InfuSystems Holdings, Inc.

Good day, and welcome to the Infosystem Holdings, Inc. Report's third quarter fiscal year 2022 financial results conference call. All participants will be in a listen-only mode. Should 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 your telephone keypad. To withdraw your question, please press star, Please note this event is being recorded. I would now like to turn the conference over to Joe Dorme of Lippin Partners. Please go ahead.

Thank you, Sarah. Good morning and thank you for joining us today to review the IMFU Systems Holdings financial results for the third quarter of 2022 ended September 30th, 2022. With us today on the call are Rich Diorio, 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 will 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 infosystem.com or numerous other financial websites. Before you give a prepared remark, I'd 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 uncertainty, 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 ended 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 INFUSYSTEM's third quarter 2022 earnings call. Thank you all for joining us today. Before providing some color around our new exciting partnership in wound care with Sonara MedTech, I would like to provide a quick overview on the recently completed quarter. In the third quarter, we once again achieved record revenue, while improving on our gross margins from the prior year, resulting in a return to gap profitability. The quarter continued to demonstrate the strength of our core business and was led by our ITS segment, which grew 5% despite the continuing headwinds in wound care, relating primarily to the availability of the cardinal negative pressure devices for new customers. Our aggregate gross margin improved by 202 basis points year-over-year. Operating income increased $1.3 million. And net income increased $900,000 for the third quarter. As we work steadily to expand our offerings and improve our long-term growth potential, we can see how InfuSystem's unique positioning in the market is drawing well-respected companies such as Sonara and GE Healthcare to partner with us. First, our seven centers of excellence are strategically positioned to serve all of North America. Second, we are a participating in-network provider in over 770 health insurance networks covering more than 95% of the U.S. population. And third, there is our strong and growing reputation for white glove service and patient-focused care. Together, these and other attributes have helped Infosystem to be increasingly recognized as a go-to partner for companies looking to upgrade their healthcare service offerings or to expand their marketplace reach. It is InfuSystem's unique problem-solving abilities and our growing reputation that attracted Sonara to partner with us. As I turn now to our new relationships and offerings related to wound care, I hope to be able to convey why we are so excited about these developments and how they are expected to impact our future business. Starting at a high level, wound care is believed to be a particularly attractive opportunity for InfuSystem. In addition to having a very large addressable market, Wound care epitomizes the need in healthcare for solutions that can help facilitate an effective transition from the hospital or clinic to the patient's home. Wounds can take significant time to heal, and hospitals, due to high costs and focus on stabilizing patients before moving them to the next care setting, are not the ideal place for patients and clinicians to advance wound healing over a long period of time. When InfuSystem entered the wound care market a few years ago, our offering was based upon a single cardinal health negative pressure device. Since that time, we have worked hard to develop several opportunities that could have materially contributed to our top line. However, Renfee Systems' experience to date in wound care has admittedly been disappointing. With the recent announcements relating to wound care, I believe this is about to change. With our new distribution agreement with Cork Medical, we now have an alternative to the Cardinal device that is no longer available in the market. Through our new relationship with Cork, we have immediate access to a state-of-the-art device and technology. Additionally, we believe Sonara will be an ideal partner as we work to provide a more comprehensive offering to the wound care market. This starts with the company sharing a long-term focus that everything we do is based on improving the quality of our patients' lives across a continuum of care by reducing the complexity of treatment and offering a diverse set of advanced wound care products. We will win business together in wound care by proving that our solutions are better for patients, better for providers, and better for payers. There are two important components to the infuse system scenario approach to wound care. First, our aligned vision on patient care, focused on providing solutions that promote healing, lowering the cost of care, and improving patient outcomes. Second, the combination of best-in-class wound care products with our leading, industry-leading turnkey services leveraging our ITS platform and our 770 in-network contracts, resulting in expanding the continuum of care and going well beyond just selling and leasing negative pressure pumps. The agreement signed last week is much more than a distribution agreement. We've been talking to Sonara for over a year, planning our