InfuSystems Holdings, Inc.

Good day and welcome to the InfoSystem Holdings Second Quarter Fiscal Year 2025 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 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Joe Dorme of Leighton Partners. Please go ahead.

Good morning and thank you for joining us today to review InfoSystem's Second Quarter 2025 Financial Results ended June 30, 2025. With us today on the call are Carrie LeChance, Chief Executive Officer, and Barry Steele, Chief Financial Officer. After the conclusion of today's prepared remarks, we will open the call for questions. Before we begin with prepared remarks, I would like to remind everyone certain statements made by the management team of InfoSystem during this conference call to 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 ended December 31, 2024. 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. InfoSystem does not undertake and specifically disclaims any obligation to update any forward-looking statements except as required by law. Now I'd like to turn the call over to Carrie Lachance, Chief Executive Officer of InfoSystem. Carrie?

Thank you, Joe, and good morning, everyone. Welcome to InfoSystem's second quarter fiscal year 2025 earnings call. Thank you for joining us today. I will provide a second quarter overview, highlighting key successes, addressing notable challenges and outlining our strategic priorities for the balance of the year and beyond. Ben Barry will provide a detailed summary of our financial results. I will then come back with some closing comments before opening the line to questions. We are pleased to report another strong quarter of financial performance marked by meaningful margin expansion, robust cash flow, and enhanced profitability. In Q2, revenue grew 7% to $36 million and growth margins expanded by 574 basis points to reach 55.2%. This resulted in a 32% -over-year increase in adjusted EBITDA to $8 million, with EBITDA margins improving by 427 basis points to 22.3%. Net income increased by 262% and cash flows from operations more than doubled, both for the quarter and -to-date. These results reflect our team's disciplined execution and ongoing commitment to process improvement across our organization. In addition to operational performance, we returned approximately $3.5 million to shareholders who stock repurchases during the quarter, bringing the total shareholder return to $6.4 million for the first half of the year. We have demonstrated a significant improvement in -over-year operating cash flow paired with a significant reduction in capital expenditures. This is in line with the expectations and trends we have discussed with you. For the first six months of 2025, operating cash flow was $8.7 million, an increase of $6 million over the prior year, and net capital expenditures for 2025 were only $2.9 million, a decrease of $4.2 million over the first six months of 2024. We expect this strong cash flow to continue for the rest of the year. In a moment, Barry will share some additional details surrounding this. We use this cash flow surplus for a few different important initiatives aligned with our capital allocation strategy and priorities. These initiatives include buying back common stock under our share buyback program, acquiring a small company that facilitates our strategy to grow and improve efficiencies and advanced wound care, and payments to reduce outstanding revolving line of credit borrowing. Our positive outlook for additional strong operating cash flow for the back half of the year of 2025 positions us to make similar investments. Now I'd like to touch on some underlying positives for the quarter. First, the relationship with Smith & Nephew is progressing as expected, and we believe we have an opportunity to beat our 2025 forecast. This business has lower margins, but is asset light because we rent the devices from Smith & Nephew. Revenue for the program was $1.6 million during the first half of 2025, $946,000 per Q2. So it's still a small part of our total business, but it shows promise for sustained growth with minimal upfront capital requirements. Second, investments made in 2024 for devices in the Device Solutions Direct Rental Business are paying off. Last year we bought $5.2 million in devices for that business that have led to $3.5 million in increased revenue annually. The rental business has one of the highest operating cash margins in our product portfolio. Third, oncology continues to be a solid contributor to steady and sustainable growth in both revenue profits and cash flows, and as such, we have increased our outlook for that business. Finally, we are successfully managing spending in order to maintain or expand margins. Turning to our outlook this morning, we are updating our 2025 revenue growth outlook to a range of 6 to 8% from the previous range of 8 to 10%. There are a number of reasons driving the update. However, before I expound upon those, I'd like to share a few positive financial updates. Despite the slightly lower revenue guide, we are increasing our outlook for full-year adjusted EBITDA and, consequently, raising our range of adjusted EBITDA margin by approximately 120 basis points to 20% or higher. This adjusted EBITDA outlook continues to include expenses we are currently investing This program, along with most of the related spending, is expected to be completed at the end of the first quarter of 2026. In essence, the project will impact our adjusted EBITDA margin by nearly 200 basis points in 2025, but will swing to a margin tailwind as savings from the project start to pay off the investment in 2026 and beyond. There are three key drivers to the lower 2025 revenue outlook. First, we are delaying the rollout of additional increases in advanced wound care volumes to later in the year, which allows time for important processing improvements that are needed to make this a profitable business. This opportunity continues to be very exciting for Infusystem due to our wide breadth of contracts. However, while there appears to be plenty of volume within our reach offering respectable gross margins, our current billing processes and systems lack the level of productivity needed to make the economics viable. To date, wound care billings, on average, have been smaller and are more complicated than our other TPP revenues, such as oncology. We don't think it prudent to sacrifice our overall company margins and profitability until we solve this issue. Fortunately, we have the solution. During the second quarter, we bought a small company that provides the opportunity to achieve increased productivity through its improved processing tools. Not only do they offer increased efficiency, but they also offer automation, connectivity to machine learning, and eliminate multiple processing steps for our teams to continue the trend of becoming a more efficient and scalable company. If it works as we anticipate, it opens a significantly attractive opportunity in the large market and it provides opportunity to lower the current processing costs of our other TPP businesses. Second, we are taking out the 2025 revenue we had in the forecast for Chemo Mouthpiece until we have better visibility. We've received notice from Chemo Mouthpiece regarding changes to the previously recommended TPP reimbursement code for their product. This said, as we navigate this change in the moment, we are extremely optimistic as Chemo Mouthpiece has submitted applications for new coding that could provide coverage for the product under a patient's DME benefit. This would be an exciting one for patients and providers, as in this case, IntuSystem would provide the product at no cost to clinics, similar to other products currently provided under our patient services platform. This makes our contribution to the role of this new product even more vital, and we are working closely with the Chemo Mouthpiece team through this change. We continue to see great potential and interest in the product and will keep everyone informed as Chemo Mouthpiece updates us on the reimbursement landscape. Our investment in this process is minimal, and we've not made any significant contributions to the program to date, which means there is no capital at risk. Finally, we are working to restructure our biomedical services relationship with GE Healthcare. The current business has not met our margins expectation, and we are working closely with GE Healthcare to make adjustments in both price and service levels to address this issue. This could result in lower revenue, however, that revenue will deliver increased profitability, which has been below acceptable levels to date. Now I'll turn it over to Barry for a detailed review of the second quarter financial results.