INFU - Earnings call transcript Q4 2023 | InfuSystem Holdings, Inc.

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Operator

Good day, and welcome to the InfuSystem Holdings Inc. reports Fourth Quarter and Fiscal Year 2023 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Mr. Dorame. Joe sir. ahead, go Please

Joe Dorame

call morning, Lachance, and review results us to Financial on for December Officer; Chief Barry Steele, and thank Fourth Quarter Chief you Chief the today InfuSystem's us financial and XXXX. joining Rich and DiIorio, XX, Executive Carrie today Officer; With Good are President Year-end ended Officer. XXXX Operating

for prepared questions. of the today's remarks, we'll the conclusion call After open

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

Forward-looking undertake company give correct. obligation assurance statements the such the of forward-looking required to that prove statements to and not statements, can specifically forward-looking any will disclaims InfuSystem law. no update made. were does speak be as as by statements only The date any except

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

Richard DiIorio

the of us guidance. year. Call. our this of with It of revenue our and year, execute I'll proud good our be $XXX.X of XX%, team and the an our XXXX. what was of year started the morning, the and you We in InfuSystem. it get I to finishing Joe, patients our and to overview continuing service. joining great was delivered year Fourth and than execution of said accomplished at strategic growth providing year of highest reflects businesses we more for XXXX start successfully XXXX the more with our the the couldn't XXXX consecutive Thank revenue that of Welcome our would the beat strong record ability momentum today. an growth the focus easily be million. or strength while validated sustained We believe organic fifth past year morning levels a Thank initiatives priorities with on partners you, both core The InfuSystem's X launched and potential Quarter With all announced results, we for in everyone. Earnings XXXX. of big I things

Oncology continued success business. combined to core in year in our share on First, grow XXXX by had improvements gains market from X%. and execution. cycle These the revenue another therapy our record factors the coming with

it always while do in care. business Our to core has beginning good opportunities equipment doing, take rental at what advantage to for of acute us new continues been emerging

solid Care. The flows from which X and initiatives, cash current execution major continued Biomed are growth support our our against core businesses strong Wound X performance in

of revenue run in million. around with and the specifically approximately a X agreement at biomed, master million of First, delivered approximately the ended GE rate services year $XX $XX.X

With will the Carrie few address topic in focus complete, efficiencies. driving will A minutes. initial now turn rollout to nearly a our

we in materially, expect providing Sanara. for and year expectations $X.X see relates under initiative with Our larger second revenue contributions million venture forward. wound Care joint at major nice XXXX, ramp Wound coming growth to for our in to beating moving developing care up opportunities our the the a was the

leases. the year, But half in Sanara's Care Wound very of to into albeit small of revenue pressure in distributing Most wound related last started second amount, to the care products our negative date a the Advanced has we been the market. device

products talk to results. payer Sanara's that We Barry JV. and facilities ordering I'll InfuSystem Care expect the and it provider their the products a Wound as third-party XXXX to like turn but QX through discuss convert as to gradual to to over DME begin our supplies ramp later the more but of I'd and call, in steady on year-end

Barry Steele

you, Thank on you, the topics. joining call thank and Rich, going us I'm to everyone, today. for focus on X

I'll First, income some classification we change about on talk the a made our expenses of in statement.

drivers quarter's quarter. to changed biomedical you on for And Second, regarding observation finally, I'll results. financial and services by how I'll the the current additional a the it share driven general our the during I review revenue; trends, fourth our third, financial update want main position

During service revenues. classifications outside upon maintenance previously to fiscal Based and more cost classified expenses. this administrative of review, costs were that classified and that as cost concluded were we costs general reviewed year primarily pump related certain of we costs our direct these were appropriately that XXXX, parts, accessories within

we now or presented have result, XXXX. to per in opposed revenues, income as of reclassified these impact income earnings administrative net The income, costs These are expenses. a general cost As within reclassification the not statement year share. fiscal and operating costs did revenues within beginning

reclassification change cash flows. or in did amount not of the any statement Additionally, sheet our balance

