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InfuSystem Holdings Reports 14.5% Revenue Increase and Approximately $3.6 Million of Adjusted EBITDA for the Third Quarter of 2008
Date:11/5/2008

MADISON HEIGHTS, Mich., Nov. 5 /PRNewswire-FirstCall/ --InfuSystem Holdings, Inc. (OTC Bulletin Board: INHI; INHIW; INHIU), the leading provider of ambulatory infusion pumps and associated clinical services, today announced financial results and provided a business update for the third quarter ended September 30, 2008.

Mr. Steve Watkins, chief executive officer, commented, "We are pleased to report a solid 14.5% increase in revenue for the third quarter of 2008, compared to the results of InfuSystem, Inc. for the same period last year, while under its prior ownership. Since our acquisition of InfuSystem, Inc. during the fourth quarter of 2007, we have generated very strong cash flow. During the third quarter alone, we achieved $3.6 million of adjusted EBITDA and now have approximately $10.8 million of cash and cash equivalents as of September 30, 2008."

"During the third quarter, we signed agreements with 9 new managed care organizations. Our increasing number of contracts and covered lives is further evidence of our overall market penetration and acceptance. We are the only nationwide provider of ambulatory infusion pumps with contracts in place with most national and regional insurance providers. We see this as a significant competitive advantage, since physicians prefer to work with a single provider that can accept insurance from most or all of their patients. Other competitive advantages include: our vast pump selection; our nationwide sales force; and most importantly, our 24-hour staffed nurse hotline for patient questions and assistance. Given these strengths, we continue to explore acquisitions and strategic partnerships that should enable us to expand our product and service offering in order to leverage our deep penetration into oncologist practices across the U.S."

Mr. Watkins concluded, "We are also continuing to make headway on a number of operational initiatives designed to boost revenue and enhance efficiency within the organization. These initiatives include upgraded computer systems and software to: support our sales initiatives; improve inter-departmental communication; and streamline billing. In response to our customers' requests, we have also implemented an on-line ordering system whereby oncology practices can order pumps directly through our website. This simplifies the ordering process for our customers while providing operational benefits to our company."

Financial Results

Revenue for the third quarter ended September 30, 2008 was $9.0 million, versus $0 for the same period in 2007, which reflects the revenues recognized by InfuSystem Holdings, Inc. following the acquisition of InfuSystem, Inc. from I-Flow Corporation.

Operating income for the third quarter of 2008 was $1.6 million versus an operating loss of ($699,000) for the same period in 2007. The increase in operating income for the third quarter of 2008 reflects revenue and operating expenses recorded for InfuSystem, Inc. following the acquisition.

The net income for the third quarter of 2008 was $5.7 million, or $0.30 per diluted share, compared to net loss of ($505,000) or $(0.03) per diluted share, for the same period in 2007. The net income for the third quarter of 2008 included a $5.4 million gain on derivative financial instruments, which is predominantly attributable to the decrease in the publicly traded value of the Company's warrants during the quarter, compared to a ($675,000) loss for the third quarter of 2007.

Adjusted EBITDA for the third quarter ended September 30, 2008 was $3.6 million, as compared to an Adjusted EBITDA loss of approximately ($435,000) for the same period of 2007. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, and excludes gain (loss) on derivative financial instruments, and stock-based compensation. Adjusted EBITDA is not a measure of performance calculated in accordance with accounting principles generally accepted in the United States ("GAAP"), and should not be considered in isolation of, or as a substitute for, earnings as an indicator of operating performance, or cash flows from operating activities as a measure of liquidity. The Company believes the presentation of Adjusted EBITDA is relevant and useful by enhancing the readers' ability to understand the Company's operating performance. The Company's management utilizes Adjusted EBITDA as a means to measure performance. The Company's measurements of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. The tables below reconcile Adjusted EBITDA, a non-GAAP measure, to net income for the three and nine months ended September 30, 2008 and 2007.

