INFU - Earnings call transcript Q3 2019 | InfuSystem Holdings, Inc.

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Operator

Good morning. And welcome to the InfuSystem Holdings Inc.

Third Quarter Fiscal Year 2019 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, today’s event is being recorded. to Partners. conference like Dorame to now Lytham with would turn over the Joe I ahead go Please sir.

Joe Dorame

of Chief for Good DiIorio, are for which today to Officer; results on joining Executive Rocco. ended President us Holdings Financial Thanks, morning. XXXX. Greg representing and today and review And on September the the Chief With of call third Rich quarter the thank Officer. XX, you InfuSystem Schulte, XXXX, Inc. us financial company the

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

remarks, meaning like certain would Securities begin the Before this to management of prepared the we made Litigation statements Act call XXXX. InfuSystem with within of everyone conference statements team during the by of Private Reform forward-looking remind constitute I

historical annual under Except detailed XXXX. forward-looking the Securities XX-K uncertainties, Commission, are for which company the statements by documents some the of the December Form the risks and fact, this that ended filed States involve statements including XX, with call Factors and report in contain Risk on United may conference for Exchange of year

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

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

Rich DiIorio

InfuSystem also engaged XXXX everybody. on that for of to I growth, to good while InfuSystem of and a part our plan exciting in and operating at team am being earnings time Joe, joining program the And third proud you improve be efficiencies. so is smart This an to call. quarter morning, continues Thanks, a thank execute

take mentioned in going advantage through on to I to share Greg and before our walks exactly opportunities the and plan share I’d a is numbers. updates of As as CFO, planned. Schulte our like gain our market last of couple highlights call, oncology

as to customer across our gains share from large to to platforms. oncology competitor. integrated the direct the continues exit elastomeric of management And see continue expected, market First, hospitals as pump market of acute the as our team the we add provider, our leading growth list. pain services executing its both growing strong therapy on In is care the attributed well to largest

pump have the DME VAT growth Our revenue consumable in addition third services XX.X% deliver continues resulting In year-over-year platform to in increase. quarter, strong we and rental revenue to saw solid additional sales.

phase not are our gains that exciting we market a as most is second now are share What’s of growing done producing revenue.

XXXX, from have for oncology. be new earnings in lot prior revenue on six seeing ramp to realized of calls, take and we to process a it As can customers share the to we of our through are expected the second new revenue discussed business cycle gains with in still market the our on flow coming quarter resulting and up months

pleased are just that am not growing. report I Secondly, to we

and revenue We continue to increasingly convert earnings.

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

EBITDA result improvements margins. in our the this will our team additional Even on lose achieving we discipline That operating goal margin should with growth continue focus control and cost to rapid with grow in coupled the pace, not as of net at a spending discipline. long-term XX%

quarter review to the turn call financials. to would third Greg Greg? I over now like to our

Greg Schulte

months $XX Net periods. revenues increase or respectively, or ended to a our December and $XX strong and Thank September nine million XXXX million, the third -- pleased highlights the three on prior XX% you, very performance. report $X million XX, $XX Rich. year I increase, quarter million XX% of months were am same from and for respectively,

year-to-date million, net and loss quarter compared XX, XX, September the to for quarter ended was a XXXX $X -- $X million, ended with XXXX, for year-to-date and income respectively. of Net September the

same EBITDA periods. As million million Rich $X mentioned, or million, months a $X three increase from ended nine and adjusted a XXXX, or for increase, months the respectively, XX, XX% $X $XX million and was prior and the year September XX% respectively,

year flows an of cash where activities or operating the by $X provided increase period. prior $X year-to-date, Net million from same million XX%

Rich. back turn will I to call not the

Rich DiIorio

Thanks, targets targets would now those and Greg. targets. like revise to I given calls, I On for preliminary XXXX have prior for XXXX.

