InfuSystems Holdings, Inc.

Ladies and gentlemen, good day and thank you all for joining this InfuSystems Holdings Q1 fiscal year 2022 financial results conference call. As a reminder, all participants are in a listen-only mode, but later you will have the opportunity to ask questions during our question and answer session. Also, please be aware today's session is being recorded. To get us started with opening remarks and introductions, I am pleased to turn the floor over to Managing Partner with Lithum Partners, Mr. Joe Dorame. Welcome, sir.

Thank you, Jim, and good morning, and thank you for joining us today to review the financial results of InfuSystem Holdings, Inc. for the first quarter of 2022, ended March 31st, 2022. With us today on the call are Rich DiIorio, Chief Executive Officer, Barry Steele, Chief Financial Officer, and Carrie LeChance, President and Chief Operating Officer. After the conclusion of today's prepared remarks, we'll open the call for questions. 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 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 and documents filed by the company with the Securities and Exchange Commission, including the annual report on Form 10-K for the year-end of December 31st, 2021. Forward-looking statements speak only as of the date the statements were made. The company can 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 to Rich DiIorio, Chief Executive Officer of INFUSYSTEM. Rich?

Thanks, Joe, and good morning, everyone, and welcome to our first quarter 2022 earnings call. Thank you all for taking the time to join us this morning. I'm pleased to be here today reporting on the strong start to the year. Revenue for the first quarter was on plan, even with some rather frustrating delays to important new businesses that we will discuss in a moment. Our top line grew by 9% over the prior year quarter, led by our DME business, which grew revenue by 18%. In the quarter, our operating cash flow was especially notable, increasing by 54% compared to the prior year, proving once again the excellent cash flow characteristics of our business. Our business is strong, and we are steadily improving the company's prospects and ability to deliver long-term sustainable growth. We are very well positioned to participate in several macro trends, including the growing movement toward maximizing opportunities to shift treatment from clinics and hospitals to the patient's home. That trend drives demand for the last-mile solutions offered by our ITS segment. Another favorable trend is the increasing demand for expert outsourced services. This trend is currently very relevant to our DME business unit. Coming into this call, the biggest piece of news for the company is the recently announced deal involving our DME segment. As reported last week, Infosystem has signed a three-year master service agreement with GE Healthcare. Having finally signed this long awaited contract, we've begun to onboard the work that we've been preparing to execute on since the second half of last year. Before going into details of the agreement and the potential it unlocks, it is important to note that we've been working toward this opportunity since 2020. That year, we conducted an internal review that revealed the high return characteristics of our biomed services offering. The high return is the result of two things. First, NP Systems Concierge Model, which specifically pursues high margin opportunities where the customer is especially concerned about quality. And second, the low capital investment required. The bench and tools used by our technicians are relatively inexpensive, and they are only needed to be acquired once. At that time, InfuSystem had a highly certified and very well-regarded biomed team, but the vast majority of the work they did was on our own fleet of devices. The strategic decision to expand upon that existing small base of business led in early 2021 to the acquisition of two biomed services companies. One extended our capabilities beyond infusion pumps, and the other one gave us significantly increased access into hospitals, most especially because the company had an existing relationship with GE Healthcare. Almost immediately after the capabilities of the two BioMed companies were combined with Infosystem's greater resources, national reach, and proven track record, we began seeing that we had created something with truly exciting potential. One more piece of background information. Historically, our DME segment has conducted its business in the home healthcare market, This suited us well when we were smaller, but as we grew larger and more capable, we were very aware of our lack of access to the acute care market and the business opportunities relating to literally millions of medical devices inside of hospitals. We bought one of the biomed companies in 2021, hoping that it would open doors to some hospital business, and it did. As part of the GE Healthcare MSA, we will be providing our white glove biomed service in 1,200 medical facilities, including 800 hospital systems in the US and Canada. GE Healthcare's preferred customers infusion pump fleet consists of more than 300,000 pumps, and we estimate revenue under the contract will ramp to approximately $10 million to $12 million in annual revenue. Our biomed services will include annual preventative maintenance and repairs conducted on-site at the hospital or off-site at one of our seven service centers. This is, of course, an excellent way to get started on our dual strategies of expanding our biomedical services business and expanding the reach