XXXX-X our the are also known XXX. conjunction leases ASC relating or with audit, disclosures annual also we reviewing to application of In standards update as Topic accounting footnote our number XXX,

to current additional along our to disclosures us revenue for to recognition expect to this our through years Due to mentioned, changes is review, the I will annual in but some the previously of result reclassification that the released financial changing XXXX lead any report. results. not of year, with have previously We our file expenses the time review requested expected we

results touch the financial me let on period. for our Now

my I'd general some line-by-line related into review, touch I trend on like observations. normal get to Before

mitigated including than consisted of ways, having GE important largely new particular, business our other ramped average of service devices our in agreement of our covered gross accretive margin biomedical lower in our at different operating as a of revenue is the percentage, a than currently and lower dilutes we ramp-up This phase. volume margin we in by with XXXX, least In our growth much it and the up our operating words, During SG&A our services than what but margin the be revenue to businesses percentage will business as have to or margin Healthcare. amount we gross absorb is other came costs other once fully businesses, some more under the related which expenses. is

additional not do long-lived What's we ramped XXXX other small back it business is the in teams more, investment biomedical XXXX other as require assets. that made X devices companies have services capital, or than we to not when and biomed XXXX. purchase biomedical this came incremental medical working business in does grows, The when acquired we investment we our in and capital

efficiency we capital-light. increase oncology of also business. core is as increased business in overall our capital the we revenue, pump Accordingly, capital Whereas and biomed rental very are our our biomedical intensive, quite

look see and we will results, year impacts. we the current quarterly As these at

on mainly the primary revenues Lower revenue the rate which oncology comparison, especially in Let We revenue annualized for $XX.X GE fourth Higher X on the to a now finished the were million stood increase. increases. GE results. Oncology me due prior sales XXXX go for million and and strong XX% quarter the contract was Healthcare onboarded representing totaling with to year. focus actual to year the strong devices $X.X $XX.X equipment from of for $X.X drivers December higher of net of increase and at revenue GE contract prior million. run offset partially $XXX,XXX, from this There or of the an year million. XX, On $X.X million approximately the

or Gross the higher quarter. margin The the offset has biomedical sales, XXXX lower was which year X% revenue, from quarter mainly million the contract. $XX.X the decrease gross fourth than are XXXX a $X.X gross the quarter by the related XX.X% prior profit Healthcare percentage, during Healthcare quarter. costs was lower was for year. driven GE start-up to estimated prior This been the which higher proportion $XXX,XXX for by XX.X% fourth down fourth of fourth biomedical GE was higher from mainly start-up have was about XXXX, was the services partially and the service for a of but year-over-year costs which margin of to average additional due million,

cost quarters for we reach once we expect over to planned, of dissipate next and originally these amounts of original we the of ramp the and has than that coverage several devices. our the start-up pass estimates been our year higher While full margin the elevated amount circle approach will first onboard

improved quarter million, short-term year. compared relation operating Much amount general of totaled to representing during of an the to paid to the fourth Selling, to and additional the commissions XXXX XXXX. as prior the related or $X $XX.X compared increase management incentives increase the of X.X% represented million in higher XXXX revenue performance expenses administrative in and higher for as quarter

ratio XXXX as net Despite expenses of of during selling, the and compared the fourth revenue the increase quarter in to administrative general dollar lower was XXXX. amount, X.X% to

As increase when $XXX,XXX or for EBITDA net result million $X.X in impacts, prior our amount XXXX represented XX.X% a during adjusted these $X.X adjusted a of million revenue was or quarter, EBITDA fourth of XX%. which the year the was

a financial points and to capital reserves. few position on Turning our

our our slightly operating slower million This prior $X.X the fourth during third a due quarter. working sequentially levels. better previous indicated for quarter the to increased and cash the of of than quarterly our capital calls, in was growth couple totaling fourth we straight quarter As amount for year flow was

