10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended March 31, 2020

or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from              to             

Commission File Number: 001-35020

INFUSYSTEM HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	20-3341405
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

3851 West Hamlin Road

Rochester Hills, Michigan 48309

(Address of Principal Executive Offices)

Registrant’s Telephone Number, including Area Code: (248) 291-1210

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
Common Stock, par value $0.0001 per share	INFU	NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No    ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No    ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☒
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).    Yes  ☐    No   ☒

As of May 7, 2020, 20,069,522 shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

Index to Form 10-Q

		PAGE
PART I-	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	-Unaudited Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019
	-Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019
	-Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2020 and 2019
	-Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019
	-Notes to the Unaudited Condensed Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II -	OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25
	Signatures	26

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	As of
	March 31,			December 31,
(in thousands, except share data)	2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	305		$	2,647
Accounts receivable, net		13,985			12,097
Inventories		4,232			2,899
Other current assets		2,002			1,662
Total current assets		20,524			19,305
Medical equipment for sale or rental		3,040			1,306
Medical equipment in rental service, net of accumulated depreciation		34,806			33,225
Property & equipment, net of accumulated depreciation		4,382			4,037
Intangible assets, net		14,388			15,463
Operating lease right of use assets		5,380			5,733
Other assets		158			155
Total assets	$	82,678		$	79,224
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	12,795		$	7,962
Current portion of long-term debt		7,295			8,082
Other current liabilities		3,708			5,803
Total current liabilities		23,798			21,847
Long-term debt, net of current portion		32,325			30,295
Deferred income taxes		113			104
Operating lease liabilities, net of current portion		4,422			4,644
Total liabilities		60,658			56,890
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 23,543,414 and 20,024,925, respectively, as of March 31, 2020 and 23,400,625 and 19,882,136, respectively, as of December 31, 2019		2			2
Additional paid-in capital		83,803			83,699
Retained deficit		(61,785	)		(61,367	)
Total stockholders’ equity		22,020			22,334
Total liabilities and stockholders’ equity	$	82,678		$	79,224

See accompanying notes to unaudited condensed consolidated financial statements.

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INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

(UNAUDITED)

	Three Months Ended
(in thousands, except share and per share data)	March 31
	2020			2019
Net revenues	$	21,553		$	18,193
Cost of revenues		8,890			7,852
Gross profit		12,663			10,341
Selling, general and administrative expenses:
Provision for doubtful accounts		285			(98	)
Amortization of intangibles		1,075			1,125
Selling and marketing		2,618			2,602
General and administrative		8,652			7,132
Total selling, general and administrative		12,630			10,761
Operating income (loss)		33			(420	)
Other expense:
Interest expense		(403	)		(460	)
Other expense		(19	)		(21	)
Loss before income taxes		(389	)		(901	)
Provision for income taxes		(29	)		(59	)
Net loss	$	(418	)	$	(960	)
Net loss per share:
Basic and diluted	$	(0.02	)	$	(0.05	)
Weighted average shares outstanding:
Basic and diluted		19,918,298			19,580,049

See accompanying notes to unaudited condensed consolidated financial statements.

-

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INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

STOCKHOLDERS’ EQUITY

(UNAUDITED)

	Common Stock					Additional						Treasury Stock					Total
				Par Value		Paid in			Retained						Par Value		Stockholders’
(in thousands)	Shares			Amount		Capital			Deficit			Shares			Amount		Equity
Balances at December 31, 2018		23,096		$	2	$	83,167		$	(62,728	)		(3,518	)	$	-	$	20,441
Stock-based shares issued upon vesting - gross		151			-		-			-			-			-		-
Stock-based compensation expense		-			-		246			-			-			-		246
Employee stock purchase plan		19			-		53			-			-			-		53
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation		(45	)		-		(37	)		-			-			-		(37	)
Net loss		-			-		-			(960	)		-			-		(960	)
Balances at March 31, 2019		23,221		$	2	$	83,429		$	(63,688	)		(3,518	)	$	-	$	19,743
Balances at December 31, 2019		23,401		$	2	$	83,699		$	(61,367	)		(3,518	)	$	-	$	22,334
Stock-based shares issued upon vesting - gross		152			-		-			-			-			-		-
Stock-based compensation expense		-			-		206			-			-			-		206
Employee stock purchase plan		14			-		74			-			-			-		74
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation		(52	)		-		(426	)		-			-			-		(426	)
Common stock - issued		28			-		250			-			-			-		250
Net loss		-			-		-			(418	)		-			-		(418	)
Balances at March 31, 2020		23,543		$	2	$	83,803		$	(61,785	)		(3,518	)	$	-	$	22,020

See accompanying notes to unaudited condensed consolidated financial statements

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INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended
	March 31
(in thousands)	2020			2019
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	557		$	1,269
INVESTING ACTIVITIES
Purchase of medical equipment and property		(4,536	)		(3,535	)
Proceeds from sale of medical equipment and property		500			764
NET CASH USED IN INVESTING ACTIVITIES		(4,036	)		(2,771	)
FINANCING ACTIVITIES
Principal payments on term loans, equipment line, revolving credit facility and other financing		(9,229	)		(929	)
Cash proceeds from 2019 equipment line and revolving credit facility		10,468			-
Debt issuance costs		-			(3	)
Common stock repurchased to satisfy statutory withholding on employee stock-based compensation plans		(426	)		(37	)
Cash proceeds - stock plans		74			53
Common stock - issued		250			-
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		1,137			(916	)
Net change in cash and cash equivalents		(2,342	)		(2,418	)
Cash and cash equivalents, beginning of period		2,647			4,318
Cash and cash equivalents, end of period	$	305		$	1,900

See accompanying notes to unaudited condensed consolidated financial statements.

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960 

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies

The terms “InfuSystem”, the “Company”, “we”, “our” and “us” are used herein to refer to InfuSystem Holdings, Inc. and its subsidiaries. InfuSystem is a leading provider of infusion pumps and related products and services for patients in the home, oncology clinics, ambulatory surgery centers, and other sites of care. The Company provides products and services to hospitals, oncology practices and facilities and other alternative site health care providers. Headquartered in Rochester Hills, Michigan, the Company delivers local, field-based customer support, and also operates pump service and repair Centers of Excellence in Michigan, Kansas, California, Massachusetts and Ontario, Canada.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and notes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The accompanying unaudited condensed consolidated financial statements include all adjustments, composed of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position and cash flows. The operating results for the interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the SEC.

The unaudited condensed consolidated financial statements are prepared in conformity with GAAP, which requires the use of estimates, judgments and assumptions that affect the amounts of assets and liabilities at the reporting date and the amounts of revenue and expenses in the periods presented. The Company believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. In particular, the coronavirus (COVID-19) pandemic and the resulting adverse impacts to global economic conditions, as well as potential adverse impacts to our operations, may impact future estimates including, but not limited to: revenue recognition; leases; accounts receivable and allowance for doubtful accounts; income taxes; and long-lived asset valuations.

Certain prior period reclassifications were made to conform with the current period presentation. These reclassifications had no effect on reported income (loss), overall cash flows, total assets, total liabilities or stockholders’ equity as previously reported.

2.       Recent Accounting Pronouncements and Developments

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-13, “Financial Instruments (Topic 326) Credit Losses”. Topic 326 changes the impairment model for most financial assets and certain other instruments. Under the new standard, entities holding financial assets and net investment in leases that are not accounted for at fair value through net income are to be presented at the net amount expected to be collected. An allowance for credit losses will be a valuation account that will be deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. Topic 326 is effective as of January 1, 2020, although in November 2019, the FASB delayed the effective date until fiscal years beginning after December 15, 2022 for SEC filers eligible to be smaller reporting companies under the SEC’s definition. The Company qualifies as a smaller reporting company under the SEC’s definition. Early adoption is permitted. The Company is currently evaluating the impact of Topic 326 on its consolidated balance sheets, statements of operations, statements of cash flows and related disclosures.

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3. Revenue Recognition

The following table presents the Company’s disaggregated revenue by offering type (in thousands):

	Three Months Ended
	March 31
	2020		2019
Third-Party Payer Rentals	$	11,236	$	8,747
Direct Payer Rentals		6,859		6,321
Product Sales		3,458		3,125
Total - Net revenues	$	21,553	$	18,193

Third-Party Payer Rentals are entirely attributed to revenues of the Integrated Therapy Services (“ITS”) segment. Product Sales are entirely attributed to revenues of the Durable Medical Equipment Services (“DME Services”) segment. For the three months ended March 31, 2020, $2.9 million and $4.0 million of Direct Payer Rentals were attributed to the ITS and DME Services segments, respectively. For the three months ended March 31, 2019, $2.6 million and $3.7 million were attributed to the ITS and DME Services segments, respectively.

The following table presents the Company’s disaggregated revenue by offering type as a percentage of total net revenues:

	Three Months Ended
	March 31
	2020			2019
Third-Party Payer Rentals		52.1	%		48.1	%
Direct Payer Rentals		31.8	%		34.7	%
Product Sales		16.1	%		17.2	%
Total - Net revenues		100.0	%		100.0	%

4. Medical Equipment

Medical equipment consisted of the following (in thousands):

	March 31,			December 31,
	2020			2019
Medical Equipment for sale or rental	$	3,068		$	1,334
Medical Equipment for sale or rental - pump reserve		(28	)		(28	)
Medical Equipment for sale or rental - net		3,040			1,306
Medical Equipment in rental service		79,100			75,853
Medical Equipment in rental service - pump reserve		(746	)		(720	)
Accumulated depreciation		(43,548	)		(41,908	)
Medical Equipment in rental service - net		34,806			33,225
Total	$	37,846		$	34,531

Depreciation expense for medical equipment for the three months ended March 31, 2020 was $2.1 million, compared to $1.7 million for the same prior year period, which were recorded in “cost of revenues” for each period.

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5. Property and Equipment

Property and equipment consisted of the following (in thousands):

	March 31, 2020							December 31, 2019
	Gross Assets		Accumulated Depreciation			Total		Gross Assets		Accumulated Depreciation			Total
Furniture, fixtures, and equipment	$	3,669	$	(2,037	)	$	1,632	$	3,202	$	(1,928	)	$	1,274
Automobiles		117		(93	)		24		117		(90	)		27
Leasehold improvements		3,439		(713	)		2,726		3,366		(630	)		2,736
Total	$	7,225	$	(2,843	)	$	4,382	$	6,685	$	(2,648	)	$	4,037

Depreciation expense for property and equipment for the three months ended March 31, 2020 was $0.2 million, compared to $0.1 million for the same prior year period. This expense was recorded in “general and administrative expenses” for each period.

6.       Intangible Assets

The carrying amount and accumulated amortization of intangible assets consisted of the following (in thousands):

	March 31, 2020							December 31, 2019
	Gross Assets		Accumulated Amortization			Net		Gross Assets		Accumulated Amortization			Net
Nonamortizable intangible assets:
Trade names	$	2,000	$	-		$	2,000	$	2,000	$	-		$	2,000
Amortizable intangible assets:
Trade names		23		(23	)		-		23		(23	)		-
Physician and customer relationships		36,534		(27,143	)		9,391		36,534		(26,550	)		9,984
Software		11,230		(8,233	)		2,997		11,230		(7,751	)		3,479
Total nonamortizable and amortizable intangible assets	$	49,787	$	(35,399	)	$	14,388	$	49,787	$	(34,324	)	$	15,463

Amortization expense for both the three months ended March 31, 2020 and 2019 was $1.1 million. Expected annual amortization expense for intangible assets recorded as of March 31, 2020 is as follows (in thousands):

	4/1-12/31/2020		2021		2022		2023		2024		2025 and thereafter		Total
Amortization expense	$	3,210	$	3,930	$	2,051	$	548	$	548	$	2,101	$	12,388

7. Debt

On February 5, 2019, the Company and its primary lender entered into the fifth amendment (the “Fifth Amendment”) to its Credit Agreement, entered into on March 23, 2015 (as amended, the “Credit Agreement”). The Fifth Amendment amended the Credit Agreement to, among other things:

● increase our borrowing capacity under the equipment line to $8.0 million, which allows for capital expenditure financing to the Company for the sole purpose of purchasing medical equipment (the “Equipment Line”);

● revise the definition of earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure, to include additional add-back adjustments for the years ended or ending December 31, 2018 and 2019;

● revise the definition of fixed charge coverage ratio for the year ending December 31, 2019 to include an unfinanced portion of capital expenditures of up to $7.0 million for the year ending December 31, 2019;

● revise the Credit Agreement’s maximum permitted indebtedness to finance the acquisition, construction or improvement of any fixed or capital assets; and

● revise the maximum leverage ratio for each of the quarters during December 31, 2018 and December 31, 2019.

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On April 15, 2019, the Company sold for $2.0 million and immediately leased back certain medical equipment in rental service to a third party specializing in such transactions. The leaseback term is 36 months. Because the arrangement contains a purchase option that the Company is reasonably certain to exercise, this transaction did not qualify for the sale-leaseback accounting under ASC 842. The medical equipment remains recorded on the accompanying condensed consolidated balance sheet and the proceeds received have been classified as an Other Financing liability, which is being paid off monthly over the term of the lease. The balance of Other Financing as of March 31, 2020 was $1.4 million.

