InfuSystem Holdings Inc

Previous wording

Certain statements contained in this quarterly report on Form 10-Q are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "strategy," "future," "likely," variations of such words, and other similar expressions, as they relate to the Company, are intended to identify forward-looking statements. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company is identifying certain factors that could cause actual results to differ, perhaps materially, from those indicated by these forward-looking statements. Those factors, risks and uncertainties include, but are not limited to, the effect of the coronavirus (“COVID-19”) pandemic or any resurgence thereof on our business, potential changes in healthcare payer mix and overall healthcare reimbursement, including the Centers for Medicare and Medicaid Services (“CMS”) competitive bidding and fee schedule reductions, sequestration, concentration of customers, increased focus on early detection of cancer, competitive treatments, dependency on Medicare Supplier Number, availability of chemotherapy drugs, global financial conditions and recessionary risks, rising inflation and interest rates, labor and supply chain disruptions, changes and enforcement of state and federal laws, natural forces, competition, dependency on suppliers, risks in acquisitions & joint ventures, U.S. Healthcare Reform, relationships with healthcare professionals and organizations, technological changes related to infusion therapy, the Company’s ability to implement information technology improvements and to respond to technological changes, the ability of the Company to successfully integrate acquired businesses, dependency on key personnel, systemic pressures in the banking sector, including disruptions to credit markets, dependency on banking relations and the ability to comply with our credit facility covenants, the Company's ability to remediate its previously disclosed material weaknesses in internal control over financial reporting, and other risks associated with our common stock, as well as any litigation in which the Company may be involved from time to time; and other risk factors as discussed in the Company’s annual report on Form 10-K for the year ended December 31, 2023 filed on April 10, 2024, this quarterly report on Form 10-Q and in other filings made by the Company from time to time with the Securities and Exchange Commission (“SEC”). Our annual report on Form 10-K is available on the SEC’s EDGAR website atwww.sec.gov, and a copy may also be obtained by contacting the Company. All…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain statements contained in this quarterly report on Form 10-Q are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "strategy," "future," "likely," variations of such words, and other similar expressions, as they relate to the Company, are intended to identify forward-looking statements. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company is identifying certain factors that could cause actual results to differ, perhaps materially, from those indicated by these forward-looking statements. Those factors, risks and uncertainties include, but are not limited to, the effect of disruptions caused by public health emergencies or extreme weather or other climate change-related events on our business, potential changes in healthcare payer mix and overall healthcare reimbursement, including the Centers for Medicare and Medicaid Services (“CMS”) competitive bidding and fee schedule reductions, sequestration, concentration of customers, increased focus on early detection of cancer, competitive treatments, dependency on Medicare Supplier Number, availability of chemotherapy drugs, global financial conditions and recessionary risks, rising inflation and interest rates, labor and supply chain disruptions, changes and enforcement of state and federal laws, natural forces, competition, dependency on suppliers, risks in acquisitions & joint ventures, U.S. Healthcare Reform, relationships with healthcare professionals and organizations, technological changes related to infusion therapy, the Company’s ability to implement information technology improvements and to respond to technological changes, the ability of the Company to successfully integrate acquired businesses, dependency on key personnel, systemic pressures in the banking sector, including disruptions to credit markets, dependency on banking relations and the ability to comply with our credit facility covenants, the Company's ability to remediate its previously disclosed material weaknesses in internal control over financial reporting, and other risks associated with our common stock, as well as any litigation in which the Company may be involved from time to time; and other risk factors as discussed in the Company’s annual report on Form 10-K for the year ended December 31, 2023 filed on April 10, 2024, this quarterly report on Form 10-Q and in other filings made by the Company from time to time with the Securities and Exchange Commission (“SEC”). Our annual report on Form 10-K is available on the SEC’s EDGAR website atwww.sec.gov, and a copy may also …

Excerpt shortened here; the source contains the full paragraph.