of our DME segment into acute care. And I emphasize the word start. Having become a national partner to a tier one global healthcare equipment service provider, we hope to see many more opportunities open up to us. This includes additional opportunities with GE Healthcare, other large medical device and services companies, and with our hospital customers. I've been saying for a while now that I believe our biomedical services business will likely be the first to catch and pass the revenue contribution of our oncology business. And I believe that now more than ever. Although the GE agreement took considerably longer than we anticipated to get across the finish line, we are very excited to have begun operating under the contract this week, and things are going great. Turning to our integrated therapy services platform, we saw growth of 5% with solid gross margin of 64.5%. Our oncology business had a record quarter for patient treatments in the first quarter, with this signaling a potential for a post-COVID return to normal patient treatment levels. While March was strong, the early months of the quarter were impacted by Omicron, with our pain business again being the most impacted. But as Omicron waned, pain management and wound care gained traction and delivered 13% revenue growth for the first quarter. The pain team treated a record number of patients in March, which is exciting as we head into the second quarter. We remain excited and very optimistic about the future prospects of these two therapies. So our top line momentum is strong. particularly following the signing of the GE agreement as we begin to onboard a significant amount of new revenue. Questions are certain to turn next to the health of our bottom line. Twice last year, we made a strategic decision to invest in building our business to capture and hopefully accelerate opportunities for long-term sustainable growth. Mid-year, we added to our sales teams in pain and wound care, and then toward the end of the year, in anticipation of the GE business, We invested in building up our biomed services team to be ready to ramp our services as soon as the contract was signed. As a result of these investments, our cost structure is higher and our current adjusted eventual margins are lower than they would be without the investments and the growth. This situation will continue until the anticipated revenue begins to flow through. As discussed during our last earnings call, we expected that we would see incremental pain and wound care revenue appearing before the end of last year, but that expectation was foiled by the appearance of Omicron and delays related to the timing of some new business wins. As discussed above, our strong March month and continuing momentum in our ITS segment, together with the even stronger momentum in the DME segment, plus the GE contract, all come together to support our expectation that revenues will increase over the next few quarters, sufficient to offset the cost of the investments made last year. Return on our growth investments were delayed, but they're still coming, and now with the big contract sign, we can talk about what we've been investing in and why. I firmly believe the strategic investments we made last year have made the company stronger and our future that much brighter, and I'm confident that this will be apparent to everyone in coming quarters. In summary, we remain confident in the long-term growth potential of the business, and we see this confidence supported by the solid momentum in our ITS and DME platforms coming out of the first quarter of 22. Led by our core oncology business displaying solid growth, with our pain management and wound care therapies gaining traction, our ITS segment is doing exactly what it should be. At the same time, our DME segment, now led by our biomed service business, is in position for long-term sustainable growth beyond anything that could have been imagined for the segment just one year ago. We are now working to leverage the new GE healthcare relationship in order to capitalize on an opportunity set that we believe is as big for biomed and DME as any of the therapies being pursued in our ITS segment. This is an exciting time in the system, and we are well-positioned for multiple growth opportunities. We strongly believe in our business model, and as a result, we recently took the opportunity to purchase approximately $4 million of our common shares in the open market. At these levels, we believe our stock represents a great investment and a good use of capital. Although our main priority is to utilize our capital to grow the business, we are prepared to be opportunistic when the price is right. Looking forward, we are projecting our annual full-year 2022 guidance for revenue growth to be within the range of 15% to 20%. or approximately 118 million to 123 million in net revenues, and adjusted EBITDA to be within the range of 24 million to $27 million. We are forecasting adjusted EBITDA margin to be in the range of 20% to 22% for the year. Our guidance for 2022 takes into account biomedical services revenue under the GE MSA commencing in May and then ramping into next year. In addition, we have accounted for the possibility of scenarios outside of our control. For example, another COVID surge that may affect pain or any new long-term supply chain disruptions. Even if these were to occur, we are comfortable that we will be within our range of 118 to 123 million of top-line revenue. Now I'd like to turn over the call to our CFO, Barry Steele, who will provide a review of our first quarter financial results.