On November 7, 2019, the Company and its primary lender entered into the sixth amendment (the “Sixth Amendment”) to its Credit Agreement. The Sixth Amendment amended the Credit Agreement to, among other things:

● provide for a 2019 capital expenditure loan (the “2019 Equipment Line”) commitment of $10.0 million (in addition to the existing Equipment Line of $8.0 million), which may be drawn upon until the earlier of the full commitment being advanced or December 31, 2020, to be used solely to purchase eligible equipment to be used in the Company’s business and in amounts not to exceed 90.0% of the invoiced hard costs of such acquired equipment;

● increase the commitment for the revolving credit facility (the “Revolver”) under the Credit Agreement to $11.8 million;

● revise the definition of EBITDA to include the following additional or revised add-back adjustments: (i) one-time charges in an aggregate amount not to exceed $0.3 million and incurred prior to December 31, 2019 relating to the Company’s integration of business previously served by another major provider of electronic oncology pumps; (ii) one-time charges in an aggregate amount not to exceed $0.3 million and incurred prior to December 31, 2019 relating to the Company’s facility move; (iii) lease buyout expenses not to exceed: (x) $0.1 million incurred on or prior to December 31, 2018; (y) $0.2 million incurred after December 31, 2018 but on or prior to March 31, 2019; and (z) $0.2 million incurred after September 30, 2019 but on or prior to December 31, 2020; and (iv) any other non-cash charges for such period (but excluding certain non-cash charges);

● revise the definition of Fixed Charge Coverage Ratio to mean, for any period, the ratio of (a) EBITDA minus Maintenance Capital Expenditures (defined to mean, for any period, 50.0% of depreciation expense) to (b) Fixed Charges, all calculated for the Company and its subsidiaries on a consolidated basis in accordance with GAAP;

● revise the definitions of Revolving Credit Maturity Date and Term Maturity Date to mean the date five years after the Sixth Amendment Effective Date and add a definition for the 2019 Equipment Line Maturity Date to provide for the same maturity date;

● reflect the refinancing of the Term A Loans, Term B Loans and Term C Loan as a single Term Loan on the Sixth Amendment Effective Date and, commencing on the last Business Day of December 2019, the consecutive quarterly principal installment payments will change to approximately $1.2 million; and

● revise Section 5.01(e) of the Credit Agreement, which governs the Company’s obligation to deliver financial statements to the lender, to require the Company to provide financial statements (x) as soon as possible but in any event within 30 days of the end of each fiscal quarter, or within 30 days of the end of each calendar month if any revolving loans were outstanding in month, (y) in connection with, and prior to, requesting any letter of credit and (z) at such other times as may be requested by the lender.

These debt amendments were accounted for as debt modifications. As of March 31, 2020, the Company was in compliance with all debt-related covenants under the Credit Agreement.

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As of March 31, 2020, the Company’s term loan, Equipment Line and 2019 Equipment Line under the Credit Agreement had balances of $25.4 million, $7.2 million and $4.3 million, respectively. The availability under the Revolver is subject to a borrowing base, which is calculated as the sum of the Company’s eligible accounts receivable and eligible inventory as defined by the Credit Agreement. As of March 31, 2020, the borrowing base was approximately $16.6 million, which exceeded the gross available borrowing amount of $11.8 million. The following table illustrates the net availability under the Revolver as of the balance sheet date (in thousands):

	March 31,			December 31,
	2020			2019
Revolver:
Gross availability	$	11,750		$	11,750
Outstanding draws		(1,402	)		-
Letters of credit		(1,750	)		(1,750	)
Landlord reserves		(161	)		(150	)
Availability on Revolver	$	8,437		$	9,850

The Company had future maturities of loans and other financing as of March 31, 2020 as follows (in thousands):

	2020			2021			2022			2023			2024 and thereafter			Total
Term Loan	$	3,461		$	4,615		$	4,615		$	4,615		$	8,074		$	25,380
Equipment Line		1,200			1,600			1,600			1,600			1,200			7,200
2019 Equipment Line		214			855			855			855			1,495			4,274
Unamortized value of the debt issuance costs		(13	)		(17	)		(17	)		(17	)		(15	)		(79	)
Other financing		496			725			222			-			-			1,443
Revolver		-			-			-			-			1,402			1,402
Total	$	5,358		$	7,778		$	7,275		$	7,053		$	12,156		$	39,620

The following is a breakdown of the Company’s current and long-term debt (in thousands):

March 31, 2020										December 31, 2019
	Current Portion			Long-Term Portion			Total				Current Portion			Long-Term Portion			Total
Term Loan	$	4,615		$	20,765		$	25,380		Term Loan	$	5,768		$	21,919		$	27,687
Equipment Line		1,600			5,600			7,200		Equipment Line		1,600			6,000			7,600
2019 Equipment Line		427			3,847			4,274		2019 Equipment Line		79			1,495			1,574
Unamortized value of debt issuance costs		(17	)		(62	)		(79	)	Unamortized value of debt issuance costs		(17	)		(66	)		(83	)
Other financing		670			773			1,443		Other financing		652			947			1,599
Revolver		-			1,402			1,402		Revolver		-			-			-
Total	$	7,295		$	32,325		$	39,620		Total	$	8,082		$	30,295		$	38,377

As of March 31, 2020, interest on the credit facility is payable at our option as a (i) Eurodollar Loan, which bears interest at a per annum rate equal to the applicable 30-day London Interbank Offered Rate (“LIBOR”) plus an applicable margin ranging from 2.00% to 3.00% or (ii) CB Floating Rate (“CBFR”) Loan, which bears interest at a per annum rate equal to the greater of (a) the lender’s prime rate or (b) LIBOR plus 2.50%, in each case, plus a margin ranging from -1.00% to 0.25% based on our leverage ratio as defined in the Credit Agreement. The actual Eurodollar Loan rate at March 31, 2020 was 3.25% (LIBOR of 0.75% plus 2.50%). The actual CBFR Loan rate at March 31, 2020 was 2.94% (lender’s prime rate of 3.44% minus 0.50%).

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8. Income Taxes

During the three months ended March 31, 2020, the Company recorded expense provision for income taxes of less than $0.1 million. The income tax provision relates principally to the Company’s state and local taxes and foreign operations in Canada. During the three months ended March 31, 2019, the Company recorded expense provision for income taxes of $0.1 million.

The Company’s realization of its deferred tax assets is dependent upon many factors, including, but not limited to, the Company’s ability to generate sufficient taxable income. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. Cumulative losses in recent years and no assurance of future taxable income are the basis for the Company’s assessment that the Company will not recognize the benefits of its federal and state deferred tax assets. Accordingly, the Company had a full valuation allowance for all deferred tax assets at March 31, 2020 and December 31, 2019.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, along with earlier issued IRS guidance, includes provisions related to refundable payroll tax credits, deferral of employer side social security payments, net operating loss carryback period, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Due to the recent enactment of the CARES Act, we are currently assessing the potential effect of the CARES Act and the ongoing government guidance related to COVID-19 on our financial position and results of operations, including effects from the qualified investment property deduction and other provisions of the CARES Act.

9. Commitments, Contingencies and Litigation

From time to time in the ordinary course of its business, the Company may be involved in legal proceedings, the outcomes of which may not be determinable. The results of litigation are inherently unpredictable. Any claims against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. The Company is not able to estimate an aggregate amount or range of reasonably possible losses for those legal matters for which losses are not probable and estimable, primarily for the following reasons: (i) many of the relevant legal proceedings are in preliminary stages and, until such proceedings develop further, there is often uncertainty regarding the relevant facts and circumstances at issue and potential liability; and (ii) many of these proceedings involve matters of which the outcomes are inherently difficult to predict. The Company has insurance policies covering potential losses where such coverage is cost effective.

The Company is not at this time involved in any legal proceedings that the Company believes could have a material effect on the Company’s financial condition, results of operations or cash flows.

10. Loss Per Share

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share assumes the issuance of potentially dilutive shares of common stock during the period. The following table reconciles the numerators and denominators of the basic and diluted loss per share computations:

	Three Months Ended
	March 31
Numerator:	2020			2019
Net loss (in thousands)	$	(418	)	$	(960	)
Denominator:
Weighted average common shares outstanding:
Basic		19,918,298			19,580,049
Dilutive effect of non-vested awards		-			-
Diluted		19,918,298			19,580,049
Net loss per share:
Basic and diluted	$	(0.02	)	$	(0.05	)

For both the three months ended March 31, 2020 and 2019, all outstanding options and restricted stock units were anti-dilutive due to the Company’s net losses for the periods and therefore not included in the calculations.

11. Leases

The Company’s operating leases are primarily for office space, service facility centers and equipment under operating lease arrangements that expire at various dates over the next ten years. The Company’s leases do not contain any restrictive covenants. The Company’s office leases generally contain renewal options for periods ranging from one to five years. Because the Company is not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term, and payments associated with the option years are excluded from lease payments. The Company’s office leases do not contain any material residual value guarantees. The Company’s equipment leases generally do not contain renewal options.

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Payments due under the Company’s operating leases include fixed payments as well as variable payments. For the Company’s office leases, variable payments include amounts for the Company’s proportionate share of operating expenses, utilities, property taxes, insurance, common area maintenance and other facility-related expenses. For the Company’s equipment leases, variable payments may consist of sales taxes, property taxes and other fees.

The components of lease costs consisted of the following (in thousands):

	Three Months Ended
	March 31
	2020		2019
Operating lease cost	$	424	$	387
Variable lease cost		112		75
Total lease cost	$	536	$	462

Supplemental cash flow information and non-cash activity related to the Company’s leases are as follows (in thousands):

	Three Months Ended
	March 31
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities and ROU assets:
Operating cash flow from operating leases	$	451	$	360
ROU assets obtained in exchange for lease obligations:
Operating leases		118		112

Weighted average remaining lease terms and discount rates for the Company’s leases are as follows:

	As of March 31
	2020		2019
	Years		Years
Weighted average remaining lease term:
Operating leases		7.3		4.0

	Rate			Rate
Weighted average discount rate:
Operating leases		7.7	%		6.6	%

Future maturities of lease liabilities as of March 31, 2020 are as follows (in thousands):

	Operating Leases
2020	$	1,094
2021		1,055
2022		991
2023		924
2024		947
Thereafter		3,166
Total undiscounted lease payments		8,177
Less: Imputed interest		(2,460	)
Total lease liabilities	$	5,717

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12. Business Segment Information

During the fourth quarter of 2019, the Company reorganized its segment reporting from one reportable segment to two reportable segments, Integrated Therapy Services (“ITS”) and Durable Medical Equipment Services (“DME Services”), due to changes in the Company’s internal reporting and the information evaluated by its chief operating decision-maker. The Company’s reportable segments are organized based on service platforms, with the ITS segment reflecting higher margin rental revenues that generally include payments made by third-party and direct payers and the DME Services segment reflecting lower margin product sales and direct payer rental revenues. Resources are allocated and performance is assessed for these segments by the Company’s Chief Executive Officer, whom the Company has determined to be its chief operating decision-maker. The Company believes that reporting performance at the gross profit level is the best indicator of segment performance.

The financial information summarized below is presented by reportable segment for the quarters ended March 31, 2020 and 2019:

2020
					Corporate/
(in thousands)	ITS		DME Services		Eliminations			Total
Net revenues - external	$	14,126	$	7,427	$	-		$	21,553
Net revenues - internal		-		1,238		(1,238	)		-
Total net revenues		14,126		8,665		(1,238	)		21,553
Gross profit		9,106		3,557		-			12,663
Selling , general and administrative expenses						12,630			12,630
Interest expense						(403	)		(403	)
Other expense						(19	)		(19	)
Provision for income taxes						(29	)		(29	)
Net loss								$	(418	)
Total Assets	$	54,762	$	25,916	$	2,000		$	82,678
Purchases of medical equipment	$	2,357	$	1,650	$	-		$	4,007
Depreciation and amortization of intangible assets	$	2,654	$	748	$	-		$	3,402

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2019
					Corporate/
(in thousands)	ITS		DME Services		Eliminations			Total
Net revenues - external	$	11,306	$	6,887	$	-		$	18,193
Net revenues - internal		-		949		(949	)		-
Total net revenues		11,306		7,836		(949	)		18,193
Gross profit		6,927		3,414		-			10,341
Selling, general and administrative expenses						10,761			10,761
Interest expense						(460	)		(460	)
Other expense						(21	)		(21	)
Provision for income taxes						(59	)		(59	)
Net loss								$	(960	)
Total Assets	$	43,953	$	21,292	$	2,000		$	67,245
Purchases of medical equipment	$	2,531	$	964	$	-		$	3,495
Depreciation and amortization of intangible assets	$	2,195	$	710	$	-		$	2,905

13.     COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which has spread globally and throughout the United States. With the exception of in-person visits to our customer facilities by our sales staff, the Company has continued to operate despite stay-at-home orders and other government mandated shutdowns across the United States and Canada under exceptions allowed by those orders for the healthcare industry.