Reconciliation from Net Income to Adjusted EBITDA:

(in thousands, except per share data)

Three Months Ended September 30

I-Flow Predecessor

2008 2007 2007

Net Income $5,704 $(505) $1,308

Adjustments:

Interest expense 937 18 -

Interest income (11) (1,210) -

Income tax expense 399 323 936

Depreciation -- Pumps 978 - 1,032

Depreciation -- Other 47 - 39

Amortization 456 - -

EBITDA $8,511 $(1,374) $3,315

Adjustments:

(Gain) loss on derivatives (5,381) 675 -

Stock based compensation 479 264 159

Adj. EBITDA $3,609 $(435) $3,474

Adj. EBITDA EPS - basic 0.20 (0.02) N/A

Adj. EBITDA EPS - diluted 0.19 (0.02) N/A

Reconciliation from Net Income to Adjusted EBITDA:

(in thousands, except per share data)

Nine Months Ended September 30

I-Flow Predecessor

2008 2007 2007

Net Income $8,700 $(928) $3,604

Adjustments:

Interest expense 2,828 33 (237)

Interest income (14) (3,534) -

Income tax expense 399 752 2,460

Depreciation -- Pumps 2,908 - 2,307

Depreciation -- Other 133 - 125

Amortization 1,370 - -

EBITDA $16,325 $(3,677) $8,259

Adjustments:

(Gain) loss on derivatives (8,665) 675 -

Stock based compensation 1,166 1,490 305

Adj. EBITDA $8,826 $(1,512) $8,564

Adj. EBITDA EPS - basic 0.50 (0.08) N/A

Adj. EBITDA EPS - diluted 0.47 (0.08) N/A

About InfuSystem Holdings, Inc.

InfuSystem is the leading provider of ambulatory infusion pumps and associated clinical services for oncology practices and their patients in the U.S. These pumps allow for the gradual delivery of a drug over a period of days in the privacy of one's home, compared to bolus infusion chemotherapy treatments that are given in a single high dose over a short period of time. Improved efficacy of the drugs, patient comfort, reimbursement to doctors for appropriate services and continuity of care all play a role in the growing trend toward this form of treatment. InfuSystem's pumps are primarily used for colorectal cancer, but they have been approved for other forms of cancer, thereby greatly enhancing the market opportunity for InfuSystem.

Forward-Looking Statements

Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those predicted by such forward-looking statements. These risks and uncertainties include general economic conditions, as well as other risks detailed from time to time in InfuSystem's publicly filed documents.

(Tables follow)

InfuSystem Holdings, Inc.

CONSOLIDATED BALANCE SHEETS

September 30, December 31,

(in thousands, except share data) 2008 2007

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents 10,795 3,960

Accounts receivable, less allowance

for doubtful accounts of $1,935 and

$1,638 at September 30, 2008 and

December 31, 2007, respectively;

September 30, 2008 and December 31, 2007

include $40 and $103 due from I-Flow,

respectively 4,132 6,304

Inventory supplies 397 364

Prepaid expenses and other current assets 394 1,263

Deferred income taxes 4 4

Total Current Assets 15,722 11,895

Property & equipment, net 11,232 13,504

Deferred debt issuance costs, net 1,424 1,918

Deferred Income Taxes - -

Goodwill 56,580 56,544

Intangible assets, net 31,195 32,565

Total Assets 116,153 116,426

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable 1,213 1,076

Other current liabilities 776 1,886

Derivative liabilities 3,742 12,407

Current portion of long-term debt;

September 30, 2008 and December 31,

2007 include $3,270 and $2,044 payable

to I-Flow, respectively 3,348 2,044

Total Current Liabilities 9,079 17,413

Long-term debt, net of current portion;

September 30, 2008 and December 31, 2007

include $27,798 and $30,250 payable to

I-Flow, respectively 28,159 30,250

Deferred income taxes 403 4

Total Liabilities 37,641 47,667

Stockholders' Equity

Preferred stock, $.0001 par value:

authorized 1,000,000 shares; none issued - -

Common stock, $.0001 par value; authorized

200,000,000 shares; issued 18,426,421 and

18,315,430, respectively; outstanding

17,192,377 and 16,824,295, respectively 2 2

Additional paid-in capital 80,490 79,437

Retained deficit (1,980) (10,680)

Total Stockholders' Equity 78,512 68,759

Total Liabilities and Stockholders'

Equity 116,153 116,426

InfuSystem Holdings, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended September 30,

I-Flow

(in thousands, except Predecessor

per share data) 2008 2007 2007

Net revenues $8,958 $- $7,822

Operating expenses:

Cost of Revenues -- Product

and supply costs 1,340 - 1,159

Cost of Revenues -- Pump

depreciation 978 - 1,032

Provision for doubtful

accounts 702 - 619

Amortization of intangibles 456 - -

Selling and marketing 1,131 - 1,036

General and administrative 2,703 699 1,732

Total Operating Expenses 7,310 699 5,578

Other income (expense):