Additionally, as pump sources to revenue much have from capital-intensive pursuing low the from our revenue This already number of net partly capital reducing biomedical amount a been I the of related relatively mentioned, quarter. including lower is $X million services, growth coming loss that and to fourth also the were expenditures increase utilization, as pumps. initiatives during we such less our

capital forward gains increased diversifying revenue to similar related most expect with We going streams. of our efficiency the

factors, flow manageable a operations we the liquidity positioned requirements. net be significant within continue reserves from growing growth available to line continued of leverage cash and by of and credit Because backed revenue revolving these fund well service to debt from

the the quarter, third to reduction. Our $XX.X net by marking $X.X debt straight quarterly decreased XXXX fourth million during million

the quarter adjusted quarter. compared at debt debt liquidity as quarter. EBITDA quarter decrease end adjusted Our in of caused the trailing to fourth end available to totaled the X.Xx decrease total of the X.XXx higher million to of the X to total and our the $XX.X end at at of XXXX ratio The EBITDA

of balance with nearly requirements rates line revolving interest our interest protected on years and term the credit borrowings rate same of of -- the no from consists some remaining $XX X million payment term in through with term. having an debt the increasing having swap Our outstanding

the call over to on to Now some to Carrie like I'd color operations. turn share

Carrie Lachance

cover everyone. would good Thanks, X topics today. to Barry, and morning, like I

I'll on second, management; work everyone update our GE up our and long-running catch MSA. on an First, revenue the initiatives cycle and under

remember unit, that was then within regular equipment most through or call our revenue is, on Patient X years part Starting insurance clinic That payment today's cycle earnings back hope I for business some from revenue of was there patient's are provide third-party payers. revenue and we a is our when or a the call. the cycle. This Services important and hospital and every X of on payer. services ago because submit almost

Third-party sounds. payers or billing as as TPP straightforward it not is

First, contract. you a bill before can payer, need a you

more don't particular terms they payers with national contracts have not of to will the requires have than is not the regional only possible, country. unique big and pay. their parts name we with small date, work also To but always remote in the insurers Each Perfection procedures. payers since from to ranging payer to the reasons find of particularly contract, operating why billing XXX compliance

those and in working to ourselves difference However, oncology, in material partner a we wound billing whether profitability benefits come, our years and this will oncology introduce improved during with These for we really XXXX, do, all efforts under investment consistently of off, care paying not have improvements both been are of others, revenue with for our in products to areas making JV reap for where on years just our we we third-party such Sanara. business. as but and or

biomed. to Turning

reasonable X for MSA contract extension. change. in total is MSA always current number GE expect working opt we've current the years, the facilities of said, contract That The number as the the original adds the approximately of under of the changing devices within inventories of contract onboarding initial them facility devices the and on expected the by term notice devices. We quarter. devices GE but parties the have as ability to both to or covered as agreed -- was drops each is under an if complete to But The out desired. or the already XXX,XXX stops

From devices GE work services. seems to and more satisfied expand our MSA and perspective, appears very eager the with our to

biomedical but an our open especially to never create been to operation. are big goal has this, We services

biomed due of review requiring third-party internal to on little area initiative return an in an after The high part biomed it CapEx. was confirmed started was very investment. This

had As we significant leverage we revenue that resources rental equipment, dependent. oncology for complemented being that to stream our biomedical by decided and servicing already CapEx our add own and less a businesses

we of where can the the we true XXXX, provides most to revenue harvest revenue. where growth, we new whether first working and X-part a a that progress to must business great have business The material is of our X-stage we second business grow buy of rental business we first, example before invest cycle value the in This Reviewing in of train such since service drive The is the our GE generating growth or regularly Biomed order hire business they before is in cycle then to described. have can we nature and is rent where and biomed, cases, begin in new the it third. technicians the in pump invest.

do material In MSA. network the surge business. growth to biomed in to XXXX, began as harvesting up investing investments standing and value the the we revenue focused pumps. facilities XXXX, continued new of biomed experienced And we we we teams that the of on in onboarded also the and the be biomed, XXXX expect of our in under technicians In work the awarded involved needed

initial once, stage, The profit only is of optimization investment, Unlike the generally the important occurs year after days the part the most stage enabling harvest cycle. which third the repeat year.

focus right, will process improvements we the creation the business. the So and returns are to that get it to from incentivized on value maximize

we leveraging new we our to operations, the national will biomed network growing reference begin the are account the When business. resume to with look and satisfied

level focus high-value change next value creation. national the not the we for pricing. that network. we opportunities on together MSA the GE 'XX, work model of on are our build focus concierge best see. a with will justifies will determine Our account GE but elevate opportunity, reference was allowed to of and biomedical the and thinking did the biomed of And is should still services changed to has basis The we this, on a scale strategy. the And In our us in year, second profitability. half efficiencies of first what steps half long-term they

Back to you, Rich.