We have taken a number of precautionary and preemptive steps to protect the safety and well-being of our employees while ensuring continuity of service to our clients, including, transitioning our employees to a remote work environment, suspending employee travel, canceling participation in industry events and in-person group meetings, promoting social distancing and enhanced cleaning and sanitization efforts across office locations, and implementing protocols to quarantine employees who may have been exposed to COVID-19, or show relevant symptoms. We also commenced preparedness plans at our facilities to maintain continuity of operations, which provide for flexible work arrangements without any significant disruptions to our business or control processes. Our management team is actively monitoring the situation and in constant communication with our workforce as well as with our customers and vendors. Other specific actions we have taken include purchasing additional inventory of supplies and pumps, as well as purchasing personal protective equipment for our employees.  While the Company’s business is considered critical, we are unable to predict the impact that COVID-19 will have due to numerous uncertainties. While COVID-19 has not significantly affected our operations, the extent of the impact in the future, if any, will depend on future developments, which are highly uncertain, cannot be predicted and could have a material adverse impact on our financial position, operating results and cash flows. A prolonged outbreak could, among other things, strain our business continuity plans, create delays in our growth and strategic initiatives, reduce our sales and marketing activities, limit our access to financing on favorable terms, increase our exposure to potential impairment charges related to intangible assets, hinder our ability to support our clients and operate our business effectively, heighten the risk of disruption to our information and reporting systems and internal controls, including those over financial reporting and other risk management systems, or require us to incur substantial costs. We are closely monitoring the impact of COVID-19 on all aspects of our business and may take further actions as may be required by federal, state or local authorities, or that we determine are in the best interests of our employees, customers and partners. As the conditions surrounding COVID-19 continue to evolve rapidly, we will continue to actively manage our response in collaboration with customers, government officials and stakeholders, and assess any potential impacts to our financial position and operating results, as well as adverse developments in our business.

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Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

The terms “InfuSystem”, the “Company”, “we”, “our” and “us” used herein refer to InfuSystem Holdings, Inc. and its subsidiaries.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this quarterly report on Form 10-Q are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company is identifying certain factors that could cause actual results to differ, perhaps materially, from those indicated by these forward-looking statements. Those factors, risks and uncertainties include, but are not limited to, the effect of the coronavirus (COVID-19) pandemic on our business, potential changes in healthcare payer mix and overall healthcare reimbursement, including the Centers for Medicare and Medicaid Services (“CMS”) competitive bidding and fee schedule reductions, sequestration, concentration of customers, increased focus on early detection of cancer, competitive treatments, dependency on Medicare Supplier Number, availability of chemotherapy drugs, global financial conditions, changes and enforcement of state and federal laws, natural forces, competition, dependency on suppliers, risks in acquisitions & joint ventures, U.S. Healthcare Reform, relationships with healthcare professionals and organizations, technological changes related to infusion therapy, the Company’s ability to implement information technology improvements and to respond to technological changes, the ability of the Company to successfully integrate acquired businesses, dependency on key personnel, dependency on banking relations and the ability to comply with our credit facility covenants, and other risks associated with our common stock, as well as any litigation to which the Company may be involved in from time to time; and other risk factors as discussed in the Company’s annual report on Form 10-K for the year ended December 31, 2019, this quarterly report on Form 10-Q and in other filings made by the Company from time to time with the Securities and Exchange Commission (“SEC”). Our annual report on Form 10-K is available on the SEC’s EDGAR website at www.sec.gov, and a copy may also be obtained by contacting the Company. All forward-looking statements made in this Form 10-Q speak only as of the date of this report. We do not intend, and do not undertake any obligation, to update any forward-looking statements to reflect future events or circumstances after the date of such statements, except as required by law.

Overview

We are a leading national health care service provider, facilitating outpatient care for Durable Medical Equipment manufacturers and health care providers. We provide our products and services to hospitals, oncology practices, ambulatory surgery centers, and other alternate site health care providers. Our headquarters is in Rochester Hills, Michigan, and we operate our business from a total of five locations in the United States and Canada. We deliver local, field-based customer support as well as operate pump service and repair Centers of Excellence in Michigan, Kansas, California, Massachusetts and Ontario, Canada. InfuSystem, Inc. is accredited by the CHAP while First Biomedical is ISO certified.

InfuSystem competes for and retains its business primarily on the basis of its long participation and strong reputation in the Durable Medical Equipment space, its long-standing relationships with Durable Medical Equipment manufacturers and its health care provider customers, and the high levels of service it provides. Current barriers to entry for potential competitors are created by our (i) growing number of third-party payer networks under contract; (ii) economies of scale, which allow for predictable reimbursement and less costly purchase and management of the pumps, respectively; (iii) established, long-standing relationships as a provider of pumps to outpatient oncology practices in the U.S. and Canada; (iv) fleet of ambulatory and large volume infusion pumps for rent and for sale, which may allow us to be more responsive to the needs of physicians, outpatient oncology practices, hospitals, outpatient surgery centers, homecare practices, patient rehabilitation centers and patients than a new market entrant; (v) five geographic locations in the U.S. and Canada that allow for same day or next day delivery of pumps; and (vi) pump repair and service capabilities at all of these facilities. We do not perform any research and development on pumps, but we have made, and continue to make investments in our information technology.

During the fourth quarter of 2019, the Company reorganized its segment reporting from one reportable segment to two reportable segments, Integrated Therapy Services (“ITS”) and Durable Medical Equipment Services (“DME Services”), due to changes in our internal reporting and the information evaluated by our chief operating decision-maker.

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ITS Segment

Our ITS segment’s core purpose is to seek opportunities to leverage our unique know-how in clinic-to-home health care involving Durable Medical Equipment, our logistics and billing capabilities, our growing network of third-party payers under contract, and our clinical and biomedical capabilities. This leverage may take the form of new products and/or services, strategic alliances, joint ventures and/or acquisitions. The leading service within our ITS segment is to supply electronic ambulatory infusion pumps and associated disposable supply kits to private oncology clinics, infusion clinics and hospital outpatient oncology clinics to be utilized in the treatment of a variety of cancers including colorectal cancer and other disease states (“Oncology Business”). Colorectal cancer is the fourth most prevalent form of cancer in the United States, according to the American Cancer Society, and the standard of care for the treatment of colorectal cancer relies upon continuous chemotherapy infusions delivered via ambulatory infusion pumps. One of the primary goals for the ITS segment is to expand into treatment of other cancers. There are a number of approved treatment protocols for pancreatic, head and neck, esophageal and other cancers, as well as other disease states which present opportunities for growth. There are also a number of other drugs currently approved by the U.S. Food and Drug Administration, as well as agents in the pharmaceutical development pipeline, which we believe could potentially be used with continuous infusion protocols for the treatment of diseases other than colorectal cancer. Additional drugs or protocols currently in clinical trials may also obtain regulatory approval over the next several years. If these new drugs or protocols obtain regulatory approval for use with continuous infusion protocols, we expect the pharmaceutical companies to focus their sales and marketing efforts on promoting the new drugs and protocols to physicians.

Furthermore, our Oncology Business focuses mainly on the continuous infusion of chemotherapy. Continuous infusion of chemotherapy can be described as the gradual administration of a drug via a small, lightweight, portable infusion pump over a prolonged period of time. A cancer patient can receive his or her medicine anywhere from one to 30 days per month depending on the chemotherapy regimen that is most appropriate to that individual’s health status and disease state. This may be followed by periods of rest and then repeated cycles with treatment goals of progression-free disease survival. This drug administration method has replaced intravenous push or bolus administration in specific circumstances. The advantages of slow continuous low doses of certain drugs are well documented. Clinical studies support the use of continuous infusion chemotherapy for decreased toxicity without loss of anti-tumor efficacy. The 2015 National Comprehensive Cancer Network Guidelines recommend the use of continuous infusion for treatment of numerous cancer diagnoses. We believe that the growth of continuous infusion therapy is driven by three factors: evidence of improved clinical outcomes; lower toxicity and side effects; and a favorable reimbursement environment.

We believe that oncology practices have a heightened sensitivity to providing quality service and whether they are reimbursed for services they provide. Simultaneously, CMS and private insurers are increasingly focused on evidence-based medicine to inform their reimbursement decisions — that is, aligning reimbursement with clinical outcomes and adherence to standards of care. Continuous infusion therapy is a main component of the standard of care for certain cancer types because clinical evidence demonstrates superior outcomes. Payers’ recognition of this benefit is reflected in their relative reimbursement policies for clinical services related to the delivery of this care.

Additional areas of focus for our ITS segment are as follows:

● Pain Management - providing our ambulatory pumps, products, and services for pain management in the area of post-surgical continuous peripheral nerve block.

● Negative Pressure Wound Therapy (“NPWT”) - as announced in February 2020, will include providing the Durable Medical Equipment, related consumables, overseeing logistics, biomedical services, and managing third-party billing of the U.S. home health care market, which as a subset of the broader NPWT market, has an estimated addressable home health care market of $600 million per year.

● Acquisitions - we believe there are additional opportunities, beyond our acquisition of Ciscura Holding Company, Inc., and its subsidiaries (“Ciscura”) in April 2015, to acquire smaller, regional health care service providers, in whole or part that perform similar services to us but do not have the national market access, network of third-party payer contracts or operating economies of scale that we currently enjoy.

● Information technology-based services - we also plan to continue to capitalize on key new information technology-based services such as EXPRESS, InfuSystem Mobile, InfuBus or InfuConnect, Pump Portal and BlockPain Dashboard^®.

The payer environment within our ITS segment is in a constant state of change. We continue to extend our considerable breadth of payer networks under contract as patients move into different insurance coverages, including Medicaid and Insurance Marketplace products. In some cases, this may slightly reduce our aggregate billed revenues payment rate but result in an overall increase in collected revenues, due to a reduction in concessions. Consequently, we are increasingly focused on net revenues less concessions.

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DME Services Segment

Our DME Services segment’s core service is to (i) sell or rent new and pre-owned pole-mounted and ambulatory infusion pumps, (ii) sell treatment-related consumables; and (iii) provide biomedical recertification, maintenance and repair services for oncology practices as well as other alternate site settings including home care and home infusion providers, skilled nursing facilities, pain centers and others. We also provide these products and services to customers in the hospital market. We purchase new and pre-owned pole-mounted and ambulatory infusion pumps from a variety of sources on a non-exclusive basis. We repair, refurbish and provide biomedical certification for the devices as needed. The pumps are then available for sale, rental or to be used within our ambulatory infusion pump management service.

COVID-19 Update

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which has spread globally and throughout the United States. We have taken a number of precautionary and preemptive steps to protect the safety and well-being of our employees while ensuring continuity of service to our clients, including, transitioning our employees to a remote work environment, suspending employee travel, canceling participation in industry events and in-person group meetings, promoting social distancing and enhanced cleaning and sanitization efforts across office locations, and implementing protocols to quarantine employees who may have been exposed to COVID-19, or show relevant symptoms. We also commenced preparedness plans at our facilities to maintain continuity of operations, which provide for flexible work arrangements without any significant disruptions to our business or control processes. Our management team is actively monitoring the situation and in constant communication with our workforce as well as with our customers and vendors. While COVID-19 has not significantly affected our operations, the extent of the impact in the future, if any, will depend on future developments, which are highly uncertain, cannot be predicted and could have a material adverse impact on our financial position, operating results and cash flows. We are closely monitoring the impact of COVID-19 on all aspects of our business, and may take further actions as may be required by federal, state or local authorities, or that we determine are in the best interests of our employees, customers and partners. As the conditions surrounding COVID-19 continue to evolve rapidly, we will continue to actively manage our response in collaboration with customers, government officials and stakeholders, and assess any potential impacts to our financial position and operating results, as well as adverse developments in our business. For further information regarding the effect of COVID-19 on the Company, please see Part II, Item 1A. Risk Factors to this Form 10-Q, which is incorporated herein by reference.

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InfuSystem Holdings, Inc. Results of Operations for the Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019

The following represents the Company’s results of operations for the three months ended March 31, 2020 and 2019. Revenues and related costs and gross profit amounts include the elimination of certain inter-segment charges.

	Three Months Ended
	March 31						Better/
(in thousands, except share and per share data)	2020			2019			(Worse)
Net revenues:
ITS	$	14,126		$	11,306		$	2,820
DME Services		7,427			6,887			540
Total		21,553			18,193			3,360
Cost of revenues:
ITS		3,782			3,430			(352	)
DME Services		5,108			4,422			(686	)
Total		8,890			7,852			(1,038	)
Gross profit:
ITS		10,344			7,876			2,468
DME Services		2,319			2,465			(146	)
Total		12,663			10,341			2,322
Selling, general and administrative expenses
Provision for doubtful accounts		285			(98	)		(383	)
Amortization of intangibles		1,075			1,125			50
Selling and marketing		2,618			2,602			(16	)
General and administrative		8,652			7,132			(1,520	)
Total selling, general and administrative expenses		12,630			10,761			(1,869	)
Operating income (loss)		33			(420	)		453
Other expense		(422	)		(481	)		59
Loss before income taxes		(389	)		(901	)		512
Provision for income taxes		(29	)		(59	)		30
Net loss	$	(418	)	$	(960	)	$	542
Net loss per share:
Basic and diluted	$	(0.02	)	$	(0.05	)	$	0.03
Weighted average shares outstanding:
Basic and diluted		19,918,298			19,580,049			338,249

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Net Revenues

Net revenues for the quarter ended March 31, 2020 were $21.6 million, an increase of $3.4 million, or 18.5%, compared to $18.2 million for the quarter ended March 31, 2019. This increase was due to increases in both the ITS and DME Services segments of $2.8 million and $0.6 million, respectively.