Previous wording

•Wound Care – launched in November 2022, the Company established a partnership, SI Wound Care, LLC ("SI Wound Care"), with Sanara MedTech Inc. "Sanara"). The partnership will focus on delivering a complete wound care solution targeted at improving patient outcomes, lowering the cost of care, and increasing patient and provider satisfaction. The partnership is expected to enable InfuSystem to offer innovative products including negative pressure wound therapy ("NPWT") devices and supplies from Cork Medical LLC's ("Cork") and Genadyne Biotechnologies Inc. and Sanara's advanced wound care product line to new customers through the jointly controlled entity.

Current wording

•Wound Care – launched in November 2022, the Company established a partnership, SI Wound Care, LLC ("SI Wound Care"), with Sanara MedTech Inc. "Sanara"). The partnership focuses on delivering a complete wound care solution targeted at improving patient outcomes, lowering the cost of care, and increasing patient and provider satisfaction. The partnership enables InfuSystem to offer innovative products including negative pressure wound therapy ("NPWT") devices and supplies from Cork Medical LLC's ("Cork") and Genadyne Biotechnologies Inc. and Sanara's advanced wound care product line to new customers through the jointly controlled entity.

Previous wording

Net revenues for the quarter ended June 30, 2024 ("second quarter of 2024") were $33.7 million, an increase of $2.0 million, or 6.2%, compared to $31.7 million for the quarter ended June 30, 2023 ("second quarter of 2023"). The increase included higher net revenues for both the Patient Services and Device Solutions segments.

Current wording

Net revenues for the quarter ended September 30, 2024 ("third quarter of 2024") were $35.3 million, an increase of $3.4 million, or 10.7%, compared to $31.9 million for the quarter ended September 30, 2023 ("third quarter of 2023"). The increase included higher net revenues for both the Patient Services and Device Solutions segments.

Previous wording

Patient Services net revenue of $20.2 million increased $0.9 million, or 4.8%, during the second quarter of 2024 compared to the prior year period. This increase was primarily attributable to additional treatment volume and increased third-party payer collections totaling $2.1 million offset partially by $1.2 million lower revenue from sales-type leases of NPWT pumps. The improved volume and collections benefited Oncology revenue by $1.5 million, or 8.9%, Pain Management revenue by $0.3 million, or 28.9%, and Wound Care treatment revenue by $0.3 million, or 188.0%. Sales-Type Lease revenue of NPWT pumps, which had a tough comparison to an unusually strong prior year, decreased by $1.2 million.

Current wording

Patient Services net revenue of $20.8 million increased $1.5 million, or 7.7%, during the third quarter of 2024 compared to the prior year period. This increase was primarily attributable to additional treatment volume and increased third-party payer collections totaling $2.4 million, offset partially by $1.0 million lower revenue from sales-type leases of NPWT pumps. The improved volume and collections benefited Oncology revenue by $1.8 million, or 10.7%, Pain Management revenue by $0.2 million, or 14.3%, and Wound Care treatment revenue by $0.5 million, or 219%. The decrease in Sales-Type Lease revenue of NPWT pumps was mainly due to an unusually strong prior year comparison.

Previous wording

Device Solutions net revenue of $13.5 million increased $1.0 million, or 8.3%, during the second quarter of 2024 compared to the prior year period. This increase included higher biomedical services revenue, which increased by $0.5 million, or 13.6%, higher rental revenue totaling $0.4 million, or 9.2%, and higher disposable medical supplies revenue, which increased by $0.4 million, or 20.4%. These increases were partially offset by lower medical equipment sales, which decreased by $0.3 million, or 18.8%. The increased biomedical revenue was mainly attributable to increased revenue from the master services agreement that we entered into in April 2022. The increases in rental revenue and disposables are mainly attributable to a new customer added during the period. Lower medical equipment sales reflects normal shipment timing for large contracts.

Current wording

Device Solutions net revenue of $14.5 million increased $1.9 million, or 15.2%, during the third quarter of 2024 compared to the prior year period. This increase included increased medical equipment sales of $1.1 million, or 89.5%, and higher rental revenue totaling $0.7 million, or 16.0%. Higher medical equipment sales were due to a large sale to an existing rental customer and reflects how timing for large contracts can vary from quarter-to-quarter. The increases in rental revenue was mainly attributable to a new customer added during the 2024 second quarter.