Richard DiIorio

call Before businesses They Wound not relationship. did developed InfuSystem going the we to the to with Q&A, I'd evolution have like the business Recall how our systems that to approached business the the help sought from was patients out our core the it our diversification of to of new started us. transition specifically is This Cardinal and within skills because empower they leveraging Care that home. enabling Cardinal the hospital opportunities.

win a and an opportunity. came try to to share partner very large opportunity business with of they to InfuSystem So a

of of that Cardinal, opportunity to with was to have national whole services platform to more again, presence, TPP with Sanara we work And needed, did contracts, they They strategies. looking provide. directly capabilities leverage led with the on them Wound the But that that achieve is can our than was Cardinal's to payer level current that us. Care team, execute even it Sanara. plan billing they saw a clinical While the came Sanara and success their not require it InfuSystem

XX/X for our our products. products by capabilities. where payer utilizing and is of InfuSystem teams. revenue distribution a could will to highly health This platform services Advanced existing health cycle in like JV those or both provides our services patient partner and before for our shared our provides InfuSystem into Cardinal ISO-certified our and could companies billing distribution of for much infusion. and Sanara, that Wound is logistics could other be they It the expertise model, that care I've ways of leverage specialty regularly channels skilled existing for Sanara hotline, biomed business leveraging about the about It approached our hope to services. handle care oncology our The Care win be platform partners. its involve contracts in opportunities

We than But these to last of continue and more X some we initiatives. in to is enough growth major developing for year, focusing opportunities. reviewing do, said are see currently as there us current our on

the MSA, expansion under Our by focus work we the activities Sanara. right now opportunities is existing on revenue doing profitability under via the the advancing of steady GE the by our and growing Wound of JV Care improving with are these

growth, portion to of businesses, single-digit biomedical see like XXXX, next our and and on call. the network services and for sales growth but expect Now in cash we might shift which low the preparing a oncology strong year. core guidance the In traditional likely flow. after impact have rentals, start focus to its year more is of earnings the DME to continued be and our I'd will second half, revenue to of harvesting and next new steady In contributing growth, round national

in Care, channel. steady into expect a third-party Wound distributed slow the of we And and products build

the course with now opportunities scale emerging over We the of are the starting under to incremental year. JV

As single-digit revenue XX.X% the full exceeding high to to our conservative margin year with be range saw assumptions of adjusted have look EBITDA the into growth to teens, year XXXX, the guidance we we high built XXXX. and be in full estimated in estimated we our margin in

guidance update look year. as the to our will and refine through We we move

technology include such updates We upgrades integrate some initiate we're to later year. this looking and important will expect

efficiencies, our internally, modern our is of services. to entry systems the technology GE costs such upgrade partnering systems efficiency integrations is are we into processes. developing These strength Sanara These which to we integrations. of to benefits some plans companies increase back standards, of significant internal improve run much that systems course, and provide tie older One systems as will, reduce and our stickiness with

we an When to appropriate for this will year. start multiyear will program financial backbones. a commence identifies be cost share date, with planning When and converting ERP be expected be and upgrade, year the over new we to what and the will it include will able our next

on and remaining help summary, share our lives, and Wound commitment the healthier enhance to Care, is our operational successfully long-term acute while portion we longer both execution our returns we live solid Q&A to unwavering adjusted and call. to market begin excellence, which now to the With lead in shareholders. Operator, plan will So expanded care margins, leading EBITDA to simple. are people of will focused ready the within

Operator

Nowak Instructions] Alex first question Craig-Hallum. [Operator Our from come with will

Alexander Nowak

a be it from term, that A of for fair the when the years but InfuSystem franchise. one oncology actually I core that look in the like franchise the been too commentary is of surprise, there lot guess remarks, And still it dollar left I the -- a in business. the but oncology much grew still like core through amount great prepared business seems of most that's a piece shouldn't growth for looks numbers, there's

