InfuSystems Holdings, Inc.

Hey, and welcome to the NC System Holdings fourth quarter and full year 2020 financial results conference call. All participants will be in listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note today's event is being recorded. I'd now like to turn the conference over to Joe Dorme with Listen Partners. Please go ahead, sir.

Thanks, Rocco. Good morning, and thank you for joining us today to review the financial results of InfuSystem Holdings, Inc. for the fourth quarter and full year 2020, ended December 31, 2020. With us on the call today are Rich DiIorio, Chief Executive Officer, Barry Steele, Chief Financial Officer, and Kerry Lachance, President and Chief Operating Officer. After the conclusion of today's prepared remarks, we will open the call for a question and answer session. If anyone participating on today's call does not have a full text copy of the press release, you can retrieve it from the company's website at www.infusystem.com or numerous other financial websites. Before we begin with prepared remarks, I would like to remind everyone certain statements made by the management team of InfuSystem during this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except for the statements of historical fact, this conference call may contain forward-looking statements that involve risks and uncertainties, some of which are detailed under risk factors in documents filed by the company with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended December 31, 2019. Forward-looking statements speak only as of the date the statements were made. the company could give no assurance that such forward-looking statements will prove to be correct. InfuSystem does not undertake and specifically disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. Now I'd like to turn the call over to Rich Diorio, Chief Executive Officer of InfuSystem. Rich?

Thanks, Joe, and good morning, everyone, and welcome to our fourth quarter and full year 2020 earnings call. Thank you all for taking the time to join us this morning. I trust that you and your families are staying safe as we hopefully work through the final stages of this COVID-19 pandemic. Looking back, the year 2020 was an unprecedented time for all of us across every aspect of our lives. At Empty System, we focused on what's important to us, the well-being and safety of our patients and our team members. We adapted in countless ways to keep our team as safe as possible while maintaining the highest levels of service to ensure our devices are available to our patients for uninterrupted medical treatments. I am extremely proud of our team and their ability to successfully adapt to so many changes and overcome so many challenges. It was their perseverance that makes it possible for us to report record results today. On this call, we will cover our financial results for the fourth quarter and full year 2020, reaffirm our 2021 annual guidance, and provide an update on our business in 2021 and outlook for 2022 and beyond. During 2020, we found that doing many things the old way had become impossible. and that developing new ways of doing things would result in long-term advantages. Our team faced up to each challenge, adapted as necessary, often creating new efficiencies, and continued to successfully execute on our growth strategy. The result of their outstanding efforts was evident by the record 2020 accomplishments that include the following. Record net revenue for the year of $97.4 million, an increase of 20% over 2019. Adjusted EBITDA of $26.4 million, an increase of 45% from the prior year, with this translating into net adjusted EBITDA margin for the year of 27.1%. Operating income of $8.8 million, an increase of 150% over 2019. Operating cash flow continued to grow, reaching $20 million, an increase of 44.4% over 2019. In the face of COVID-19, we grew our pain management therapy and treated a record number of patients, despite limited access to medical facilities and the broad postponement of elective surgeries during the year. We were also able to launch our partnership with Cardinal Health as we entered the $600 million wound care market with our negative pressure wound therapy service. The COVID-19 pandemic has put a spotlight on the need to move patients out of the hospital environment and into their home to continue their treatment. The increasing movement toward home-based treatment benefits the patient, the provider, and the payer. INFUSYSTEM provides the services that make this possible. We bridge the gaps and enable the continuity of care for patients between the hospital and their home. Our integrated therapy services posted a record year delivering growth of 18% over last year with strong gross margins of 65.1%, driven primarily by increased oncology therapy as we treated a record number of patients in 2020. Oncology remains the core of our ITS platform, and it is the strength of that offering that allows us to expand into new therapies and develop new growth drivers. Our durable medical equipment services platform also delivered record results with growth of 25% over last year and solid gross margin of 45.6%. Growth was driven by strong market demand for infusion pumps, partly due to COVID-19, resulting in significant pump sales and new rentals. Although pump sales are not likely to repeat at the same levels in 2020, we believe the new Redfield customers are here to stay, and 2021 should be another strong year. Turning to our relatively new relationship with Cardinal Health, I am extremely pleased to report that despite the challenges of COVID, we've been able to accomplish a lot in a short period of time. Our sales teams are already working together, and each company is leveraging the capabilities and relationships of the other to successfully deliver patient services. We are gaining traction in negative pressure wound therapy, and I firmly believe we will capture five to 10% of the estimated $600 million negative pressure home healthcare market in the next three to five years. Back to InfuSystem. Over the last 12 months, we were able to significantly strengthen and enhance the capabilities of our leadership team. This includes the appointment of Barry as our Chief Financial Officer last March, and the recent promotion of Carrie to President, in addition to her COO role. Barry continues to strengthen the financial foundation of the company, with this perfectly evidenced by our new credit facility. MPSystems always generated strong operating cash flows, but our success in attracting a syndicate of premier banks to a $75 million credit facility shows how much progress we have made in the last few years. With the new and improved facility, we have the liquidity and financial flexibility to timely capitalize on a growing array of potential growth opportunities in each of our two operating platforms, ITS and DME. In Carrie's expanded role, she will be leading the implementation of new therapies under both platforms and the integration of acquisitions. Now I'd like to take the opportunity for Carrie to introduce herself and provide some color around our acquisition of Filamid.