ITS

ITS net revenue increased $2.8 million, or 24.9%, compared to the same prior year period. This increase was primarily attributable to growth in the Company’s customer base due to favorable changes in the competitive environment for oncology services and growth in its pain management business.

DME Services

DME Services net revenue increased $0.6 million, or 7.8%, compared to the same prior year period. This increase was largely due to an increase in product sales of $0.4 million, or 10.7%, and an increase of $0.2 million, or 5.5%, in rental revenues. Product sales growth was largely attributable to the growth in the sales of pumps of $0.3 million and an increase in the sales of disposable products of $0.1 million.

Gross Profit

Gross profit for the quarter ended March 31, 2020 increased $2.3 million, or 22.5%, from $10.4 million for the quarter ended March 31, 2019 to $12.7 million. The increase was driven by an increase in the ITS segment of $2.4 million, slightly offset by a decrease in the DME Services segment of $0.1 million. Gross profit as a percentage of net revenues (“gross margin”) increased to 58.8% compared to the same prior year period at 56.8%.

ITS

ITS gross profit increased $2.4 million, or 31.3%, compared to the same prior year period. This increase was driven mainly by the increase in net revenues, which was partially offset by higher incremental costs for equipment depreciation expense. ITS gross margin increased to 73.2% compared to the same prior year period at 69.7%.

DME Services

DME Services gross profit decreased $0.1 million, or 5.9%, compared to the same prior year period. This decrease was driven by periodic changes in product mix, partially offset by an increase in net revenue. Decrease in profitability was impacted by higher incremental costs for both pump sales and service expense. DME Services gross margin decreased to 31.2% compared to the same prior year period at 35.8%.

Provision for Doubtful Accounts

Provision for doubtful accounts for the quarter ended March 31, 2020 was $0.3 million, an increase of $0.4 million, compared to the quarter ended March 31, 2019. The provision for doubtful accounts as a percentage of net revenues, increased to 1.3% compared to the same prior year period at -0.5%. For the quarter ended March 31, 2019, the Company had a reversal of approximately $0.1 million of its previously calculated reserve due to improved collections. Provision for doubtful accounts is mainly attributable to reserves related to our Direct Payer Rentals. We did not incur any significant disruptions to payments from our customers during the three months ended March 31, 2020 from COVID-19, however, we cannot be certain that stay-at-home orders and other business disruptions associated with the response to COVID-19 by federal, state and local authorities will not unfavorably impact future customer collections or our ability to recover unreserved accounts receivable balances.

Amortization of Intangible Assets

Amortization of intangible assets decreased $0.1 million, or 4.4%, compared to the same prior year period. The decrease is attributable to certain intangible assets becoming fully amortized, thus, the related amortization no longer existed during 2020.

Selling and Marketing Expenses

Selling and marketing expenses for both the quarter ended March 31, 2020 and 2019 were approximately $2.6 million. Selling and marketing expenses as a percentage of net revenues decreased to 12.1% compared to the same prior year period at 14.3%. Selling and marketing expenses during these periods consisted of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, overall travel and entertainment and other miscellaneous expenses.

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General and Administrative Expenses

General and administrative (“G&A”) expenses for the quarter ended March 31, 2020 were $8.6 million, an increase of 21.3% from $7.1 million for the quarter ended March 31, 2019. G&A expenses as a percentage of net revenues, increased to 40.1% compared to the same prior year period at 39.2%. The increase of $1.5 million was largely due to an increase in employee compensation related expenses of $1.1 million, outside services of $0.1 million, rent expense of $0.1 million, legal and shareholder costs of $0.1 million and $0.1 million of depreciation expense. The increase in employee compensation related expenses was primarily attributable to a $0.7 million increase in salaries, benefits and related expenses, $0.2 million increase in severance and a $0.2 million net increase in incentive bonuses. G&A expenses during the quarters ended March 31, 2020 and 2019 consisted primarily of accounting, administrative, third-party payer billing and contract services, customer service, nurses on staff, new product services, service center personnel salaries, fringe benefits and other payroll-related items, professional fees, legal fees, stock-based compensation, insurance and other miscellaneous items.

Other Income and Expenses

During the quarter ended March 31, 2020, we incurred interest expense of $0.4 million, a decrease of $0.1 million, or 12.4%, compared to the quarter ended March 31, 2019. This was a net result of lower weighted average interest rates on our outstanding debt in 2020 as compared to 2019, which was partially offset by interest on our increased average outstanding borrowings during the quarter ended March 31, 2020.

Provision for Income Taxes

During the quarter ended March 31, 2020, we recorded a provision for income taxes of less than $0.1 million, representing an effective tax rate of -7.5% on pre-tax losses totaling $0.4 million, compared to a provision for income taxes of $0.1 million, representing an effective tax rate of -6.5% on pre-tax losses totaling $0.9 million, for the quarter ended March 31, 2019. The effective tax rates differ from the U.S. statutory rates due mainly to an increase in the valuation reserve on our net deferred tax assets of less than $0.1 million and $0.3 million during the quarters ended March 31, 2020 and 2019, respectively, and the effect of state income taxes. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic, which provides numerous tax provisions and other stimulus measures. Due to the recent enactment of this legislation, the Company continues to assess the potential impacts the CARES Act may have on its financial position and results of operations.

Liquidity and Capital Resources

Overview:

We finance our operations and capital expenditures with internally-generated cash from operations and borrowings under our existing Credit Agreement, entered into on March 23, 2015 (as amended, the “Credit Agreement”). As of March 31, 2020, we had cash and cash equivalents of $0.3 million, and $8.4 million of availability on our revolving credit facility under the Credit Agreement (the “Revolver”) compared to $2.6 million of cash and cash equivalents and $9.9 million of availability on our Revolver at December 31, 2019. Additionally, as of March 31, 2020, we had $5.7 million in undrawn availability under our 2019 Equipment Line under the Credit Agreement. While we have not fully drawn the 2019 Equipment Line, we have made sufficient capital expenditures, which would allow us to request advances up to the total limit. As of December 31, 2019, we had $8.4 million in undrawn availability under our 2019 Equipment Line. Our liquidity and borrowing plans are established to align with our financial and strategic planning processes and ensure we have the necessary funding to meet our operating commitments, which primarily include the purchase of pumps, inventory, payroll and general expenses. We also take into consideration our overall capital allocation strategy, which includes investment for future growth, share repurchases and potential acquisitions. We believe we have adequate sources of liquidity and funding available for at least the next year. However, any projections of future earnings and cash flows are subject to substantial uncertainty, including factors such as the successful execution of our business plan and general economic conditions, particularly in light of the rapidly changing market and economic conditions created by the COVID-19 pandemic. We may need to access debt and equity markets in the future if unforeseen costs or opportunities arise, to meet working capital requirements, fund acquisitions or investments or repay indebtedness under the Credit Agreement. If we need to obtain new debt or equity financing in the future, the terms and availability of such financing may be impacted by economic and financial market conditions as well as our financial condition and results of operations at the time we seek additional financing. While we did not incur significant disruptions or significant direct unusual expenses during the three months ended March 31, 2020 from COVID-19, we have used cash and drawn on our Revolver and 2019 Equipment Line to fund acceleration of our capital expenditures of medical equipment and increased our inventory levels of related supplies in conjunction with our COVID-19 preparedness activities. We will continue to assess our liquidity needs and anticipated capital requirements as we move forward.

21

  Long-Term Debt Activities:

As of March 31, 2020, the Company’s term loan, Equipment Line and 2019 Equipment Line under the Credit Agreement had balances of $25.4 million, $7.2 million and $4.3 million, respectively. The availability under the Revolver is subject to a borrowing base, which is calculated as the sum of our eligible accounts receivable and eligible inventory as defined by the Credit Agreement. As of March 31, 2020, the borrowing base was approximately $16.6 million, which exceeded the gross available borrowing amount of $11.8 million. The following table illustrates the net availability under the Revolver as of the balance sheet date (in thousands):

	March 31,			December 31,
	2020			2019
Revolver:
Gross availability	$	11,750		$	11,750
Outstanding draws		(1,402	)		-
Letters of credit		(1,750	)		(1,750	)
Landlord reserves		(161	)		(150	)
Availability on Revolver	$	8,437		$	9,850

As of March 31, 2020, interest on the credit facility is payable at our option as a (i) Eurodollar Loan, which bears interest at a per annum rate equal to the applicable 30-day London Interbank Offered Rate (“LIBOR”) plus an applicable margin ranging from 2.00% to 3.00% or (ii) CB Floating Rate (“CBFR”) Loan, which bears interest at a per annum rate equal to the greater of (a) the lender’s prime rate or (b) LIBOR plus 2.50%, in each case, plus a margin ranging from -1.00% to 0.25% based on our leverage ratio as defined in the Credit Agreement. The actual Eurodollar Loan rate at March 31, 2020 was 3.25% (LIBOR of 0.75% plus 2.50%). The actual CBFR Loan rate at March 31, 2020 was 2.94% (lender’s prime rate of 3.44% minus 0.50%). As of March 31, 2020, the Company was in compliance with all debt-related covenants under the Credit Agreement.

 Cash Flows:

Operating Cash Flow.  Net cash provided by operating activities for the three months ended March 31, 2020 was $0.6 million compared to $1.3 million for the three months ended March 31, 2019. This $0.7 million, or 56.1%, decrease was primarily attributable to an increase in accounts receivable totaling $1.1 million, an increase in inventory of $1.0 million and an increase in other assets of $0.2 million, which were partially offset by the positive cash flow effect of increases in accounts payable and other liabilities totaling $0.9 million and an increase in net loss adjusted for non-cash items of $0.7 million.

Investing Cash Flow. Net cash used in investing activities was $4.0 million for the three months ended March 31, 2020 compared to $2.8 million for the three months ended March 31, 2019. The increase in net cash used was primarily due to a $0.5 million increase in cash used to purchase medical equipment in support of our revenue growth, $0.5 million increase in cash used to purchase other assets and a $0.2 million decrease in proceeds from the sales of medical equipment.

Financing Cash Flow. Net cash provided by financing activities for the three months ended March 31, 2020 was $1.1 million compared to cash used of $0.9 million for the three months ended March 31, 2019. The net increase in net cash provided was primarily attributable to the cash proceeds received from our decision to utilize a portion of our 2019 Equipment Line and Revolver during the first quarter of 2020.

Critical Accounting Policies and Estimates

The unaudited condensed consolidated financial statements are prepared in conformity with GAAP, which require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. The critical accounting estimates that affect the unaudited condensed consolidated financial statements and the judgments and assumptions used are consistent with those described in the notes to the audited consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2019.

22

As of the date of the unaudited consolidated financial statements presented in this Form 10-Q, there have been no material financial impacts on our operations resulting from the COVID-19 pandemic. However, the future effects of this pandemic on economic and market conditions is uncertain and increases the subjectivity that will be involved in evaluating our estimates and assumptions underlying our critical accounting policies. Any events and changes in circumstances arising after March 31, 2020, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures and Changes in Internal Control over Financial Reporting

We maintain a set of disclosure controls and procedures designed to ensure that material information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that material information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures. Our CEO and CFO have evaluated these disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q and have determined that such disclosure controls and procedures were effective.

There have been no changes in our internal control over financial reporting during our most recent calendar quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

23

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

From time to time in the ordinary course of our business, we may be involved in legal proceedings, the outcomes of which may not be determinable. The results of litigation are inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. We are not able to estimate an aggregate amount or range of reasonably possible losses for those legal matters for which losses are not probable and estimable, primarily for the following reasons: (i) many of the relevant legal proceedings are in preliminary stages and until such proceedings develop further, there is often uncertainty regarding the relevant facts and circumstances at issue and potential liability; and (ii) many of these proceedings involve matters of which the outcomes are inherently difficult to predict. We have insurance policies covering potential losses where such coverage is cost effective.

We are not at this time involved in any legal proceedings that we believe could have a material effect on our business, financial condition, results of operations or cash flows.

Item 1A. Risk Factors

For information regarding factors that could affect our results of operations, financial condition and liquidity, refer to the section entitled “Risk Factors” in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2019. In addition to the risk factors disclosed therein, we are supplementing those identified in the Form 10-K with the following risk factor, as described below. For further information on our forward-looking statements see Part I, Item 2 of this Quarterly Report on Form 10-Q.

The effects of the COVID-19 pandemic could disrupt our operations and adversely affect our business, financial condition, results of operations and cash flows.