So year? how go? that just this much can curious, next are you that year, thinking further about for How

Richard DiIorio

a that's Alex, Yes. great question.

call business, So exceptional -- good would I year was right? a was for storm. year it perfect last It that an almost

on their collect quick the side, efficiencies and with that As able XXXX dollars. revenue especially overperform the in they're cycle and year continues how team just to kind to Carrie of every mentioned,

too. of And out accounts, new and then a bunch the added team went

was a combination that nice that drove it number. So

of I for the X% combination X. the think it was year, about the

kind it's to expect 'XX up year up I it's that it's on it maybe But average I obviously. kind every that business, X% Do for of wouldn't big saw probably to or every of year? do every more But If -- that that few like out business accounts impossible. I a just obviously No. it X% we contributor that's that that like expect to we back big this tough of not a expect squeeze every is year. more the year, pushes company, number. kind percent to of I efficiency to when nice be next see in -- realistic. open an year, still of So year but

Alexander Nowak

last then that the Yes. Absolutely. candidly, it of Well, that years going factors guide a makes has And been sense. led to to back variety the of been has and that. obviously couple choppy guidance,

guide if if different is the of growth in what the the the not XYZ maybe is the Just guidance to included more going confidence year, to and it, end of question in a of the we're by gets performance. added reach level really

Richard DiIorio

not being Well, we're of any or at spot -- spot not one kind any we're aggressive just we're all. -- in

the there. oncology not next quarters to core our the businesses it's whether that just or future and going sales guidance. our the looking We're that new to the stick think that's device in okay, happen. not we're think rentals and oncology I into and or down businesses, We're saying, putting going or in even we in few

So specific more, couple one up we Wound beat we'll customers, if out off, dollars million guidance not at some and and a obviously raise thing, will like, takes any it's and really get hey, it's go point. a and the of Care couple more push and that Alex. It's more big

growth Pain, help efficiencies good this double but a their of we raise. on grow going with year, the to amount business call, digits. continue really could in hit forecast, the solid everything If we will probably If that we didn't in faster. oncology, mention us add they're the they

on lot So more couple get a hit year. 'XX every over can overextended in My right? our we all more more more you 'XX. talked kind mistake as and the see us, we've a on, burner. of runway and upfront expectations year hope conservative we're behind goes, to years, back again. get this just not more going make -- factors We We're the year of the about are 'XX and from that those visibility of specific, and which is numbers now we is to we want last and We

so the numbers gate. look have not across conservative conservative We So to lot only like only a in of I'd be rather the it's we're it's of middle have out in, at a But coming being January of board. mean just yet. more we March. kind I little the

go that to that to single certainly high be out doesn't in upside -- we numbers. and digit there's to hard work get -- every going the up to It to But have revenue don't going day mean to get always we're the there, happen, in it you guys but because it on go expectations, we not you can right guidance anymore I put make going I'm we guys. if sure what doesn't the to have tell and want execute

Alexander Nowak

think benefiting devices earlier when an you need Maybe be XXXX be people is Makes business? a essentially need and effect? that question but ready do NOPAIN actually. effect How that there into didn't on total there. much to access to And get goes it to A prepared sense. because the going pain certainly, but about in it There's talk Act good effect in for we bill non-opioids The pain need into segue about care. -- the in XXXX, remarks, expands to goes for

Richard DiIorio

Yes. That's a great question.

collectively the team, around reimbursement XXX years to X we're see for been probably having So effects. leadership world going a as

will see that. We

prepare for the want us people some get us mean They're sooner. the of to open we'll to account year call will new They'll revenue. see as the ahead today. to of end going and We kind of are new up kind That not the call doesn't of going reimbursement." a we at want say, see reimbursement "Hey, significant that to and

out the how reimbursement value the the open, they accounts side process comes, isn't don't of while that is get they to billing the it takes what a reimbursement to of The looks like. have understand used reimbursement that build, have necessarily other to dollar The actual bill, floodgates coin to what the to yet. when

be too. So a driver will that

some some the have just adopters not end reimbursement, until -- any We'll mid it's in We're have they XXXX at might this right? wait 'XX, of number, And even you end see the dollars like going that to till late see of actually bell right? or see but year. curve, to early have So come in. the adopters other some the

patients great obviously, finally the and great So opioid eliminating it's for is upfront. use market. putting The right? It's government news behind for something news families,