For XXXX, in adjusted million for EBITDA. $XX in are in $XX revenue we $XX.X adjusted million million had $XX targets new million EBITDA. in revenue and and The plus target XXXX of

and For revenue in previously XXXX, we targets adjusted had million $XX EBITDA. committed $XX million in of plus

are we targets As the in in revenue gained year’s XXXX $XX next visibility plus the million $XX EBITDA. now we and million have plus greater to adjusted operating annual revising plan, in

We also in flow expect in from XXXX. operations million to generate cash $XX.X

financial history, starting before market share oncology XXXX, our million I’d to $XX.X revenue our and was in gains like recent of EBITDA. in point targets our point Comparing with million $XX our out that

million -- EBITDA. and represent million $X represent revenue XXXX of Our targets growth than annual growth $XX of in XXXX more annual in for of

that each likely CapEx have which to million, which million fleet capture in in of pump substantial about includes part an decade. make the to results for This approximate to maintenance about better of to XXXX in a order of in growth, $XX $X million continue investments year XX%, anticipate $X In will rate we be CapEx. and we return total

performance, pleased future as even our am I am to as excited -- discuss am I more with and pleased our I strategy. As growth current

about First, I’d to talk like our platforms. business

about will platforms. two we forward, Going businesses around talk organized being our

first is second therapy services. The and the integrated DME one is services

visibility into rethinking business. evaluating these improve In to and changing two these our around two our we sides year addition operations at of platforms, reporting our end to segment rebranding are

our you host The integrated will offerings, is full and will find pain suite management and we services. utilizing where new therapies of therapy services our platform our oncology where

being view integrated any as medical therapy durable bring. in I company our platform view with unaware capabilities We the other operating of sorry, are operating am a company is unique we equipment our and focus, we in in we industry, scale DME,

management, like oversee necessary third-party This turnkey be the of new and the in the provide where to pain InfuSystem -- durable will take the customer will and provide large announcing care the medical oncology -- clinics will we we consumables support healthcare just will clinics and equipment, a do nationwide. and procedure billings. to logistics, means Soon third a a a partner, our hospitals with InfuSystem where supplier, InfuSystem bringing that work solution

that will partner new out, from the see coming believe bring to future new growth to Our repeatable in asking significant we market. InfuSystem We a sought therapies this us capabilities our is adding event and way. this unique

service direct assets. businesses therapies return our consumables, integrated other platform culture and services then sales our having where leverages with you biomedical of businesses our business, are platform in seen Our turn durable in the services and and medical platform win medical while services on These will strong and therapy services. equipment integrated high a our find to business supports therapies. This pump is rental lower margin

I’d has leading a like plus our closing, years on built industry based over reputation partners. last InfuSystem to to patients In the reiterate service XX that and

built by our an platform is a service therapy our ability This have services perfected During this integrated provide to exceptional we driven device. around time, platform.

to the trust it’s their offer to and standard patients biomedical keep us pain gold and in care, day We in management logistics revenue thousands of every our services, management clinicians clinical cycle customers and safe. why oncology

doesn’t The if great wound it’s for matter about It completely oncology, it’s that agnostic. or a pump part a for platform management pump negative and pressure this device pain device. is therapy scalable

said, any questions. And to I with happy that being answer am

Operator

first DSW Instructions] Investment. today’s And Douglas go question you. Please from of [Operator comes Thank ahead. Weiss

Douglas Weiss

the Hi. morning. have you good Congrats the quarter. Good on on all made and progress

Rich DiIorio

Thanks Doug.

Douglas Weiss

comment last that So, therapy, I pressure that new mentioned negative wound the guess, is was, mentioned? you your you opportunity very

Rich DiIorio

of one But we of of that we There almost DVT see with looking and unlimited at. one are is can interested coming things along the therapies deep in look It’s and soon. negative amount thrombosis. pressure opportunities the we are we devices is definitely vein devices, at,

Douglas Weiss

want have business would to new guess, -- too is the to you on don’t that out? sought you elaborate I where opportunity mentioned you early

Rich DiIorio

is It now. right

are couple weeks announcement. a an from probably, think, only, making away I we

will very hear soon. something you So

Douglas Weiss

Okay. On pain -- pain the pain management management opportunity. --

impediments of reimbursement how those were there doctor and you talk both think, the Could some of both historically, then adoption. are I those, to progressing?

Rich DiIorio

Sure.

So done the on team model. building great reimbursement job the has the a side,

payer but direct third-party a is reimbursement, there So not also just component. it’s

So if we payer. get don’t we the get sorry, paid am if clinic, paid the by by I don’t

clinics So and we into directly. that we the a the payers, government turn payers commercial actually direct model pay and build

from actually been So reimbursement program. it’s a great standpoint, a

physician every to a ways the clinics the to and the from adoption looking use can the shelf to one that. seems as crisis for opioids. be things just off pull States, is write to for doctors, far first the and of every in have not that United of opioid As bottle And uptake this the a with they clinic, prescription to avoid

accelerate we seeing that’s I the going huge and on. United think over but our just in years And I that services, are to think that with next focus not institutions the only States only InfuSystem teaching the few using

and point And that’s is It’s to that patient. that we get where out really into is treat addicted somebody we can once has where really The get it. our that falls hope of somebody to the addiction program. that difficult ahead service never