The widespread outbreak of COVID-19 has created significant volatility, uncertainty, and disruption in economic activity and financial markets globally. Although the outbreak of COVID-19 did not significantly affect our results of operations, there can be no assurance that COVID-19 will not have a material adverse effect on our future operational and financial performance. The extent to which COVID-19 could impact our operational and financial performance in future periods is currently uncertain and will depend on numerous evolving factors and future developments that we may not be able to accurately predict and to which we may not be able to respond.  Such factors and developments include, but are not limited to: the duration, severity and spread of the outbreak; actions taken by government authorities to contain and mitigate COVID-19 and the effectiveness of such actions; the effect on the U.S. and global economies and actions taken in response; the overall impact on the businesses of our customers, partners, vendors and suppliers; the health of and effect on our workforce; the future effects to our operational and financial results of the changes we have made to protect the safety and well-being of our employees and future operational disruptions or challenges we may face; increased cybersecurity and information security risk as a result of the transition of our employees to a remote work environment; and how quickly and to what extent normal economic and operating conditions may resume. Further, our management has been intensely focused on mitigating COVID-19, which has required and will continue to require, a large investment of time, attention and resources. Although we have yet to experience a significant disruption of our operations as a result of the COVID-19 pandemic, a prolonged outbreak could, among other things, strain our business continuity plans, create delays in our growth and strategic initiatives, reduce our sales and marketing activities, limit our access to financing on favorable terms, increase our exposure to potential impairment charges related to intangible assets, hinder our ability to support our clients and operate our business effectively, heighten the risk of disruption to our information and reporting systems and internal controls, including those over financial reporting and other risk management systems, or require us to incur substantial costs. We cannot predict the degree to which COVID-19 will ultimately impact our operations, however, the effects of the COVID-19 pandemic, alone or taken together, could adversely affect our future business, financial condition, results of operations and cash flows, and may also heighten other risks to which the Company is subject, including risks discussed in our most recent annual report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

24

Item 6.     Exhibits

Exhibits
3.1	Amended and Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on May 12, 2014)
3.2	Amended and Restated By-Laws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on July 9, 2018)
10.1	Independent Contractor Agreement, effective February 5, 2020, by and between the Company and Wesley W. Winnekins (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on February 7, 2020)
10.2	Separation Agreement, dated March 5, 2020, by and between the Company and Greg Schulte (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A (File No. 1-35020) filed on March 9, 2020)
10.3	Employment Agreement, effective March 11, 2020, by and between the Company and Barry G. Steele (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on March 12, 2020)
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE* *	XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith

25

SIGNATURES

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 thereunto duly authorized.

	INFUSYSTEM HOLDINGS, INC.
Date: May 15, 2020	/s/ Richard DiIorio
	Richard DiIorio
	Chief Executive Officer, President and Director
	(Principal Executive Officer)

Date: May 15, 2020	/s/ Barry Steele
	Barry Steele
	Chief Financial Officer
	(Principal Accounting and Financial Officer)

26

EX-31.1

Exhibit 31.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER

I, Richard DiIorio, certify that:

1. I have reviewed this quarterly report on Form 10-Q of InfuSystem Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 15, 2020	/s/ Richard DiIorio
	Richard DiIorio Chief Executive Officer, President and Director

EX-31.2

Exhibit 31.2

CERTIFICATION BY CHIEF FINANCIAL OFFICER

I, Barry Steele, certify that:

1. I have reviewed this quarterly report on Form 10-Q of InfuSystem Holdings, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2020	/s/ Barry Steele
	Barry Steele Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of InfuSystem Holdings, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The quarterly report on Form 10-Q for the quarter ended March 31, 2020 (the “Form 10-Q”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2020	/s/ Richard DiIorio
	Richard DiIorio Chief Executive Officer, President and Director

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of InfuSystem Holdings, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The quarterly report on Form 10-Q for the quarter ended March 31, 2020 (the “Form 10-Q”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2020	/s/ Barry Steele
	Barry Steele Chief Financial Officer

XML

Note 3 - Revenue Recognition - Disaggregated Revenue by Revenue Stream (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenues, Total	$ 21,553	$ 18,193
Customer Concentration Risk [Member] | Third-Party Payor Rental Revenue [Member]
Revenue	52.10%	48.10%
Customer Concentration Risk [Member] | Direct Payer Rentals [Member]
Revenue	31.80%	34.70%
Customer Concentration Risk [Member] | Revenue, Product and Service Benchmark [Member]
Revenue	16.10%	17.20%
Customer Concentration Risk [Member] | Revenue from Contract with Customer Benchmark [Member]
Revenue	100.00%	100.00%
Third-Party Payor Rental Revenue [Member]
Revenues, Total	$ 11,236	$ 8,747
Direct Payer Rentals [Member]
Revenues, Total	6,859	6,321
Product Sales [Member]
Revenues, Total	$ 3,458	$ 3,125

XML

Note 4 - Medical Equipment (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Medical Equipment [Table Text Block]

	March 31,			December 31,
	2020			2019
Medical Equipment for sale or rental	$	3,068		$	1,334
Medical Equipment for sale or rental - pump reserve		(28	)		(28	)
Medical Equipment for sale or rental - net		3,040			1,306
Medical Equipment in rental service		79,100			75,853
Medical Equipment in rental service - pump reserve		(746	)		(720	)
Accumulated depreciation		(43,548	)		(41,908	)
Medical Equipment in rental service - net		34,806			33,225
Total	$	37,846		$	34,531

XML

Note 10 - Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended
	March 31
Numerator:	2020			2019
Net loss (in thousands)	$	(418	)	$	(960	)
Denominator:
Weighted average common shares outstanding:
Basic		19,918,298			19,580,049
Dilutive effect of non-vested awards		-			-
Diluted		19,918,298			19,580,049
Net loss per share:
Basic and diluted	$	(0.02	)	$	(0.05	)

XML

Note 11 - Leases - Maturities of Lease Liabilities (Details) $ in Thousands	Mar. 31, 2020 USD ($)
2020	$ 1,094
2021	1,055
2022	991
2023	924
2024	947
Thereafter	3,166
Total undiscounted lease payments	8,177
Less: Imputed interest	(2,460)
Total lease liabilities	$ 5,717

XML

Note 7 - Debt - Summary of Company's Current and Long-term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current portion of long-term debt	$ 7,295	$ 8,082
Long-term debt	32,325	30,295
Total	39,620	38,377
Unamortized value of the debt issuance costs, current portion of long-term debt	(17)	(17)
Unamortized value of the debt issuance costs, long-term debt	(62)	(66)
Unamortized value of the debt issuance costs, Total	(79)	(83)
Financing Agreement [Member]
Current portion of long-term debt	670	652
Long-term debt	773	947
Total	1,443	1,599
Equipment Line [Member]
Current portion of long-term debt	1,600	1,600
Long-term debt	5,600	6,000
Total	7,200	7,600
The 2019 Equipment Line [Member]
Current portion of long-term debt	427	79
Long-term debt	3,847	1,495
Total	4,274	1,574
Revolving Credit Facility [Member]
Current portion of long-term debt
Long-term debt	1,402
Total	1,402
Term Loan [Member]
Current portion of long-term debt	4,615	5,768
Long-term debt	20,765	21,919
Total	$ 25,380	$ 27,687

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Net revenues	$ 21,553	$ 18,193
Cost of revenues	8,890	7,852
Gross profit	12,663	10,341
Selling, general and administrative expenses:
Provision for doubtful accounts	285	(98)
Amortization of intangibles	1,075	1,125
Selling and marketing	2,618	2,602
General and administrative	8,652	7,132
Total selling, general and administrative	12,630	10,761
Operating income (loss)	33	(420)
Other expense:
Interest expense	(403)	(460)
Other expense	(19)	(21)
Loss before income taxes	(389)	(901)
Provision for income taxes	(29)	(59)
Net loss	$ (418)	$ (960)
Net loss per share:
Basic and diluted (in dollars per share)	$ (0.02)	$ (0.05)
Weighted average shares outstanding:
Basic and diluted (in shares)	19,918,298	19,580,049

XML

Note 2 - Recent Accounting Pronouncements and Developments

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

2.

       Recent Accounting Pronouncements and Developments

In

June 2016,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update

No.

2016

-

13,

“Financial Instruments (Topic

326

) Credit Losses”. Topic

326

changes the impairment model for most financial assets and certain other instruments. Under the new standard, entities holding financial assets and net investment in leases that are

not

accounted for at fair value through net income are to be presented at the net amount expected to be collected. An allowance for credit losses will be a valuation account that will be deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. Topic

326

is effective as of

January 1, 2020,

although in

November 2019,

the FASB delayed the effective date until fiscal years beginning after

December 15, 2022

for SEC filers eligible to be smaller reporting companies under the SEC’s definition. The Company qualifies as a smaller reporting company under the SEC’s definition. Early adoption is permitted. The Company is currently evaluating the impact of Topic

326

on its consolidated balance sheets, statements of operations, statements of cash flows and related disclosures.

XML

Note 7 - Debt

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Debt Disclosure [Text Block]

7 . Debt

On

February 5, 2019,

the Company and its primary lender entered into the

fifth

amendment (the “Fifth Amendment”) to its Credit Agreement, entered into on

March 23, 2015 (

as amended, the “Credit Agreement”). The Fifth Amendment amended the Credit Agreement to, among other things:

● increase our borrowing capacity under the equipment line to $8.0 million, which allows for capital expenditure financing to the Company for the sole purpose of purchasing medical equipment (the “Equipment Line”);

● revise the definition of earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure, to include additional add-back adjustments for the years ended or ending December 31, 2018 and 2019;

● revise the definition of fixed charge coverage ratio for the year ending December 31, 2019 to include an unfinanced portion of capital expenditures of up to $7.0 million for the year ending December 31, 2019;

● revise the Credit Agreement’s maximum permitted indebtedness to finance the acquisition, construction or improvement of any fixed or capital assets; and

● revise the maximum leverage ratio for each of the quarters during December 31, 2018 and December 31, 2019.

On

April 15, 2019,

the Company sold for

$2.0

million and immediately leased back certain medical equipment in rental service to a

third

party specializing in such transactions. The leaseback term is

36

months. Because the arrangement contains a purchase option that the Company is reasonably certain to exercise, this transaction did

not

qualify for the sale-leaseback accounting under ASC

842.

The medical equipment remains recorded on the accompanying condensed consolidated balance sheet and the proceeds received have been classified as an Other Financing liability, which is being paid off monthly over the term of the lease. The balance of Other Financing as of

March 31, 2020

was

$1.4

million.

On

November 7, 2019,

the Company and its primary lender entered into the

sixth

amendment (the “Sixth Amendment”) to its Credit Agreement. The Sixth Amendment amended the Credit Agreement to, among other things:

● provide for a 2019 capital expenditure loan (the “2019 Equipment Line”) commitment of $10.0 million (in addition to the existing Equipment Line of $8.0 million), which may be drawn upon until the earlier of the full commitment being advanced or December 31, 2020, to be used solely to purchase eligible equipment to be used in the Company’s business and in amounts not to exceed 90.0% of the invoiced hard costs of such acquired equipment;

● increase the commitment for the revolving credit facility (the “Revolver”) under the Credit Agreement to $11.8 million;

● revise the definition of EBITDA to include the following additional or revised add-back adjustments: (i) one -time charges in an aggregate amount not to exceed $0.3 million and incurred prior to December 31, 2019 relating to the Company’s integration of business previously served by another major provider of electronic oncology pumps; (ii) one -time charges in an aggregate amount not to exceed $0.3 million and incurred prior to December 31, 2019 relating to the Company’s facility move; (iii) lease buyout expenses not to exceed: ( x ) $0.1 million incurred on or prior to December 31, 2018; ( y) $0.2 million incurred after December 31, 2018 but on or prior to March 31, 2019; and (z) $0.2 million incurred after September 30, 2019 but on or prior to December 31, 2020; and (iv) any other non-cash charges for such period (but excluding certain non-cash charges);

● revise the definition of Fixed Charge Coverage Ratio to mean, for any period, the ratio of (a) EBITDA minus Maintenance Capital Expenditures (defined to mean, for any period, 50.0% of depreciation expense) to (b) Fixed Charges, all calculated for the Company and its subsidiaries on a consolidated basis in accordance with GAAP;

● revise the definitions of Revolving Credit Maturity Date and Term Maturity Date to mean the date five years after the Sixth Amendment Effective Date and add a definition for the 2019 Equipment Line Maturity Date to provide for the same maturity date;

● reflect the refinancing of the Term A Loans, Term B Loans and Term C Loan as a single Term Loan on the Sixth Amendment Effective Date and, commencing on the last Business Day of December 2019, the consecutive quarterly principal installment payments will change to approximately $1.2 million; and

● revise Section 5.01 (e) of the Credit Agreement, which governs the Company’s obligation to deliver financial statements to the lender, to require the Company to provide financial statements ( x ) as soon as possible but in any event within 30 days of the end of each fiscal quarter, or within 30 days of the end of each calendar month if any revolving loans were outstanding in month, (y) in connection with, and prior to, requesting any letter of credit and (z) at such other times as may be requested by the lender.

These debt amendments were accounted for as debt modifications. As of

March 31, 2020,

the Company was in compliance with all debt-related covenants under the Credit Agreement.