combined disruptive approach to wound care. This is a true partnership, with each party bringing to the table unique and world-class capabilities. Our goal is to bring a more effective approach to the wound care market and redefine the standard of care by capitalizing on InfuSystem's unique service offerings that will include our sales, distribution, clinical support, and revenue cycle capabilities. That will complement Cenara's deep wound care experience and expertise in their leading edge products, including Biocose and Hi-Call, to promote patient healing. To fully develop this opportunity, we have formed SI Wound Care, a jointly controlled LLC that will enable both companies to maximize new wound care business opportunities and share in the profits. Barry will provide more details on this operating agreement in a moment. Coincident to launching the partnership, INFUSYSTEM signed a distribution agreement with Cork Medical with plans to almost immediately begin taking advantage of this new supplier relationship. Our team will sell and lease their NISIS brand of negative pressure wound therapy devices and supplies in the U.S. and Canada. The new relationship with Cork is the solution of the difficulties with Cardinal Health and access to their negative pressure equipment that we discussed on a call in August. Previously, with only having a single point solution in the wound care market, our team was challenged to compete effectively with the larger, more diversified players. With the Sonara partnership, we believe that obstacle has been removed. We now feature a comprehensive portfolio of wound care products and have a tremendous opportunity to grow our wound care business by offering a complete solution from a device to advance wound care products designed to heal patients and not just treat them. Our belief is that if you can take care of patients by improving outcomes and satisfaction, clinicians will take notice, leading to increased market share. Switching over to our DME services segment, I would like to give an update on the status of our ramping relationship with GE Healthcare. While the onboarding process started out slower than we had anticipated and realized revenue is behind where we expected it to be at this point in the calendar, our BioMed service team continues to work very closely with their counterparts within GE. We have confirmed that our white glove services are being well received both by GE and the onboarded facilities and that onboarding of new medical facilities will continue in a systematic manner. We finished the third quarter with a strong August and September. and we continue to build positive momentum in the deployment of our services that can involve up to 300,000 pumps located in 1,200 medical facilities, including 800 hospital systems in the U.S. and Canada. As a reminder, the foundational master service agreement with GE relates to our team performing preventative maintenance and repairs onsite at the hospitals or offsite at one of our seven service centers. We see many opportunities to potentially expand upon this relationship. and I am pleased to report that includes one project slated to start in the fourth quarter of 2022. This relates to GE's mobile asset management system using RFID tagging to track devices. Although onboarding of facilities has taken longer than we expected, we remain very optimistic about the GE relationship and opportunity. We now believe the revenue potential will be larger than our original estimate of $10 to $12 million on an annual basis once we are fully operational. Now turning to Payne. We remain very positive on the outlook of the pain management business and are excited about our near-term prospects. For the third quarter, our pain business generated a 37% increase in revenue versus the comparable quarter last year. This is as we are beginning to see the benefits of our investments in the sales team that we made last year. Despite the short-term supply-related interruptions in Q2, our team continued to gain market share despite the seasonality of the summer months when fewer procedures were performed. We are seeing rising patient treatments with this setting the stage for a strong finish to the end of the year. Our partnership with Ventus Pharma, a leader in advancing surgical and chronic pain management solutions, became effective in the third quarter. The National Sales and Marketing Agreement gives our sales team access to the Endura Kit, a single injection for pain management that can be used in conjunction with our InfuBlock or as a standalone treatment. One of the keys to gaining market share and driving revenue growth in pain we'll be providing more choices to healthcare professionals and patients by giving them an alternative to opioids. INFUSYSTEM is fully committed to doing our part in helping to reduce the use of opioids in North America. Moving on to guidance. INFUSYSTEM is estimating total revenue for the full year 2022 of approximately $112 million, which is at the lower end of the previously stated guidance of 10 to 13% revenue growth for the year. Additionally, adjusted EBITDA for the full year 2022 is estimated to be approximately $22 million with adjusted EBITDA margin in the range of 19 to 20%. I want to thank the entire Infosystem team for their hard work and dedication in ensuring our customers and partners receive industry-leading service. Now I would like to turn the call over to our CFO, Barry Steele, who will provide a review of the third quarter financial results.