So going I is think the great. adoption

the management think phenomenal done I building pain program. a has job team the

and problem not in obviously, So that to it’s the patient real, problem a this a a turnkey the but is so that customer, country. real just for helpful avoiding

Douglas Weiss

business there oncology -- a that designated for is overlap sales is force So management? pain that you and between do -- is have or

Rich DiIorio

oncology a doing team, dedicated will geography is selling. and it dedicated do is there and out help sense team we there a pain both. So standpoint But team from that the goes a makes have the when

Douglas Weiss

out? contributor start And be sales would a that the breaking when that think that do of large enough to you

Rich DiIorio

break services. our But therapies in it integrated the we the segment along therapies I that to therapies So and beginning segment and think look the at DME change other this any out. soon that it at as part would we be that. forward will enough we roll That just to to point, quarter of with of integrated this have of reporting large year, become around oncology would end enough

together. So be those all will

Douglas Weiss

Okay.

contract Medicare you do that with side, insurance correct? Advantage, the is On

Rich DiIorio

Correct.

Douglas Weiss

that is a of so the way, a Medicare Advantage. Medicare Is in moving changes such companies CMS? insurance from impact that now growth to because of is that’s the the mitigating, area So for some and of mitigating much been

Rich DiIorio

we that CMS a those programs That’s of the payers, and have from those carry obviously with I contracts our been us. scale Medicare have and we while, that business really or a still The for Medicaid of population. -- so payer our network have that really, is helps mean, patient roughly the Not agreements. advantage really XX% helps that around programs

States. we roughly I lives in of think XX% United cover the

is a So, it and Medicare, we what and secondary for model it’s help Advantage different those with is still does it Medicare have patients. still it But out. payers, CMS,

Douglas Weiss

opposed percentage percent what of know or direct you the Medicaid What Right. Medicare? do as to

Rich DiIorio

I but breakout. I don’t don’t much number Medicaid. have at It’s Medicaid have that’s level, do contracts smaller have a No. the out. broken helps, the we state those And which

Douglas Weiss

Right.

Okay.

is and So, pumps. I related one things churn that and the competitor there, recently market, I that mean, had stabilized elastomeric guess, -- left the segment. like that -- sounded It on direct and competition asked accurate? know earlier levels I Has to -- sales I -- about from

Rich DiIorio

Yeah.

largest direct with the helped the biggest manufacturer elastomerics from elastomerics obviously least market of distribution share. So in a States. the halted leaving to our It’s stabilize United the competitor being at marketplace, lot

plus customers and to ago, even waver that when direct came -- still is change churn had Eventually, it of every and from a But year CMS really into presence number kind after we with changes our extremely retained model couple we XX% after years much. this heavy well. the even very elastomerics a really market, has our the doesn’t of

Douglas Weiss

be the about the Right. something model connected pump some making are Is investment And would feedback you where doctor. excited you the monitoring guys on still a year were that earlier digital, in of from more releases couple the press about? had you a to there

Rich DiIorio

with? So to referring out came if the the is you mobile, InfuSystem which app are that we

Douglas Weiss

Yeah.

Rich DiIorio

Yeah.

are to to patient doctor, that -- the we sure about excited an the it going monitor a only It from patient. pump from more with to us that in-class their make that. get way and in plan patient out of it’s and two allows And necessarily So ahead basically is really to not an according is the therapy us. doc still it’s product event communication to the

or program head have where real We the in a basically the complications. before the up off miss some may they hospital pump if for we becomes So a a medical there’s end event it malfunction, know patient. that real problem or

gets hand safety So, from it’s in opportunities, yeah, the market. it a opens communication, of none it’s kinds which the in two all us platform way of a up second but patients patient to

Douglas Weiss

what would the point And this in that percent at terms you the have pumps out is say you market? in of

Rich DiIorio

yeah, they patients number care. when hospitals when But my at struggled we off there their and and they their head. I I love to have of a don’t the they patient the clinic, are something don’t and energy help of keeping safe hospitals. put and can their the know leave that money the with. lot top always clinic we time that under These number They -- the bring clinics to clinicians, lot bring which it level a is once and offices have it’s the ability something it have into

been leave they patients. monitor it’s clinic, for that those Once to always them tough

excited So the the the are we past. to bring that had they a about, level security never give of opportunity have in platform they them that and