As of

March 31, 2020,

the Company’s term loan, Equipment Line and

2019

Equipment Line under the Credit Agreement had balances of

$25.4

million,

$7.2

million and

$4.3

million, respectively. The availability under the Revolver is subject to a borrowing base, which is calculated as the sum of the Company’s eligible accounts receivable and eligible inventory as defined by the Credit Agreement. As of

March 31, 2020,

the borrowing base was approximately

$16.6

million, which exceeded the gross available borrowing amount of

$11.8

million. The following table illustrates the net availability under the Revolver as of the balance sheet date (in thousands):

	March 31,			December 31,
	2020			2019
Revolver:
Gross availability	$	11,750		$	11,750
Outstanding draws		(1,402	)		-
Letters of credit		(1,750	)		(1,750	)
Landlord reserves		(161	)		(150	)
Availability on Revolver	$	8,437		$	9,850

The Company had future maturities of loans and other financing as of

March 31, 2020

as follows (in thousands):

	2020			2021			2022			2023			2024 and thereafter			Total
Term Loan	$	3,461		$	4,615		$	4,615		$	4,615		$	8,074		$	25,380
Equipment Line		1,200			1,600			1,600			1,600			1,200			7,200
2019 Equipment Line		214			855			855			855			1,495			4,274
Unamortized value of the debt issuance costs		(13	)		(17	)		(17	)		(17	)		(15	)		(79	)
Other financing		496			725			222			-			-			1,443
Revolver		-			-			-			-			1,402			1,402
Total	$	5,358		$	7,778		$	7,275		$	7,053		$	12,156		$	39,620

The following is a breakdown of the Company’s current and long-term debt (in thousands):

March 31, 2020										December 31, 2019
	Current Portion			Long-Term Portion			Total				Current Portion			Long-Term Portion			Total
Term Loan	$	4,615		$	20,765		$	25,380		Term Loan	$	5,768		$	21,919		$	27,687
Equipment Line		1,600			5,600			7,200		Equipment Line		1,600			6,000			7,600
2019 Equipment Line		427			3,847			4,274		2019 Equipment Line		79			1,495			1,574
Unamortized value of debt issuance costs		(17	)		(62	)		(79	)	Unamortized value of debt issuance costs		(17	)		(66	)		(83	)
Other financing		670			773			1,443		Other financing		652			947			1,599
Revolver		-			1,402			1,402		Revolver		-			-			-
Total	$	7,295		$	32,325		$	39,620		Total	$	8,082		$	30,295		$	38,377

As of

March 31, 2020,

interest on the credit facility is payable at our option as a (i) Eurodollar Loan, which bears interest at a per annum rate equal to the applicable

30

-day London Interbank Offered Rate (“LIBOR”) plus an applicable margin ranging from

2.00%

to

3.00%

or (ii) CB Floating Rate (“CBFR”) Loan, which bears interest at a per annum rate equal to the greater of (a) the lender’s prime rate or (b) LIBOR plus

2.50%,

in each case, plus a margin ranging from -

1.00%

to

0.25%

based on our leverage ratio as defined in the Credit Agreement. The actual Eurodollar Loan rate at

March 31, 2020

was

3.25%

(LIBOR of

0.75%

plus

2.50%

). The actual CBFR Loan rate at

March 31, 2020

was

2.94%

(lender’s prime rate of

3.44%

minus

0.50%

).

XML

Note 11 - Leases

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

1 1 . Leases

The Company’s operating leases are primarily for office space, service facility centers and equipment under operating lease arrangements that expire at various dates over the next

ten

years. The Company’s leases do

not

contain any restrictive covenants. The Company’s office leases generally contain renewal options for periods ranging from

one

to

five

years. Because the Company is

not

reasonably certain to exercise these renewal options, the options are

not

considered in determining the lease term, and payments associated with the option years are excluded from lease payments. The Company’s office leases do

not

contain any material residual value guarantees. The Company’s equipment leases generally do

not

contain renewal options.

Payments due under the Company’s operating leases include fixed payments as well as variable payments. For the Company’s office leases, variable payments include amounts for the Company’s proportionate share of operating expenses, utilities, property taxes, insurance, common area maintenance and other facility-related expenses. For the Company’s equipment leases, variable payments

may

consist of sales taxes, property taxes and other fees.

The components of lease costs consisted of the following (in thousands):

	Three Months Ended
	March 31
	2020		2019
Operating lease cost	$	424	$	387
Variable lease cost		112		75
Total lease cost	$	536	$	462

Supplemental cash flow information and non-cash activity related to the Company’s leases are as follows (in thousands):

	Three Months Ended
	March 31
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities and ROU assets:
Operating cash flow from operating leases	$	451	$	360
ROU assets obtained in exchange for lease obligations:
Operating leases		118		112

Weighted average remaining lease terms and discount rates for the Company’s leases are as follows:

	As of March 31
	2020		2019
	Years		Years
Weighted average remaining lease term:
Operating leases		7.3		4.0

	Rate			Rate
Weighted average discount rate:
Operating leases		7.7	%		6.6	%

Future maturities of lease liabilities as of

March 31, 2020

are as follows (in thousands):

	Operating Leases
2020	$	1,094
2021		1,055
2022		991
2023		924
2024		947
Thereafter		3,166
Total undiscounted lease payments		8,177
Less: Imputed interest		(2,460	)
Total lease liabilities	$	5,717

XML

Note 6 - Intangible Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Amortization of Intangible Assets, Total	$ 1,075	$ 1,125

XML

Note 4 - Medical Equipment (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Depreciation Expense Related to Medical Equipment	$ 2.1	$ 1.7

XML

Note 7 - Debt - Summary of Revolver Based Upon Borrowers' Eligible Accounts Receivable and Inventory (Details) - Revolving Credit Facility [Member] - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Gross availability	$ 11,750	$ 11,750
Outstanding draws	(1,402)
Letters of credit	(1,750)	(1,750)
Landlord reserves	(161)	(150)
Availability on Revolver	$ 8,437	$ 9,850

XML

Note 3 - Revenue Recognition

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

3 . Revenue Recognition

The following table presents the Company’s disaggregated revenue by offering type (in thousands):

	Three Months Ended
	March 31
	2020		2019
Third-Party Payer Rentals	$	11,236	$	8,747
Direct Payer Rentals		6,859		6,321
Product Sales		3,458		3,125
Total - Net revenues	$	21,553	$	18,193

Third-Party Payer Rentals are entirely attributed to revenues of the Integrated Therapy Services (“ITS”) segment. Product Sales are entirely attributed to revenues of the Durable Medical Equipment Services (“DME Services”) segment. For the

three

months ended

March 31, 2020,

$2.9

million and

$4.0

million of Direct Payer Rentals were attributed to the ITS and DME Services segments, respectively. For the

three

months ended

March 31, 2019,

$2.6

million and

$3.7

million were attributed to the ITS and DME Services segments, respectively.

The following table presents the Company’s disaggregated revenue by offering type as a percentage of total net revenues:

	Three Months Ended
	March 31
	2020			2019
Third-Party Payer Rentals		52.1	%		48.1	%
Direct Payer Rentals		31.8	%		34.7	%
Product Sales		16.1	%		17.2	%
Total - Net revenues		100.0	%		100.0	%

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 07, 2020
Document Information [Line Items]
Entity Registrant Name	InfuSystem Holdings, Inc
Entity Central Index Key	0001337013
Trading Symbol	infu
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		20,069,522
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false
Title of 12(b) Security	Common Stock, par value $0.0001 per share

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Total
Balances (in shares) at Dec. 31, 2018	23,096			(3,518)
Balances at Dec. 31, 2018	$ 2	$ 83,167	$ (62,728)		$ 20,441
Stock-based shares issued upon vesting - gross (in shares)	151
Stock-based shares issued upon vesting - gross
Stock-based compensation expense		246			246
Employee stock purchase plan (in shares)	19
Employee stock purchase plan		53			53
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation (in shares)	(45)
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation		(37)			(37)
Net income (loss)			(960)		(960)
Net loss			(960)		(960)
Balances (in shares) at Mar. 31, 2019	23,221			(3,518)
Balances at Mar. 31, 2019	$ 2	83,429	(63,688)		19,743
Balances (in shares) at Dec. 31, 2019	23,401			(3,518)
Balances at Dec. 31, 2019	$ 2	83,699	(61,367)		22,334
Stock-based shares issued upon vesting - gross (in shares)	152
Stock-based shares issued upon vesting - gross
Stock-based compensation expense		206			206
Employee stock purchase plan (in shares)	14
Employee stock purchase plan		74			74
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation (in shares)	(52)
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation		(426)			(426)
Net income (loss)			(418)		(418)
Common stock - issued (in shares)	28
Common stock - issued		250			250
Net loss			(418)		(418)
Balances (in shares) at Mar. 31, 2020	23,543			(3,518)
Balances at Mar. 31, 2020	$ 2	$ 83,803	$ (61,785)		$ 22,020

XML

Note 6 - Intangible Assets

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

6

.       

Intangible Assets

The carrying amount and accumulated amortization of intangible assets consisted of the following (in thousands):

	March 31, 2020							December 31, 2019
	Gross Assets		Accumulated Amortization			Net		Gross Assets		Accumulated Amortization			Net
Nonamortizable intangible assets:
Trade names	$	2,000	$	-		$	2,000	$	2,000	$	-		$	2,000
Amortizable intangible assets:
Trade names		23		(23	)		-		23		(23	)		-
Physician and customer relationships		36,534		(27,143	)		9,391		36,534		(26,550	)		9,984
Software		11,230		(8,233	)		2,997		11,230		(7,751	)		3,479
Total nonamortizable and amortizable intangible assets	$	49,787	$	(35,399	)	$	14,388	$	49,787	$	(34,324	)	$	15,463

Amortization expense for both the

three

months ended

March 31, 2020

and

2019

was

$1.1

million. Expected annual amortization expense for intangible assets recorded as of

March 31, 2020

is as follows (in thousands):

	4/1-12/31/2020		2021		2022		2023		2024		2025 and thereafter		Total
Amortization expense	$	3,210	$	3,930	$	2,051	$	548	$	548	$	2,101	$	12,388

XML

Note 10 - Loss Per Share

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Earnings Per Share [Text Block]

10 . Loss Per Share

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share assumes the issuance of potentially dilutive shares of common stock during the period. The following table reconciles the numerators and denominators of the basic and diluted loss per share computations:

	Three Months Ended
	March 31
Numerator:	2020			2019
Net loss (in thousands)	$	(418	)	$	(960	)
Denominator:
Weighted average common shares outstanding:
Basic		19,918,298			19,580,049
Dilutive effect of non-vested awards		-			-
Diluted		19,918,298			19,580,049
Net loss per share:
Basic and diluted	$	(0.02	)	$	(0.05	)

For both the

three

months ended

March 31, 2020

and

2019,

all outstanding options and restricted stock units were anti-dilutive due to the Company’s net losses for the periods and therefore

not

included in the calculations.

XML

Note 7 - Debt - Summary of Future Maturities of Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
2020	$ 5,358
2021	7,778
2022	7,275
2023	7,053
2024 and thereafter	12,156
Long-term Debt, Total	39,620	$ 38,377
Unamortized value of the debt issuance costs, 2020	(13)
Unamortized value of the debt issuance costs, 2021	(17)
Unamortized value of the debt issuance costs, 2022	(17)
Unamortized value of the debt issuance costs, 2023	(17)
Unamortized value of the debt issuance costs, 2024 and thereafter	(15)
Unamortized value of the debt issuance costs, Total	(79)	(83)
Financing Agreement [Member]
2020	496
2021	725
2022	222
2023
2024 and thereafter
Long-term Debt, Total	1,443	1,599
Equipment Line [Member]
2020	1,200
2021	1,600
2022	1,600
2023	1,600
2024 and thereafter	1,200
Long-term Debt, Total	7,200	7,600
The 2019 Equipment Line [Member]
2020	214
2021	855
2022	855
2023	855
2024 and thereafter	1,495
Long-term Debt, Total	4,274	1,574
Revolving Credit Facility [Member]
2020
2021
2022
2023
2024 and thereafter	1,402
Long-term Debt, Total	1,402
Term Loan [Member]
2020	3,461
2021	4,615
2022	4,615
2023	4,615
2024 and thereafter	8,074
Long-term Debt, Total	$ 25,380	$ 27,687

XML

Note 6 - Intangible Assets - Summary of Carrying Amount and Accumulated Amortization of Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Amortizable intangible assets, accumulated amortization	$ (35,399)	$ (34,324)
Amortizable intangible assets, net	12,388
Total nonamortizable and amortizable intangible assets, gross assets	49,787	49,787
Total nonamortizable and amortizable intangible assets, net	14,388	15,463
Trade Names [Member]
Amortizable intangible assets, gross assets	23	23
Amortizable intangible assets, accumulated amortization	(23)	(23)
Amortizable intangible assets, net
Physician and Customer Relationships [Member]
Amortizable intangible assets, gross assets	36,534	36,534
Amortizable intangible assets, accumulated amortization	(27,143)	(26,550)
Amortizable intangible assets, net	9,391	9,984
Computer Software, Intangible Asset [Member]
Amortizable intangible assets, gross assets	11,230	11,230
Amortizable intangible assets, accumulated amortization	(8,233)	(7,751)
Amortizable intangible assets, net	2,997	3,479
Trade Names 1 [Member]
Nonamortizable intangible assets	$ 2,000	$ 2,000

XML

Note 4 - Medical Equipment - Summary of Medical Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Medical Equipment for sale or rental	$ 3,068	$ 1,334
Medical Equipment for sale or rental - pump reserve	(28)	(28)
Medical Equipment for sale or rental - net	3,040	1,306
Medical Equipment in rental service	79,100	75,853
Medical Equipment in rental service - pump reserve	(746)	(720)
Accumulated depreciation	(43,548)	(41,908)
Medical Equipment in rental service - net	34,806	33,225
Total	$ 37,846	$ 34,531

XML

Note 3 - Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended
	March 31
	2020		2019
Third-Party Payer Rentals	$	11,236	$	8,747
Direct Payer Rentals		6,859		6,321
Product Sales		3,458		3,125
Total - Net revenues	$	21,553	$	18,193

	Three Months Ended
	March 31
	2020			2019
Third-Party Payer Rentals		52.1	%		48.1	%
Direct Payer Rentals		31.8	%		34.7	%
Product Sales		16.1	%		17.2	%
Total - Net revenues		100.0	%		100.0	%

