8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 7, 2019

_____________________

InfuSystem Holdings, Inc.

(Exact name of registrant as specified in its charter)

_________________________

Delaware	001-35020	20-3341405
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

31700 Research Park Drive

Madison Heights, Michigan 48071

 (Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (248) 291-1210

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

___________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

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

Item 2.02.  Results of Operations and Financial Condition.

On March 7, 2019, InfuSystem Holdings, Inc. issued a press release reporting its financial results for the fourth quarter and fiscal year 2018. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 of this Current Report on Form 8-K and the press release attached hereto as Exhibit 99.1 shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of such section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Item 9.01.  Financial Statements and Exhibits.

 (d) Exhibits

Exhibit No.	Description
99.1	Press Release of InfuSystem Holdings, Inc., dated March 7, 2019

Signature

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

INFUSYSTEM HOLDINGS, INC.
By:	/s/ Gregory W. Schulte
	Gregory W. Schulte Chief Financial Officer

Dated: March 7, 2019

EX-99.1

Exhibit 99.1

      InfuSystem Holdings, Inc. 31700 Research Park Drive Madison Heights, MI 48071 248-291-1210

CONTACT: Joe Dorame, Joe Diaz & Robert Blum Lytham Partners, LLC 602-889-9700

InfuSystem Holdings, Inc. Reports FOURTH QUARTER AND FULL YEAR 2018 Financial REsults

“Generates $11.4 million in Operating Cash Flow in 2018, an increase of 48% vs. prior year.”

MADISON HEIGHTS, MICHIGAN, March 7, 2019—InfuSystem Holdings, Inc. (NYSE American LLC: INFU) (“InfuSystem” or the “Company”), a leading national provider of infusion pumps and related services for the healthcare industry in the United States and Canada, today reported financial results for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter and Full Year Highlights:

● Cash flows provided by operating activities were $11.4 million for the year ended December 31, 2018, up $3.7 million or 47.6% from the same period of 2017.

● 2018 stock repurchases totaled $10.4 million, approximately 14.6% of the outstanding shares at December 31, 2017.

● Net revenues for the quarter and year ended December 31, 2018 were $17.6 million and $67.1 million, respectively, a 7.0% and 5.5% decrease, respectively, from the same prior year periods. Prior to the effect of adopting ASC 606, this would have represented a net increase of $0.2 million or 1.0% increase and $2.4 million or 3.3% increase, respectively, from the same prior year periods.

● Net loss for the quarter and year ended December 31, 2018 was $0.3 million and $1.1 million, respectively, a 98.5% and 94.7% decrease, respectively, from the net loss for the same prior year periods.

● Adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) (a non-GAAP financial measure) for the quarter and year ended December 31, 2018 was $3.7 million and $13.8 million, respectively, an increase of 12.5% and 17.7%, respectively, from the same prior year periods and represented 21.3% and 20.5% of net revenues, respectively. 

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Commenting on the fourth quarter and full year, Richard DiIorio, chief executive officer of InfuSystem, said, “I am pleased to announce that our improved efficiencies and strategic initiatives continue to favorably impact our financials.  We will continue working to improve our operations in 2019, with emphasis on managing our pump utilization, improving logistics, and managing our expenses.  This, along with an initiative to improve our revenue cycle management practices, should continue the positive trend in cash generation into 2019.”

Mr. DiIorio continued, “The InfuSystem team will continue the company’s agenda of superior patient care and customer service into the new fiscal year. This, we believe, will help to drive significant market share gains in our core oncology business and customer adoption of our new InfuSystem Mobile patient-care application.”

Implementation of ASC 606:

Effective January 1, 2018, InfuSystem adopted, on a modified retrospective approach, Accounting Standards Codification Topic 606: Revenue from Contracts with Customers (“ASC 606”). The effect of this change is to remove from reported revenue, in this and future periods, the amount the Company recorded as a provision for doubtful accounts during such period. The adoption on a modified retrospective approach means that the Company will not restate its financials for the periods prior to the adoption of ASC 606.

The adoption of ASC 606 resulted in a reclassification of $1.5 million and $6.3 million for the three months and full year ended December 31, 2018, respectively. These amounts, which previously would have been reported as provision for doubtful accounts on the Company’s income statement, are instead reflected as reductions in reported net revenues - rentals.

Results for the Quarter and Year Ended December 31, 2018

Gregory Schulte, chief financial officer, commented, “Our significant increase in operating cash flows in 2018 was primarily due to:

● Profitability, after adjustments to reconcile net loss to net cash provided by operating activities excluding the change in the provision for doubtful accounts, improved by $2.8 million, primarily attributable to net revenue growth and decreased selling, general and administrative costs; and,

● Improved working capital net inflows of $0.9 million, primarily due to increased accounts receivable collections, including the change in the provision for doubtful accounts, and vendor management impact on accounts payable and other liabilities, partially offset by higher inventory levels.