Previous wording

Patient Services gross profit was $13.4 million during the second quarter of 2024, representing an increase of $1.6 million compared to the prior year period. The increase reflected the higher net revenue and higher gross margin, which increased from the prior year by 5.1% to 66.4%. The increase in gross margin reflected increased third-party payer collections, favorable gross margin mix, lower pump disposal expenses and improved coverage of fixed costs from higher net revenue. The favorable gross margin mix was mainly related to the decrease in revenue related to NPWT equipment leases which have a lower average gross margin than other Patient Services revenue categories. Pump disposal expenses, which include retirements of damaged pumps and reserves for missing pumps, decreased by $0.1 million during the second quarter of 2024 compared to the prior year period.

Current wording

Patient Services gross profit was $13.7 million during the third quarter of 2024, representing an increase of $1.9 million, or 15.8%, compared to the prior year period. The increase reflected the higher net revenue and higher gross margin, which increased from the prior year by 4.6% to 66.0%. The increase in gross margin reflected increased third-party payer collections, favorable gross margin mix and improved coverage of fixed costs from higher net revenue. The favorable gross margin mix was mainly related to the decrease in revenue related to NPWT equipment leases which had lower average gross margin than other Patient Services revenue categories.

Previous wording

Device Solutions gross profit during the second quarter of 2024 was $3.2 million, representing a decrease of $0.8 million, or 19.1%, compared to the prior year. This decrease was due to the $0.6 million error correction and a decrease in gross margin. These decreases were partially offset by higher net revenue. The Device Solutions gross margin was 24.0% during the current quarter, which was 8.1% lower than the prior year period which included a 4.1% reduction related to the error correction. The remaining decrease was due to unfavorable sales mix favoring lower margin products including disposable medical supplies.

Current wording

Device Solutions gross profit during the third quarter of 2024 was $5.3 million, representing an increase of $1.6 million, or 41.2%, compared to the prior year. This increase was due to the increase in net revenue and an increased gross margin. The Device Solutions gross margin was 36.7% during the current quarter, which was 6.7% higher than the prior year period. The increase was due to favorable sales mix involving higher margin products including rental revenue and sales of used medical equipment.

Previous wording

Selling and marketing expenses were $3.0 million for the second quarter of 2024, representing an increase of $0.1 million, or 1.9%, compared to the prior year. Selling and marketing expenses as a percentage of net revenues decreased to 9.0% compared to 9.4% in the prior year period. This decrease reflected a reduction in sales team members and improved coverage of fixed costs from higher net revenues. The selling and marketing expenses during these periods consisted of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, travel and entertainment and other miscellaneous expenses.

Current wording

Selling and marketing expenses were $2.8 million for the third quarter of 2024, representing an increase of 1.0%, compared to the prior year. Selling and marketing expenses as a percentage of net revenues decreased to 7.8% compared to 8.5% in the prior year period. This decrease reflected a reduction in sales team members and improved coverage of fixed costs from higher net revenues. The selling and marketing expenses during these periods consisted of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, travel and entertainment and other miscellaneous expenses.

Previous wording

General and administrative ("G&A") expenses for the second quarter of 2024 were $11.5 million, an increase of 1.5% from $11.4 million for the second quarter of 2023. G&A expenses during these periods consisted primarily of accounting, administrative, third-party payer billing and contract services, customer service, nurses on staff, new product services, service center personnel salaries, fringe benefits and other payroll-related items, professional fees, legal fees, stock-based compensation, insurance and other miscellaneous items. G&A expenses as a percentage of net revenues for the second quarter of 2024 decreased to 34.2% compared to 35.8% for the prior year period, mainly reflecting improved net revenue leverage over fixed costs.