Douglas Weiss

paid anything -- different pricing product on that Do you the versus? get is

Rich DiIorio

No.

the So service we it’s part value-added that provide. of just

Douglas Weiss

Okay.

to I on you I at the just pumps. is flows pumps, CapEx in I sometimes lot SG&A. general think weren’t I prepared a question estimate mean, maintenance if be obviously, comment would know so had you steady-state have maintenance you it. remarks point? a that had capital, just you capital, a your in your I had maintenance sort investing pumps. of on that you this of do But missed new pump replace that to, into what what steady-state but

Rich DiIorio

Yeah.

year. about is bit. number a the which about we that $X we fleet you know a fleet. way kind $X to long million to number study last It’s -- million a to million the to years, And get depreciate they years, on maintain million XX currently about think that but spent of $XX that We give the $X we there but And have the I us we own. version. a So over short let year answer, seven that of typically we quite is pumps brings me

But patients, and when to we pull there’s is them pumps of value these off them. there die always

for for them sell trade-ins, we can parts use them. take can can we we them So

$X to fleet think $X And out with about which roughly in, we substantially. we million year, that higher $X was talked once million $X million to growth, we So -- grown the it past, would no to in technologies we you factor up. is steady-state have has per that where than with think comes down the that’s $X about our million there, end just new million that if but

Douglas Weiss

Okay.

upside a on, I of of question that and sounds to I from but me, contributes that, quantify -- talk question areas. guidance -- have what about these detail is might from new given sort given projects, of last, everything how Last have after sort quick it, other there I can’t maybe these sorry, standpoint? extent some haven’t maybe today. based lot new some big generally mean, second Okay. earnings opportunities but you you or can revenue you a be which maybe of last so one the It think like know you is, you on to

Rich DiIorio

go billion a we huge, of $X or Some that market. that, these of hundreds these lot alone that isn’t pressure, smaller it’s presents of hundreds millions of that to of maybe after if but two, mentioned would a addressable negative is earlier, markets. the dollars opportunity The in billion you billions in than markets are mean part that a itself I

we forward future. more at just of we three driving especially years what’s lot two from can and are us now, four these that that hope without in change add moving for is our five can just infrastructure can the upside, integrated not The huge existing our give therapy layer in years, massive platform, and therapies way markets, that looking up we XXXX the but really costs, could again we in us of leverage look years, the a therapies and which some years, team

Douglas Weiss

interesting. It’s Yeah.

which on that now then at kind -- margin, the that about going for year can Okay. just question gross sort and since you talk Is but And to on what’s of I where model of than direct I a a should know, the bit really little function a of is has the here about the early has XXXX. real don’t margin. there XX% it’s quick with just or stable of of sort been shift gross now? historically, It’s to henceforth lower it that been kind mean, I been a that’s model

Greg Schulte

yeah. Greg. Sure. is This Doug,

shift the business taking of the main cetera, little will the shifts basically driver gross We ecology margin We tweak are are oncology a pump obviously costs on is -- our on -- but a or to in fairly the which consistent. towards the are down we side the margin, up lower depreciation equipment on gross purchases, which business. et tend little our have any sales, really margin than the lower run a more

as ultimately, strong you basis see think I rate it’s a our will pretty on up down I few consistent. as think little points and that on But -- had relatively depending margin we dilutive is far by did usually a a far mix really predictable equipment repeatable QX the that run disposable or have just skew we it it. a gross as product speaking pretty the line a as sales fairly will margin. So But in effect quarter

Douglas Weiss

you next to Okay. quarter. All quarter right. the Well, great on congrats talk and again

Rich DiIorio

Thanks, Doug.

Operator

session. the final back Instructions] I’d for conference to remarks. Richard over DiIorio our any turn [Operator question-and-answer And like concludes this

Rich DiIorio

for nothing the forward to possible day I I every to The for Again, sharing the our Thank our am have effort to day. the looking short Thank is customers today. effort. closing safe give our would you Rocco. call deliver a services keep team thank great like all progress patients products and Thanks, their to of best you phenomenal. strong you in future and and joining XXXX calls. and

Operator

This conference presentation. Thank all We concludes thank attending call. for you. you today’s today’s

a lines now your wonderful have You may and disconnect day.

InfuSystem (INFU) 14 Nov 192019 Q3 Earnings call transcript