It all help So that's will definitely all news. will help us InfuSystem. in the market. great It of

drive Yes, of we something will to is people start end they and should year reimbursement, see at the -- because hope behavior. our ahead but the of and obviously, get because of not we this just that

So news. it's good

year, As we'll we of start that into obviously the see line in, the we that towards coming we you to if see it. end give if sight get guys of

Alexander Nowak

a sense. then And Makes delay. Okay. the around is question just kind last of XX-K clarification

this So is -- to there that here, in material Is of there going there questions up XX-K be with delay? I couple is got a to a is be once there to going the notice but a covenants of filed issues be and going restatement shows prior periods. is weakness any with debt

Barry Steele

be make our financial issues reporting able all we're our be There any the with sure. for we'll of covenants or to requirements covenants should and meeting not

have the a say but with issues. as Obviously, know done, other to finish have As ability have the far is audit the the actually we I anything. to shared other on clarity still made audit we don't change the already really and to you, we point, until reclassification

Operator

Company. Next & with question will Jim come from Sidoti Sidoti

James Sidoti

With to to GE, have respect contract you implement sufficient Or bringing do on? still now people staff that are fully? you

Richard DiIorio

we're we're Carrie, the staffed at ebbs there, always right? think team, but way pretty probably XX-plus flows we're in and of good up. much percent of I shape. pretty the There's I mean,

Carrie Lachance

Yes, that's correct.

James Sidoti

fast build the you And that starts is with be something color on think can ramps And third you Do how in more you us do you up? little Sanara. revenue that think quarter? a how think this Okay. will give second and

Richard DiIorio

in come we're seeing revenue some So products. already we're see going to -- for their

$X challenge of will year, I was Wound of comps the be leases think south almost million, kind in $X Care, just right, in specifically, million. the had which last year last the

to door the we going That Sanara this on build of end -- should be So very really today. the starts kicking really out products in year, it ramp in be probably the a as will should of kind happen By are it pace. itself. steady gradual

on there It give be will because you aren't leases standpoint it with saw hard calls those the because we last comp clarity -- that to will in the be guys a from repeat we'll 'XX level to going just future year. for

So the certainly come accelerate year It's here. ramp out XXXX. of is coming. this into and we as will It already

James Sidoti

if assume single-digit you're leases growth, thinking as some high that XXXX in well? forecasting But you'll I you're get

Richard DiIorio

that of lease Yes. Leases of had that year will always the be big majority customer one really the part last We drove business. revenue.

some hopefully leases that year. from repeat, do bit a That business don't little customer to be versus case. standpoint. the comp a is growth but grow big always every one there'll we in we to it XX%. year-over-year some makes that tough always from expect Replacing coming But expect So the and revenue

the with leases still even comp, the growth that business. we expect So in in

James Sidoti

the that were and includes for strong particularly you. September quarters, which And June

in You think those as growth quarters you'll year-over-year have well?

Richard DiIorio

haven't I to looked back the hard how second now, if and that's the go were right, Jim, know quarter-to-quarter. to heavy say case, third -- quarters, quarter. leases X be It'd and I at those right at have I'd in it look many

when every comparison I don't the of growth in leases kind Sanara in but look the core you business So to year-over-year sequential will there great, going 'XX. It's know be quarter. hard if should that lump be

Barry Steele

got to traditionally you equipment the really lumpy. sales XX quarters had at you deliveries always leases, that basis made the at it look trailing large at we've When and our because a look

So forward. that change going won't

Operator

turn to any closing session. over concludes would Mr. This like sir. for the Instructions] ahead, go Richard Please remarks. conference question-and-answer back to Dilorio [Operator I our

Richard DiIorio

and update this today's want quarter call, we great Thanks, everyone a thank priorities. strategic results on Have to when day. progress call Chuck. look participating and our forward I to on we the with first year's will for our

Operator

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

now may disconnect. You

InfuSystem (INFU) 14 Mar 242023 Q4 Earnings call transcript