviously, half, a coming, have based second growth of half potentially, phase we in CapEx expect -- larger the with

Douglas Weiss

And what first was it in the half?

Gregory Schulte

was The $X.X CapEx million. number

Douglas Weiss

Okay.

is So most this cash your into year going of CapEx?

Gregory Schulte

Yes. the this This year, yes. is investment

Douglas Weiss

how that year? And fair the cash? grows, process pre-CapEx terms a have of about flow. If thought What's cash next amount investing you'd in then free EBITDA I of -- would

Gregory Schulte

looking We best put continue we of the cost of to use at opportunities and cash. on cash to the where the based make best what look and will capital it at utilize

different we're So all opportunities. look at

Douglas Weiss

Is pain the capital? that put with business? Is going it a growing? place potentially more you that is would How

Richard DiIorio

done So in year. patients in to increase The and large teaching new it again us great big for to next perfecting this double job a team allows the it has it institutions. in clinics, is expect gain is to we year, model, And at to it which new is traction my that expectation growing. continues double with

absolutely, we're to sense think if So makes continue the down more in pay we'd going devices, investment. that's we'll makes it see probably that buy true X invest and and cash, a -- the board. with If that some buyback we we to when interest, of If that But in things that best at growth, to I that business those are sense. first. do continue that. we'll is debt across look We'll think our

Douglas Weiss

for the are specialized? interchangeable Are with pain pumps? chemo they Or pumps the

Richard DiIorio

if pain special wouldn't go of us for management. use To specialized. to. just in them market, not we They're We in a the we but a them, have degree, they're lot needed necessarily sell could to

Douglas Weiss

expanding business, to buy I But have to that you business? specific mean the pumps extent that to you're

Richard DiIorio

Correct, Doug. Yes, that's accurate.

Gregory Schulte

And said I I million Doug, million. $X.X $X.X CapEx, should've of said

Sorry about that.

Douglas Weiss

you Do historically, is I the seasonal business to see accelerate half good half of a year? the Okay. think, the second On been through kind seasonality, quarter. continuing of back

Richard DiIorio

the more market gain a I in anything little Yes. yes, -- really half. this in oncology seasonality, going but definitely there's else, than is bit of to second I think mean share hit

the should So next there be considerable expansion quarters. over X

Douglas Weiss

mean at this it your sequential like arithmetic, I and Okay. are, are point where the some doing revenue if ramp. basic year you conservative assuming given anything, looks just targets just in

Richard DiIorio

Targets year mean, you for year? this next or

Douglas Weiss

I Well, both guess, really.

Richard DiIorio

right? this complete Yes. early, process through is We next And I year. the think budgeting for really haven't gone

this numbers So for XXXX think we it we there's we hit even revise can year. can when if think that numbers, new feel numbers go makes and them certainly they're But they're we sense. opportunities. next Again, we hit improved and comfortable as we year we'll

Douglas Weiss

imply that inventory pumps point? opportunity pumps? of just then that to sort are utilization the of improve -- and reduce fully there the is CapEx, sort downtime existing your on of this you're does -- I Or in those at terms of And utilizing the you

Richard DiIorio

So don't go buying get them out done and that always utilization. we're I we're process. and we there's buying when redeploy. think with to lot because pumps, looking that to a them that we feel think improve comfortable we're there are not we I need also ever But

doing I last that of and suppress improving that and of over we numbers, helped the spent CapEx the years think last couple couple lot number. a of those the cleanup years

where number the I think accounts need. that have the we're they point at about now right

spot team We time. at have the logistics great sure in makes a that right the that right they're

because for them patients. we we we're buying need when So them buy now pumps,

Douglas Weiss

you typically refurbishing Or you then buying used new? pumps are buying them? and are And the them

Richard DiIorio

Both. The majority new. are

Douglas Weiss

have inventory? some -- of buy Is is Okay. a business sort potential of given there you potentially that's its competitor to downsizing their there

Richard DiIorio

just the to on opportunity down It the depends possible. too. It's mix, on really and it comes it depends --

when to device of acquisition. comes it then opportunity we So don't don't type them. have any unturned But it needed different they from to there's leave pump it, buy if and no we stone

Douglas Weiss

Okay. And some various have things how There is How historically negotiations. in energy and one going reimbursement energy been, regard? much in had of establishing of terms that lot a new going the -- insurance times. at are was where went, historically, issues rates relationships? pressure How holding? into of are been reimbursement What's

Richard DiIorio

rates are reimbursement holding So great.

up recently a a should be actually We couple a job does that fantastic have team of phenomenal new contracts every us. We've day. that picked for

and it something every that not it's So over, think actually we're I at getting lose better day. sleep I

Douglas Weiss

And there? debt? the Okay. about -- how that Is bad are what trends

Gregory Schulte

but it's Doug, the bad XX%. into debt numbers is actually down year-over-year. was Obviously, it's this lower our bad now put now, revenue, baked XX% it's of year, percentage. year, -- a about year-to-date about seeing we're Last revenue debt

So...

Douglas Weiss

Okay. Last question.

might the of more and the terms terms to Can be in size strategy the sort in hesitant point your in were -- give were to competitor change in of opportunity of revenue exit of at the sales You this give opportunity competitor or your what your what of any competitor. you visibility total?

Richard DiIorio

Yes.

a it's of $XX north the that's that at initial somewhere the elastomeric with seen estimates. we've least of competitive changes what and is our So million, combo

Operator

Instructions]. over [Operator for to Rich session. I would our like remarks. question-and-answer turn to back This DiIorio the any closing concludes conference

Richard DiIorio

call. forward for exciting the Thank joining to sharing Thanks, to trust a day to the being reason safe. thank thousands their time for This their have clinical progress. I'd Again, patients I'd specifically to Nicole. of and and you, InfuSystem, team our the why biomedical efforts, every clinics day. teams, I'm like thank keep everybody great and looking for like for is us calls an and the future

Operator

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

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InfuSystem (INFU) 14 Aug 192019 Q2 Earnings call transcript