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These improved cash flows, plus net borrowings from our amended bank credit facility, allowed us to repurchase $10.4 million of our common stock during 2018. Also, in the second half of 2018, we used our improved cash flows from operations and equipment line borrowings to ramp up capital expenditure purchases of pumps to meet the demand of favorable oncology market growth in the foreseeable future and to make other necessary additions to our fleet.”

Conference Call

The Company will conduct a conference call for investors on Thursday, March 7, 2019 at 9:00 a.m. Eastern Time to discuss fourth quarter and full year 2018 results. The conference call may also include a discussion of Company developments, forward-looking statements and other material information about business and financial matters. To participate in this call, please dial in toll-free (833) 366-1127 or (412) 902-6773. Additionally, a Web replay will be available on the Company’s website for 90 days or by calling (877) 344-7529 or (412) 317-0088, confirmation code 10129264, through March 14, 2019.

Condensed Consolidated Financial Statements

Certain balances in the condensed consolidated financial statements for the quarter and year ended December 31, 2017 have been reclassified to be consistent with the quarter and year ended December 31, 2018 presentation in accordance with GAAP.

Non-GAAP Measures

This press release contains information prepared in conformity with GAAP as well as non-GAAP financial information. The Company believes that the non-GAAP financial measures presented in this press release provide useful information to the Company's management, investors, and other interested parties about the Company's operating performance because they allow them to understand and compare the Company's operating results during the current periods to the prior year periods in a more consistent manner. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP, and similarly titled non-GAAP measures may be calculated differently by other companies. The Company calculates those non-GAAP measures by adjusting for non-recurring items that are not part of the normal course of business and that the Company’s management does not believe will have similar comparable year-over-year items. A reconciliation of those measures to the most directly comparable GAAP measures is provided below.

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About InfuSystem Holdings, Inc.

InfuSystem Holdings, Inc. is a leading provider of infusion pumps and related services to hospitals, oncology practices and other alternate site healthcare providers. Headquartered in Madison Heights, Michigan, the Company delivers local, field-based customer support and also operates Centers of Excellence in Michigan, Kansas, California, Massachusetts and Ontario, Canada. The Company’s stock is traded on the NYSE American LLC under the symbol INFU.

Forward-Looking Statements 

The financial results in this press release reflect preliminary results, which are not final until the Company's Form 10-K for the year ended December 31, 2018 is filed. In addition, certain statements contained in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, such as statements relating to future actions, business plans, objectives and prospects, future operating or financial performance. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “strategy,” “future,” “likely,” variations of such words, and other similar expressions, as they relate to the Company, are intended to identify forward-looking statements. Forward-looking statements are subject to factors, risks and uncertainties that could cause actual results to differ materially, including, but not limited to, our dependence on estimates of collectible revenue, potential litigation, changes in third-party reimbursement processes, changes in law and other risk factors disclosed in the Company’s most recent annual report on Form 10-K and, to the extent applicable, quarterly reports on Form 10-Q. All forward-looking statements made in this press release speak only as of the date hereof. We do not undertake any obligation to update any forward-looking statements to reflect future events or circumstances, except as required by law.

Additional information about InfuSystem Holdings, Inc. is available at www.infusystem.com.

FINANCIAL TABLES FOLLOW

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INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	December 31,			December 31,
(in thousands, except share and per share data)	2018			2017
ASSETS
Current assets:
Cash and cash equivalents	$	4,318		$	3,469
Accounts receivable, net		9,593			11,284
Inventories		2,254			1,764
Other current assets		1,372			1,150
Total current assets		17,537			17,667
Medical equipment held for sale or rental		1,601			1,567
Medical equipment in rental service, net of accumulated depreciation		23,488			23,369
Property & equipment, net of accumulated depreciation		1,445			1,633
Intangible assets, net		19,865			24,514
Other assets		137			131
Total assets	$	64,073		$	68,881
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	7,091		$	5,516
Capital lease liability, current		33			505
Current portion of long-term debt		4,903			3,039
Other current liabilities		2,763			3,414
Total current liabilities		14,790			12,474
Long-term debt, net of current portion		28,842			25,352
Capital lease liability, long-term		-			33
Deferred income taxes		-			62
Other long-term liabilities		-			7
Total liabilities	$	43,632		$	37,928
Stockholders’ equity:
Preferred stock, $.0001 par value: authorized 1,000,000 shares; none issued		-			-
Common stock, $.0001 par value: authorized 200,000,000 shares; issued and outstanding 23,095,513 and 19,577,024, as of December 31, 2018, respectively, and issued and outstanding 22,978,398 and 22,780,738, as of December 31, 2017, respectively.		2			2
Additional paid-in capital		83,167			92,584
Retained deficit		(62,728	)		(61,633	)
Total stockholders’ equity		20,441			30,953
Total liabilities and stockholders’ equity	$	64,073		$	68,881