Gain (loss) on derivatives 5,381 (675) -

Interest income 11 1,210 -

Interest expense (937) (18) -

Total other income 4,455 517 -

Income (loss) before income taxes 6,103 (182) 2,244

Income tax expense (399) (323) (936)

Net income (loss) 5,704 (505) 1,308

Net income (loss) per share:

Basic 0.31 (0.03) N/A

Diluted 0.30 (0.03) N/A

Weighted average shares outstanding:

Basic 18,442,957* 18,625,252 N/A

Diluted 18,794,182 18,625,252 N/A

Nine Months Ended September 30,

I-Flow

(in thousands, except Predecessor

per share data) 2008 2007 2007

Net revenues $26,323 $- $23,528

Operating expenses:

Cost of Revenues -- Product

and supply costs 4,182 - 3,746

Cost of Revenues -- Pump

depreciation 2,908 - 2,307

Provision for doubtful accounts 2,477 - 3,278

Amortization of intangibles 1,370 - -

Selling and marketing 3,401 - 3,030

General and administrative 8,737 3,002 5,340

Total Operating Expenses 23,075 3,002 17,701

Other income (expense):

Gain (loss) on derivatives 8,665 (675) -

Interest income 14 3,534 -

Interest expense (2,828) (33) 237

Total other income 5,851 2,826 237

Income (loss) before income taxes 9,099 (176) 6,064

Income tax expense (399) (752) (2,460)

Net income (loss) 8,700 (928) 3,604

Net income (loss) per share:

Basic 0.49 (0.05) N/A

Diluted 0.47 (0.05) N/A

Weighted average shares

outstanding:

Basic 17,757,075* 18,625,252 N/A

Diluted 18,581,789 18,625,252 N/A

* Includes, from April 25, 2008, the 1,234,044 shares referenced in Notes 9 and 10 to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

InfuSystem Holdings, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30,

I-Flow

Predecessor

(in thousands) 2008 2007 2007

OPERATING ACTIVITIES

Net Income (Loss) 8,700 (928) 3,604

Items included in net income

not requiring cash:

(Gain) loss on derivative

liabilities (8,665) 675 -

Provision for doubtful

accounts 2,477 - 3,278

Depreciation 3,041 - 2,432

Amortization of intangible

assets 1,370 - -

Amortization of deferred

debt issuance costs 494 - -

Loss on disposal of assets 385 - 241

Interest Income on Investments

Held in Trust - (3,528) -

Withdrawal of interest earned

on investments held in trust - 422 -

Stock-based compensation 1,166 1,490 305

Deferred Income Taxes 399 - (517)

Changes in current assets and

liabilities:

Decrease (increase) in accounts

receivable (305) - (1,636)

Decrease (increase) in prepaid

expenses and other current

assets 836 439 (129)

(Decrease) increase in accounts

payable and other current

liabilities (628) 768 (953)

NET CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIES 9,270 (662) 6,625

INVESTING ACTIVITIES

Payment of deferred

acquisition costs (105) (252) -

Capital expenditures (951) - (2,664)

Proceeds from sale of property - - 231

NET CASH USED IN INVESTING

ACTIVITIES (1,056) (252) (2,433)

FINANCING ACTIVITIES

Net capital distributions to

parent - - (5,147)

Principal payments on term loan (1,226) - -

Common stock repurchased to

satisfy minimum statutory

withholding on stock-based

compensation (113) - -

Principal payments on capital

lease obligation (40) - -

Proceeds from issuance of

warrants - 514 -

NET CASH (USED IN) PROVIDED BY

FINANCING ACTIVITIES (1,379) 514 (5,147)

Net change in cash and cash

equivalents 6,835 (400) (955)

Cash and cash equivalents,

beginning of period 3,960 427 1,956

Cash and cash equivalents,

end of period 10,795 27 1,001

SUPPLEMENTAL DISCLOSURES

Cash paid for interest

(including swap payments/

proceeds, and excluding

capitalized interest) $2,334 $4 $-

Cash paid for income taxes $478 $695 $186

NON-CASH TRANSACTIONS

Additions to property $80 $- $241

Property acquired with a

capital lease $480 $- $-

Issuance of vested restricted

shares (number of shares) 150 - -


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SOURCE InfuSystem Holdings, Inc.
Copyright©2008 PR Newswire.
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