Sharps Compliance Corp.

Good morning, ladies and gentlemen, and welcome to the SHARPS compliance first quarter 2022 earnings call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Jen Belladeau. Ma'am, the floor is yours.

Thank you. Good morning, and welcome to the SHARPS compliance first quarter fiscal 2022 earnings call. On the call today, we have David P. Tusa, the company's President and Chief Executive Officer, and Diana P. Diaz, Executive Vice President and Chief Financial Officer. David will review the company's business performance, operations, and outlook, while Diana will review the financials. Immediately following their formal remarks, we will take questions from our call participants. As you're aware, we may make some forward-looking statements during the formal presentation and in the question and answer portion of this teleconference. These statements apply to future events which are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from where we are today. These factors are outlined in our earnings release, as well as in documents filed by the company with the Securities and Exchange Commission. These can be found at our website or at sec.gov. So with that out of the way, let me turn the call over to David to begin the review. Please go ahead, David.

Great. Thank you, Jen. Good morning, everyone, and thank you for participating in the first quarter earnings call. So let's just jump right into it. We'll review the first quarter, and then we're going to talk about the business outlook as well. First quarter results were in line with our expectations. They did reflect slower immunization revenue for September, for the September quarter versus the preceding sequential quarters. Just to provide some context, the March and the June quarters for immunization business were about $27.9 million in billings, $24.6 in revenue. In the September quarter, immunization orders were about $1.8 million and generated about $3.1 million of mail-back revenue. Again, consistent with the slower immunizations that were administered in the country for the September quarter. On the route-based business, we had a bit of a tough comp when you looked at the year-over-year. The prior year included increased volumes from the long-term care markets, which were driven by COVID, labs and also labs performing COVID-related testing. Additionally, in our first quarter, our half-waste billings were down. There were delayed pickups resulting from industry-wide limited third-party half-waste incineration. So those added up to about $500,000 of a negative headwind. And when you take out those three items, the route-based business increased by about 19%. Further supporting that is the increase in our customer locations. They increased from the June quarter to the September quarter from 14,200 to 16,600, which was a 17% increase. in customer locations. We've talked about unused medications for the last couple of quarters, and we said that we thought that we would see a return to growth for unused medication in the September quarter, and we did. It was up 11% year over year and up 31% sequentially. So we believe we should continue to see growth in the offering over our fiscal year 2022 as retail pharmacies and long-term care refocus on the proper and cost-effective disposal of ultimate user, unused medication. I'm sure you saw the announcement about our first acquisition, tuck-in acquisition of Affordable Medical Waste in Indiana. We were very pleased to close this deal. It enhances our presence not only in the Midwest, but it significantly improves the route density in our service area. And while it's small, or smaller, It's perfect. It's an overlay to our existing service area, and the post-synergy EBITDA margins should be much, much higher than even our consolidated EBITDA margin. So we continue to work. There's been a lot of resources working on the acquisitions. The pipeline is quite full, quite active. We can't make any guarantees, but we're hopeful we'll be able to to close more deals that will densify our existing route-based infrastructure, which again, 37 states, 80% of the population. So let's look forward a bit. Let's talk about COVID. So although the landscape, it's been fluid, continues to be fluid, but it's starting to become a little bit more clear, in my opinion. There's a number of developments. We now have boosters available. approved for about 100 million adults, and the experts say that boosters for the remaining Americans could be approved over the next three to six months. This morning they were talking about even a fourth shot for the immunocompromised. So with respect to boosters, let's just talk about it from a point of reference. So we have 191 million Americans that are fully vaccinated. And the polling shows that maybe as much as 80% to 90% of the Americans would receive a booster. Well, so far, only 7% of those 191 million have received a booster. So we're hopeful that with more and more adults getting the booster that we can see revenue opportunities. Yesterday, the FDA recommended approval of the Pfizer vaccine for children age 5 to 11. This age group represents about 28 million children. And by the way, it's a two-shot regimen for the 5 to 11, just as it was for the adult vaccine. So considering all of this, we do believe that we do have opportunity for more COVID-related mailbag revenue. And if we had to... to guess that we would probably see that over the next two to three quarters, maybe the three quarters as all of this rolls out across the country. So let's sum it up. So where are we and where are we going? We have begun the process of enhancing our route-based business, the growth in our route-based business, with complementary and strategic tuck-in acquisitions. As I mentioned, the pipeline is active. The pipeline is quite full. And we're looking for the opportunity, similar to affordable, where we can bring them in. And because of our existing infrastructure, that we can generate some significant post-synergy EBITDA margins. And at the same time, improve the route density. COVID. So, you know, we don't think it's over. I mean, March and June were significant quarters with respect to COVID. September slowed down. But we still think we have a ways to go for the fiscal year 22 when you consider boosters, vaccines for children, and so on and so forth. So we'll see. But again, we do think there's more opportunity there. On the unused medication, it's great that we're seeing a return of the growth in the unused medication year over year and sequentially. But what I get really excited about is the fact that I think fiscal year 22 could be a really good year for unused medication in the long-term care sector. The long-term care sector, as you all have heard me say many times, has been focused on COVID versus a rollout of the MedSafe. We're seeing some reengagement, and we're hoping our fiscal year 22 can show some significant unused medication revenue growth in the long-term care market. So that's the big picture. Let me turn it over to Diane, and she's going to address the financials in a bit more detail.