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INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
(in thousands, except share data)	2018			2017			2018			2017
Net revenues:
Rentals	$	14,338		$	15,857		$	56,584		$	61,085
Product sales		3,225			3,036			10,554			9,992
Net revenues		17,563			18,893			67,138			71,077
Cost of revenues:
Cost of revenues - Product, service and supply costs		5,152			4,755			19,332			18,367
Cost of revenues - Pump depreciation and loss on disposal		2,567			2,808			8,788			9,349
Gross profit		9,844			11,330			39,018			43,361
Selling, general and administrative expenses:
Third-party payor provision for doubtful accounts		-			1,286			-			5,615
Amortization of intangibles		1,137			1,378			4,649			5,560
Asset impairment charges		-			993			-			993
Selling and marketing		2,157			2,336			9,107			9,779
General and administrative		6,424			6,648			24,847			25,226
Total selling, general and administrative:		9,718			12,641			38,603			47,173
Operating income (loss)		126			(1,311	)		415			(3,812	)
Other expense:
Interest expense		(439	)		(317	)		(1,420	)		(1,332	)
Other expense		(18	)		(2	)		(37	)		(113	)
Total other expense		(457	)		(319	)		(1,457	)		(1,445	)
Loss before income taxes		(331	)		(1,630	)		(1,042	)		(5,257	)
Benefit from (provision for) income taxes		56			(16,364	)		(53	)		(15,450	)
Net loss	$	(275	)	$	(17,994	)	$	(1,095	)	$	(20,707	)
Net loss per share:
Basic and diluted	$	(0.01	)	$	(0.79	)	$	(0.05	)	$	(0.91	)
Weighted average shares outstanding:
Basic and diluted		19,561,272			22,780,737			21,417,628			22,739,651

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INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Year Ended			Year Ended
	December 31,			December 31,
(in thousands)	2018			2017
OPERATING ACTIVITIES
Net loss	$	(1,095	)	$	(20,707	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Provision for doubtful accounts		6,104			5,641
Depreciation		6,659			6,963
Loss on disposal of medical equipment		434			207
Gain on sale of medical equipment		(1,340	)		(1,662	)
Amortization of intangible assets		4,649			5,560
Asset impairment charges		-			993
Amortization of deferred debt issuance costs		33			28
Stock-based compensation expense		957			682
Deferred income tax expense (benefit)		(62	)		15,389
Changes in Assets - (Increase)/Decrease:
Accounts receivable		(4,413	)		(5,344	)
Inventories		(490	)		402
Other current assets		(222	)		(201	)
Other assets		(6	)		119
Changes in Liabilities - Increase/(Decrease):
Accounts payable and other liabilities		183			(352	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		11,391			7,718
INVESTING ACTIVITIES
Purchases of medical equipment		(8,022	)		(2,652	)
Purchases of property and equipment		(281	)		(104	)
Purchases of intangible assets		-			(192	)
Proceeds from sale of medical equipment		3,319			3,866
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(4,984	)		918
FINANCING ACTIVITIES
Principal payments on term loans and capital lease obligations		(6,319	)		(37,466	)
Cash proceeds from bank loans and revolving credit facility		11,162			28,866
Debt Issuance Costs		(27	)		(38	)
Cash Proceeds - Stock Plans		91			131
Common stock repurchased as part of Repurchase Program		(10,395	)		-
Common stock repurchased to satisfy taxes on stock based compensation		(70	)		(58	)
NET CASH USED IN FINANCING ACTIVITIES		(5,558	)		(8,565	)
Net change in cash and cash equivalents		849			71
Cash and cash equivalents, beginning of year		3,469			3,398
Cash and cash equivalents, end of year	$	4,318		$	3,469

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INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

(UNAUDITED)

NET LOSS TO ADJUSTED EBITDA:

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
(in thousands)	2018			2017			2018			2017
GAAP net loss		(275	)		(17,994	)		(1,095	)		(20,707	)
Adjustments:
Interest expense		439			317			1,420			1,332
(Benefit from) provision for income taxes		(56	)		16,364			53			15,450
Depreciation		1,780			1,797			6,659			6,963
Asset impairment		-			993			-			993
Amortization		1,137			1,378			4,649			5,560
Non-GAAP EBITDA	$	3,025		$	2,855		$	11,686		$	9,591
Stock compensation costs		278			232			957			682
Restatement costs		-			-			-			28
Early termination fees for capital leases		98			-			98			292
Exited facility costs		-			-			44			-
Management reorganization/transition costs		41			76			250			737
Contested proxy and other shareholder costs		17			-			251			200
Certain other non-recurring costs		279			160			476			160
Non-GAAP Adjusted EBITDA	$	3,738		$	3,323		$	13,762		$	11,690
GAAP Net Revenues	$	17,563		$	18,893		$	67,138		$	71,077
Non-GAAP Adjusted EBITDA Margin		21.3	%		17.6	%		20.5	%		16.4	%

Non-GAAP Adjusted EBITDA Margin is defined as Non-GAAP Adjusted EBITDA as a percentage of GAAP Net Revenues.

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