MADISON HEIGHTS — InfuSystem Holdings Inc. (NYSE MKT: INFU), a national provider of infusion pumps and related services for the health care industry in the United States, reported its second consecutive quarter of profitability in the fourth quarter ending Dec. 31.
Revenue for the quarter was $16.2 million, up 16 percent from $14 million in the fourth quarter of 2011.
For the year, revenue was $58.8 million, up 8 percent from $54.6 million in 2011.
The company said revenues rose due to the addition of larger customers, increased penetration into existing customer accounts, and the resolution of the oncology drug shortage from 2011. Also, during the fourth quarter of 2012, a major group of third-party payors revised their claim processing guidelines that affected all durable medical equipment providers, which pushed some claims to be billed at higher out-of-network rates directly to patients.
Net income in the fourth quarter was $221,000, or 1 cent a share, compared to a net loss of $763,000 or 4 cents a share in the same quarter a year earlier. For the full year, the company’s net loss was $1.5 million, or 7 cents a share, an improvement from a loss of $45.4 million or $2.16 a share, in 2011. The 2011 loss includes a one-time asset impairment charge of $67.6 million.
“We are very pleased with our improved fourth quarter performance and fiscal year-over-year growth for the Company,” said Dilip Singh, interim CEO. “The company has accumulated annualized cost savings of approximately $1.6 million since the current management team took control in April of 2012. That, combined with our securing a new debt facility during the fourth quarter, has helped restore the company’s liquidity and create a far stronger balance sheet. Equally important, we have generated sufficient momentum to increase the number of third-party payor relationships and expand our provider footprint while delivering best in class service and patient satisfaction. Our efforts are now clearly focused on sustaining long-term growth.”
Gross profit for the year ended Dec. 31 was $42.9 million, an increase of 21 percent compared to $35.4 million in the prior year. It represented 73 percent of revenues in the current year compared to 65 percent the prior year. The increase in the gross margin as a percentage of revenue in 2012 was primarily related to the increase in rental revenue, specifically third party billings, which generally have a higher gross profit margin.
Selling and marketing expenses were $9.9 million compared to $9.4 million for the year ended Dec. 31, 2011. The increase in selling and marketing expenses is primarily related to expenses incurred by the increase in associated revenues as well as increased retention and travel costs. Compared to the prior year, these expenses remained consistent at 17 percent of revenues.
During the year ended Dec. 31, 2012, general and administrative expenses were $23.1 million, up from $18 million for the year ended Dec. 31, 2011. General and administrative expenses have increased from 33 to 39 percent of revenue for the year ended Dec. 31, 2012 compared to the same period in the prior year. The increase was primarily due to an increase in professional service costs related to the Concerned Stockholder Group. Additional legal, accounting and outside service fees of $2.2 million were incurred during the year relating to this matter and the related early extinguishment of debt; severance payments for the former CEO amounted to $1.0 million; $0.6 million was recorded for retention payments to key employees during this ongoing matter; and we incurred $0.6 million associated with our decision to evaluate potential strategic alternatives.
Additional increases were mainly attributed to an increase in finance and accounting staff and several other general and administrative accounts. These costs were partially offset by the reversal of previously recognized stock compensation expense of $1.4 million.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $13.1 million for the latest fiscal year. This compares to 2011’s adjusted EBITDA, adjusted on a comparable basis, of $10.3 million. The Company utilizes Adjusted EBITDA as a means to measure its operating performance. A reconciliation from Adjusted EBITDA, a non-GAAP measure, to net income can be found in the appendix.
Net cash provided by operations for fiscal 2012 was $5.5 million, down from the $6.7 million for the prior year. This decrease is mainly attributed to higher accounts receivable levels due to the higher revenue in the fourth quarter of 2012. As of Dec. 31, 2012, the company had cash and cash equivalents of $2.3 million and $4.7 million of availability on the revolving line-of-credit compared to $800,000 and $4.9 million of availability on the revolving line-of-credit at Dec. 31, 2011. This increase is due to the new credit facility and better cash management during the year.
Headquartered in Madison Heights, the company delivers local, field-based customer support and also operates Centers of Excellence in Michigan, Kansas, California, and Ontario, Canada.