XML

Note 7 - Debt (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Line of Credit Facilities [Table Text Block]

	March 31,			December 31,
	2020			2019
Revolver:
Gross availability	$	11,750		$	11,750
Outstanding draws		(1,402	)		-
Letters of credit		(1,750	)		(1,750	)
Landlord reserves		(161	)		(150	)
Availability on Revolver	$	8,437		$	9,850

Schedule of Maturities of Long-term Debt [Table Text Block]

	2020			2021			2022			2023			2024 and thereafter			Total
Term Loan	$	3,461		$	4,615		$	4,615		$	4,615		$	8,074		$	25,380
Equipment Line		1,200			1,600			1,600			1,600			1,200			7,200
2019 Equipment Line		214			855			855			855			1,495			4,274
Unamortized value of the debt issuance costs		(13	)		(17	)		(17	)		(17	)		(15	)		(79	)
Other financing		496			725			222			-			-			1,443
Revolver		-			-			-			-			1,402			1,402
Total	$	5,358		$	7,778		$	7,275		$	7,053		$	12,156		$	39,620

Schedule of Debt [Table Text Block]

March 31, 2020										December 31, 2019
	Current Portion			Long-Term Portion			Total				Current Portion			Long-Term Portion			Total
Term Loan	$	4,615		$	20,765		$	25,380		Term Loan	$	5,768		$	21,919		$	27,687
Equipment Line		1,600			5,600			7,200		Equipment Line		1,600			6,000			7,600
2019 Equipment Line		427			3,847			4,274		2019 Equipment Line		79			1,495			1,574
Unamortized value of debt issuance costs		(17	)		(62	)		(79	)	Unamortized value of debt issuance costs		(17	)		(66	)		(83	)
Other financing		670			773			1,443		Other financing		652			947			1,599
Revolver		-			1,402			1,402		Revolver		-			-			-
Total	$	7,295		$	32,325		$	39,620		Total	$	8,082		$	30,295		$	38,377

XML

Note 3 - Revenue Recognition (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenues, Total	$ 21,553	$ 18,193
Direct Payer Rentals [Member]
Revenues, Total	6,859	6,321
ITS Segment [Member] | Direct Payer Rentals [Member]
Revenues, Total	2,900	2,600
DME Services Segment [Member] | Direct Payer Rentals [Member]
Revenues, Total	$ 4,000	$ 3,700

XML

Note 12 - Business Segment Information (Details Textual)	3 Months Ended	9 Months Ended
	Mar. 31, 2020	Sep. 30, 2019
Number of Reportable Segments	2	1

XML

Note 8 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Tax Expense (Benefit), Total	$ 29	$ 59

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	23,543,414	23,400,625
Common stock, shares outstanding (in shares)	20,024,925	19,882,136

XML

Note 1 - Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Basis of Presentation and Significant Accounting Policies [Text Block]

1. Basis of Presentation , Nature of Operations and Summary of Significant Accounting Policies

The terms “InfuSystem”, the “Company”, “we”, “our” and “us” are used herein to refer to InfuSystem Holdings, Inc. and its subsidiaries. InfuSystem is a leading provider of infusion pumps and related products and services for patients in the home, oncology clinics, ambulatory surgery centers, and other sites of care. The Company provides products and services to hospitals, oncology practices and facilities and other alternative site health care providers. Headquartered in Rochester Hills, Michigan, the Company delivers local, field-based customer support, and also operates pump service and repair Centers of Excellence in Michigan, Kansas, California, Massachusetts and Ontario, Canada.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the unaudited condensed consolidated financial statements do

not

include all of the information and notes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The accompanying unaudited condensed consolidated financial statements include all adjustments, composed of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position and cash flows. The operating results for the interim periods are

not

necessarily indicative of results that

may

be expected for any other interim period or for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form

10

-K for the year ended

December 31, 2019

as filed with the SEC.

The unaudited condensed consolidated financial statements are prepared in conformity with GAAP, which requires the use of estimates, judgments and assumptions that affect the amounts of assets and liabilities at the reporting date and the amounts of revenue and expenses in the periods presented. The Company believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. In particular, the coronavirus (COVID-

19

) pandemic and the resulting adverse impacts to global economic conditions, as well as potential adverse impacts to our operations,

may

impact future estimates including, but

not

limited to: revenue recognition; leases; accounts receivable and allowance for doubtful accounts; income taxes; and long-lived asset valuations.

Certain prior period reclassifications were made to conform with the current period presentation. These reclassifications had

no

effect on reported income (loss), overall cash flows, total assets, total liabilities or stockholders’ equity as previously reported.

XML

Note 7 - Debt (Details Textual) - USD ($) $ in Thousands			3 Months Ended	12 Months Ended
	Nov. 07, 2019	Apr. 15, 2019	Mar. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Mar. 31, 2019	Feb. 05, 2019	Dec. 31, 2018
Long-term Debt, Total			$ 39,620	$ 38,377
Term Loan [Member]
Long-term Debt, Total			25,380	27,687
Equipment Line [Member]
Long-term Debt, Total			7,200	7,600
Revolving Credit Facility [Member]
Line of Credit Facility, Current Borrowing Capacity			11,750	11,750
Long-term Debt, Total			1,402
The 2019 Equipment Line [Member]
Long-term Debt, Total			4,274	1,574
Credit Facility [Member] | Term Loan [Member]
Long-term Debt, Total			$ 25,400
Credit Facility [Member] | Eurodollar Loan [Member]
Debt Instrument, Interest Rate, Effective Percentage			3.25%
LIBOR Rate			0.75%
Credit Facility [Member] | Eurodollar Loan [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate			2.50%
Credit Facility [Member] | CB Floating Rate Loan [Member]
Debt Instrument, Interest Rate, Effective Percentage			2.94%
Credit Facility [Member] | CB Floating Rate Loan [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate, Before Margin Rate			2.50%
Credit Facility [Member] | CB Floating Rate Loan [Member] | CB Floating Rate [Member]
Debt Instrument, Basis Spread on Variable Rate			(0.50%)
Lender Prime Rate			3.44%
Credit Facility [Member] | Maximum [Member] | Eurodollar Loan [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate			3.00%
Credit Facility [Member] | Maximum [Member] | CB Floating Rate Loan [Member] | Greater of Prime Rate or LIBOR Plus 2.5% [Member]
Debt Instrument, Basis Spread on Variable Rate			0.25%
Credit Facility [Member] | Minimum [Member] | Eurodollar Loan [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate			2.00%
Credit Facility [Member] | Minimum [Member] | CB Floating Rate Loan [Member] | Greater of Prime Rate or LIBOR Plus 2.5% [Member]
Debt Instrument, Basis Spread on Variable Rate			(1.00%)
Credit Facility [Member] | Equipment Line [Member]
Line of Credit Facility, Maximum Borrowing Capacity							$ 8,000
Line of Credit Facility Additional Maximum Borrowing Capacity	$ 10,000
Line of Credit Facility, Invoiced Hard Cost Maximum Percent	90.00%
Line of Credit Facility, Maximum One-time Charges	$ 300
Line of Credit Facility, Maximum Lease Buyout Expenses						$ 200		$ 100
Debt Instrument, Periodic Payment, Principal	1,200
Long-term Debt, Total			$ 7,200
Credit Facility [Member] | Equipment Line [Member] | Forecast [Member]
Line of Credit Facility, Maximum Lease Buyout Expenses					$ 200
Credit Facility [Member] | Equipment Line [Member] | Maximum [Member]
Capital Expenditures Incurred but Not yet Paid				7,000
Credit Facility [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 11,800		11,800
Line of Credit Facility, Borrowing Base			16,600
Credit Facility [Member] | The 2019 Equipment Line [Member]
Long-term Debt, Total			4,300
Financing Agreement [Member]
Long-term Debt, Total			1,443	$ 1,599
Financing Agreement [Member] | Medical Equipment [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 2,000
Debt Instrument, Term (Month)		3 years
Line of Credit Facility, Current Borrowing Capacity			$ 1,400

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Note 5 - Property and Equipment - Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Gross Assets	$ 7,225	$ 6,685
Accumulated Depreciation	(2,843)	(2,648)
Total	4,382	4,037
Furniture and Fixtures [Member]
Gross Assets	3,669	3,202
Accumulated Depreciation	(2,037)	(1,928)
Total	1,632	1,274
Automobiles [Member]
Gross Assets	117	117
Accumulated Depreciation	(93)	(90)
Total	24	27
Leasehold Improvements [Member]
Gross Assets	3,439	3,366
Accumulated Depreciation	(713)	(630)
Total	$ 2,726	$ 2,736

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Note 12 - Business Segment Information

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

12. Business Segment Information

During the

fourth

quarter of

2019,

the Company reorganized its segment reporting from

one

reportable segment to

two

reportable segments, Integrated Therapy Services (“ITS”) and Durable Medical Equipment Services (“DME Services”), due to changes in the Company’s internal reporting and the information evaluated by its chief operating decision-maker. The Company’s reportable segments are organized based on service platforms, with the ITS segment reflecting higher margin rental revenues that generally include payments made by

third

-party and direct payers and the DME Services segment reflecting lower margin product sales and direct payer rental revenues. Resources are allocated and performance is assessed for these segments by the Company’s Chief Executive Officer, whom the Company has determined to be its chief operating decision-maker. The Company believes that reporting performance at the gross profit level is the best indicator of segment performance.

The financial information summarized below is presented by reportable segment for the quarters ended

March 31, 2020

and

2019:

2020
					Corporate/
(in thousands)	ITS		DME Services		Eliminations			Total
Net revenues - external	$	14,126	$	7,427	$	-		$	21,553
Net revenues - internal		-		1,238		(1,238	)		-
Total net revenues		14,126		8,665		(1,238	)		21,553
Gross profit		9,106		3,557		-			12,663
Selling , general and administrative expenses						12,630			12,630
Interest expense						(403	)		(403	)
Other expense						(19	)		(19	)
Provision for income taxes						(29	)		(29	)
Net loss								$	(418	)
Total Assets	$	54,762	$	25,916	$	2,000		$	82,678
Purchases of medical equipment	$	2,357	$	1,650	$	-		$	4,007
Depreciation and amortization of intangible assets	$	2,654	$	748	$	-		$	3,402

2019
					Corporate/
(in thousands)	ITS		DME Services		Eliminations			Total
Net revenues - external	$	11,306	$	6,887	$	-		$	18,193
Net revenues - internal		-		949		(949	)		-
Total net revenues		11,306		7,836		(949	)		18,193
Gross profit		6,927		3,414		-			10,341
Selling, general and administrative expenses						10,761			10,761
Interest expense						(460	)		(460	)
Other expense						(21	)		(21	)
Provision for income taxes						(59	)		(59	)
Net loss								$	(960	)
Total Assets	$	43,953	$	21,292	$	2,000		$	67,245
Purchases of medical equipment	$	2,531	$	964	$	-		$	3,495
Depreciation and amortization of intangible assets	$	2,195	$	710	$	-		$	2,905

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Note 4 - Medical Equipment

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Medical Equipment and Property Disclosure [Text Block]

4 . Medical Equipment

Medical equipment consisted of the following (in thousands):

	March 31,			December 31,
	2020			2019
Medical Equipment for sale or rental	$	3,068		$	1,334
Medical Equipment for sale or rental - pump reserve		(28	)		(28	)
Medical Equipment for sale or rental - net		3,040			1,306
Medical Equipment in rental service		79,100			75,853
Medical Equipment in rental service - pump reserve		(746	)		(720	)
Accumulated depreciation		(43,548	)		(41,908	)
Medical Equipment in rental service - net		34,806			33,225
Total	$	37,846		$	34,531

Depreciation expense for medical equipment for the

three

months ended

March 31, 2020

was

$2.1

million, compared to

$1.7

million for the same prior year period, which were recorded in “cost of revenues” for each period.

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Note 8 - Income Taxes

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

8. Income Taxes

During the

three

months ended

March 31, 2020,

the Company recorded expense provision for income taxes of less than

$0.1

million. The income tax provision relates principally to the Company’s state and local taxes and foreign operations in Canada. During the

three

months ended

March 31, 2019,

the Company recorded expense provision for income taxes of

$0.1

million.

The Company’s realization of its deferred tax assets is dependent upon many factors, including, but 

not

 limited to, the Company’s ability to generate sufficient taxable income. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. Cumulative losses in recent years and

no

assurance of future taxable income are the basis for the Company’s assessment that the Company will 

not

 recognize the benefits of its federal and state deferred tax assets. Accordingly, the Company had a full valuation allowance for all deferred tax assets at

March 31, 2020

and

December 31, 2019.

On

March 27, 2020,

the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-

19

pandemic. The CARES Act, along with earlier issued IRS guidance, includes provisions related to refundable payroll tax credits, deferral of employer side social security payments, net operating loss carryback period, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Due to the recent enactment of the CARES Act, we are currently assessing the potential effect of the CARES Act and the ongoing government guidance related to COVID-

19

on our financial position and results of operations, including effects from the qualified investment property deduction and other provisions of the CARES Act.

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Note 5 - Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Property, Plant and Equipment [Table Text Block]

	March 31, 2020							December 31, 2019
	Gross Assets		Accumulated Depreciation			Total		Gross Assets		Accumulated Depreciation			Total
Furniture, fixtures, and equipment	$	3,669	$	(2,037	)	$	1,632	$	3,202	$	(1,928	)	$	1,274
Automobiles		117		(93	)		24		117		(90	)		27
Leasehold improvements		3,439		(713	)		2,726		3,366		(630	)		2,736
Total	$	7,225	$	(2,843	)	$	4,382	$	6,685	$	(2,648	)	$	4,037

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Note 11 - Leases (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Lease, Cost [Table Text Block]

	Three Months Ended
	March 31
	2020		2019
Operating lease cost	$	424	$	387
Variable lease cost		112		75
Total lease cost	$	536	$	462

	Three Months Ended
	March 31
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities and ROU assets:
Operating cash flow from operating leases	$	451	$	360
ROU assets obtained in exchange for lease obligations:
Operating leases		118		112

	As of March 31
	2020		2019
	Years		Years
Weighted average remaining lease term:
Operating leases		7.3		4.0

	Rate			Rate
Weighted average discount rate:
Operating leases		7.7	%		6.6	%

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

	Operating Leases
2020	$	1,094
2021		1,055
2022		991
2023		924
2024		947
Thereafter		3,166
Total undiscounted lease payments		8,177
Less: Imputed interest		(2,460	)
Total lease liabilities	$	5,717

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Note 11 - Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating lease cost	$ 424	$ 387
Variable lease cost	112	75
Total lease cost	536	462
Operating cash flow from operating leases	451	360
ROU assets obtained in exchange for lease obligations: Operating leases	$ 118	$ 112
Weighted average remaining lease term: Operating leases (Year)	7 years 109 days	4 years
Operating leases	7.70%	6.60%

XML

Note 6 - Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Carrying Amount and Accumulated Amortization of Identifiable Intangible Assets [Table Text Block]

	March 31, 2020							December 31, 2019
	Gross Assets		Accumulated Amortization			Net		Gross Assets		Accumulated Amortization			Net
Nonamortizable intangible assets:
Trade names	$	2,000	$	-		$	2,000	$	2,000	$	-		$	2,000
Amortizable intangible assets:
Trade names		23		(23	)		-		23		(23	)		-
Physician and customer relationships		36,534		(27,143	)		9,391		36,534		(26,550	)		9,984
Software		11,230		(8,233	)		2,997		11,230		(7,751	)		3,479
Total nonamortizable and amortizable intangible assets	$	49,787	$	(35,399	)	$	14,388	$	49,787	$	(34,324	)	$	15,463

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

	4/1-12/31/2020		2021		2022		2023		2024		2025 and thereafter		Total
Amortization expense	$	3,210	$	3,930	$	2,051	$	548	$	548	$	2,101	$	12,388

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Note 12 - Business Segment Information (Tables)

3 Months Ended

Mar. 31, 2020

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

2020
					Corporate/
(in thousands)	ITS		DME Services		Eliminations			Total
Net revenues - external	$	14,126	$	7,427	$	-		$	21,553
Net revenues - internal		-		1,238		(1,238	)		-
Total net revenues		14,126		8,665		(1,238	)		21,553
Gross profit		9,106		3,557		-			12,663
Selling , general and administrative expenses						12,630			12,630
Interest expense						(403	)		(403	)
Other expense						(19	)		(19	)
Provision for income taxes						(29	)		(29	)
Net loss								$	(418	)
Total Assets	$	54,762	$	25,916	$	2,000		$	82,678
Purchases of medical equipment	$	2,357	$	1,650	$	-		$	4,007
Depreciation and amortization of intangible assets	$	2,654	$	748	$	-		$	3,402

2019
					Corporate/
(in thousands)	ITS		DME Services		Eliminations			Total
Net revenues - external	$	11,306	$	6,887	$	-		$	18,193
Net revenues - internal		-		949		(949	)		-
Total net revenues		11,306		7,836		(949	)		18,193
Gross profit		6,927		3,414		-			10,341
Selling, general and administrative expenses						10,761			10,761
Interest expense						(460	)		(460	)
Other expense						(21	)		(21	)
Provision for income taxes						(59	)		(59	)
Net loss								$	(960	)
Total Assets	$	43,953	$	21,292	$	2,000		$	67,245
Purchases of medical equipment	$	2,531	$	964	$	-		$	3,495
Depreciation and amortization of intangible assets	$	2,195	$	710	$	-		$	2,905

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Note 12 - Business Segment Information - Summary of Financial Information By Reportable Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Net revenues - external	$ 21,553	$ 18,193
Net revenues - internal
Total net revenues	21,553	18,193
Gross profit	12,663	10,341
Selling , general and administrative expenses	12,630	10,761
Interest expense	(403)	(460)
Other expense	(19)	(21)
Provision for income taxes	(29)	(59)
Net loss	(418)	(960)
Total Assets	82,678	67,245	$ 79,224
Purchases of medical equipment	4,007	3,495
Depreciation and amortization of intangible assets	3,402	2,905
Corporate and Eliminations [Member]
Net revenues - external
Net revenues - internal	(1,238)	(949)
Total net revenues	(1,238)	(949)
Gross profit
Selling , general and administrative expenses	12,630	10,761
Interest expense	(403)	(460)
Other expense	(19)	(21)
Provision for income taxes	(29)	(59)
Net loss
Total Assets	2,000	2,000
Purchases of medical equipment
Depreciation and amortization of intangible assets
ITS Segment [Member] | Operating Segments [Member]
Net revenues - external	14,126	11,306
Net revenues - internal
Total net revenues	14,126	11,306
Gross profit	9,106	6,927
Selling , general and administrative expenses
Interest expense
Other expense
Provision for income taxes
Net loss
Total Assets	54,762	43,953
Purchases of medical equipment	2,357	2,531
Depreciation and amortization of intangible assets	2,654	2,195
DME Services Segment [Member] | Operating Segments [Member]
Net revenues - external	7,427	6,887
Net revenues - internal	1,238	949
Total net revenues	8,665	7,836
Gross profit	3,557	3,414
Selling , general and administrative expenses
Interest expense
Other expense
Provision for income taxes
Net loss
Total Assets	25,916	21,292
Purchases of medical equipment	1,650	964
Depreciation and amortization of intangible assets	$ 748	$ 710

XML

Note 10 - Loss Per Share - Summary of Income and Share Amounts Utilized to Calculate Basic and Diluted Net Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Net loss	$ (418)	$ (960)
Basic (in shares)	19,918,298	19,580,049
Dilutive effect of non-vested awards (in shares)
Diluted (in shares)	19,918,298	19,580,049
Basic and diluted (in dollars per share)	$ (0.02)	$ (0.05)

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 305	$ 2,647
Accounts receivable, net	13,985	12,097
Inventories	4,232	2,899
Other current assets	2,002	1,662
Total current assets	20,524	19,305
Medical equipment for sale or rental	3,040	1,306
Medical equipment in rental service, net of accumulated depreciation	34,806	33,225
Property & equipment, net of accumulated depreciation	4,382	4,037
Intangible assets, net	14,388	15,463
Operating lease right of use assets	5,380	5,733
Other assets	158	155
Total assets	82,678	79,224
Current liabilities:
Accounts payable	12,795	7,962
Current portion of long-term debt	7,295	8,082
Other current liabilities	3,708	5,803
Total current liabilities	23,798	21,847
Long-term debt, net of current portion	32,325	30,295
Deferred income taxes	113	104
Operating lease liabilities, net of current portion	4,422	4,644
Total liabilities	60,658	56,890
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 23,543,414 and 20,024,925, respectively, as of March 31, 2020 and 23,400,625 and 19,882,136, respectively, as of December 31, 2019	2	2
Additional paid-in capital	83,803	83,699
Retained deficit	(61,785)	(61,367)
Total stockholders’ equity	22,020	22,334
Total liabilities and stockholders’ equity	$ 82,678	$ 79,224

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
NET CASH PROVIDED BY OPERATING ACTIVITIES	$ 557	$ 1,269
INVESTING ACTIVITIES
Purchase of medical equipment and property	(4,536)	(3,535)
Proceeds from sale of medical equipment and property	500	764
NET CASH USED IN INVESTING ACTIVITIES	(4,036)	(2,771)
FINANCING ACTIVITIES
Principal payments on term loans, equipment line, revolving credit facility and other financing	(9,229)	(929)
Cash proceeds from 2019 equipment line and revolving credit facility	10,468
Debt issuance costs		(3)
Common stock repurchased to satisfy statutory withholding on employee stock-based compensation plans	(426)	(37)
Cash proceeds - stock plans	74	53
Common stock - issued	250
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	1,137	(916)
Net change in cash and cash equivalents	(2,342)	(2,418)
Cash and cash equivalents, beginning of period	2,647	4,318
Cash and cash equivalents, end of period	$ 305	$ 1,900

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Note 6 - Intangible Assets - Expected Annual Amortization Expense for Intangible Assets (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Amortization expense, 2020	$ 3,210
Amortization expense, 2021	3,930
Amortization expense, 2022	2,051
Amortization expense, 2023	548
Amortization expense, 2024	548
Amortization expense, 2025 and thereafter	2,101
Amortization expense, Total	$ 12,388

XML

Note 5 - Property and Equipment (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Depreciation, Nonproduction	$ 0.2	$ 0.1

XML

Note 5 - Property and Equipment

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

5 . Property and Equipment

Property and equipment consisted of the following (in thousands):

	March 31, 2020							December 31, 2019
	Gross Assets		Accumulated Depreciation			Total		Gross Assets		Accumulated Depreciation			Total
Furniture, fixtures, and equipment	$	3,669	$	(2,037	)	$	1,632	$	3,202	$	(1,928	)	$	1,274
Automobiles		117		(93	)		24		117		(90	)		27
Leasehold improvements		3,439		(713	)		2,726		3,366		(630	)		2,736
Total	$	7,225	$	(2,843	)	$	4,382	$	6,685	$	(2,648	)	$	4,037

Depreciation expense for property and equipment for the

three

months ended

March 31, 2020

was

$0.2

million, compared to

$0.1

million for the same prior year period. This expense was recorded in “general and administrative expenses” for each period.

XML

Note 9 - Commitments, Contingencies and Litigation

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

9. Commitments , Contingencies and Litigation

From time to time in the ordinary course of its business, the Company

may

be involved in legal proceedings, the outcomes of which

may

not

be determinable. The results of litigation are inherently unpredictable. Any claims against the Company, whether meritorious or

not,

could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. The Company is

not

able to estimate an aggregate amount or range of reasonably possible losses for those legal matters for which losses are

not

probable and estimable, primarily for the following reasons: (i) many of the relevant legal proceedings are in preliminary stages and, until such proceedings develop further, there is often uncertainty regarding the relevant facts and circumstances at issue and potential liability; and (ii) many of these proceedings involve matters of which the outcomes are inherently difficult to predict. The Company has insurance policies covering potential losses where such coverage is cost effective.

The Company is

not

at this time involved in any legal proceedings that the Company believes could have a material effect on the Company’s financial condition, results of operations or cash flows.

XML

Note 13 - COVID-19

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Effect of Covid-19 Pandemic [Text Block]

1

3

.

     COVID-

19

On

March 11, 2020,

the World Health Organization declared the outbreak of COVID-

19

as a pandemic, which has spread globally and throughout the United States. With the exception of in-person visits to our customer facilities by our sales staff, the Company has continued to operate despite stay-at-home orders and other government mandated shutdowns across the United States and Canada under exceptions allowed by those orders for the healthcare industry.

We have taken a number of precautionary and preemptive steps to protect the safety and well-being of our employees while ensuring continuity of service to our clients, including, transitioning our employees to a remote work environment, suspending employee travel, canceling participation in industry events and in-person group meetings, promoting social distancing and enhanced cleaning and sanitization efforts across office locations, and implementing protocols to quarantine employees who

may

have been exposed to COVID-

19,

or show relevant symptoms. We also commenced preparedness plans at our facilities to maintain continuity of operations, which provide for flexible work arrangements without any significant disruptions to our business or control processes. Our management team is actively monitoring the situation and in constant communication with our workforce as well as with our customers and vendors. Other specific actions we have taken include purchasing additional inventory of supplies and pumps, as well as purchasing personal protective equipment for our employees.  While the Company’s business is considered critical, we are unable to predict the impact that COVID-

19

will have due to numerous uncertainties. While COVID-

19

has

not

significantly affected our operations, the extent of the impact in the future, if any, will depend on future developments, which are highly uncertain, cannot be predicted and could have a material adverse impact on our financial position, operating results and cash flows. A prolonged outbreak could, among other things, strain our business continuity plans, create delays in our growth and strategic initiatives, reduce our sales and marketing activities, limit our access to financing on favorable terms, increase our exposure to potential impairment charges related to intangible assets, hinder our ability to support our clients and operate our business effectively, heighten the risk of disruption to our information and reporting systems and internal controls, including those over financial reporting and other risk management systems, or require us to incur substantial costs. We are closely monitoring the impact of COVID-

19

on all aspects of our business and

may

take further actions as

may

be required by federal, state or local authorities, or that we determine are in the best interests of our employees, customers and partners. As the conditions surrounding COVID-

19

continue to evolve rapidly, we will continue to actively manage our response in collaboration with customers, government officials and stakeholders, and assess any potential impacts to our financial position and operating results, as well as adverse developments in our business.