Current wording

General and administrative ("G&A") expenses for the third quarter of 2024 were $12.8 million, an increase of $1.8 million, or 16.8%, from the third quarter of 2023. G&A expenses during these periods consisted primarily of accounting, administrative, third-party payer billing and contract services, customer service, nurses on staff, new product services, service center personnel salaries, fringe benefits and other payroll-related items, professional fees, legal fees, stock-based compensation, insurance and other miscellaneous items. The increase over the prior year of $1.8 million included increased stock-based compensation expenses of $0.2 million, increased accrued incentive compensation totaling $0.3 million, an increase in accrued bad debt expense of $0.2 million and $0.3 million of expenses not incurred in 2023 related to a project to upgrade the Company's information technology and business applications. Other increased expenses totaling $0.8 million were associated with revenue volume growth including the cost of additional personnel, information technology and general business expenses and included inflationary increases. G&A expenses as a percentage of net revenues for the third quarter of 2024 increased to 36.2% from 34.3% for the prior year period.

Previous wording

During the second quarter of 2024, other expense included interest expense of $0.5 million, which was $0.1 million lower than interest expense for the second quarter of 2023. Interest expense includes interest and other fees paid in relation to borrowings under the 2021 Credit Agreement, as amended, partially offset by amounts received on interest rate swap derivatives. The decrease resulted from lower average outstanding debt balances during the second quarter of 2024 compared to the second quarter of 2023, partially offset by higher commitment fees on a higher unused revolving line availability.

Current wording

During the third quarter of 2024, other expense included interest expense of $0.5 million, which was $0.1 million lower than interest expense for the third quarter of 2023. Interest expense includes interest and other fees paid in relation to borrowings under the 2021 Credit Agreement, as amended, partially offset by amounts received on interest rate swap derivatives. The decrease resulted from lower average outstanding debt balances during the third quarter of 2024 compared to the third quarter of 2023, partially offset by higher commitment fees on a higher unused revolving line availability.

Previous wording

During the second quarter of 2024, the Company recorded a provision for income taxes totaling $0.6 million on pre-tax income of $1.3 million, representing an effective tax rate of 45%. During the second quarter of 2023, the Company recorded a provision for income taxes of $0.2 million on a pre-tax income of $0.6 million, representing an effective tax rate of 31%. The effective tax rates for these periods differed from the U.S. statutory rate mainly due to the effects of local, state and foreign jurisdiction income taxes and certain permanent differences in expenses recognized for tax purposes, such as non-deductible meals and entertainment, management compensation and differences between expense recognized for book purposes versus tax purposes associated with equity compensation expense. The impact of permanent differences weigh heavier on the effective tax rate when pre-tax earnings are close to break even.

Current wording

During the third quarter of 2024, the Company recorded a provision for income taxes totaling $1.0 million on pre-tax income of $2.8 million, representing an effective tax rate of 35%. During the third quarter of 2023, the Company recorded a provision for income taxes of $0.4 million on a pre-tax income of $1.1 million, representing an effective tax rate of 38%. The effective tax rates for these periods differed from the U.S. statutory rate mainly due to the effects of local, state and foreign jurisdiction income taxes and certain permanent differences in expenses recognized for tax purposes, such as non-deductible meals and entertainment, management compensation and differences between expense recognized for book purposes versus tax purposes associated with equity compensation expense. The impact of permanent differences weigh heavier on the effective tax rate when pre-tax earnings are close to break even.

Previous wording

InfuSystem Holdings, Inc. Results of Operations for the Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

Current wording

InfuSystem Holdings, Inc. Results of Operations for the Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

Previous wording

The following represents the Company’s results of operations for the six months ended June 30, 2024 and 2023:

Current wording

The following represents the Company’s results of operations for the nine months ended September 30, 2024 and 2023:

Previous wording

Net revenues for the six-month period ended June 30, 2024 ("first half of 2024") were $65.7 million, an increase of $3.6 million, or 5.8%, compared to $62.1 million for the six-month period ended June 30, 2023 ("first half of 2023"). The increase included higher net revenues for both the Patient Services and Device Solutions segments.

Current wording

Net revenues for the nine-month period ended September 30, 2024 ("nine-month period of 2024") were $101.0 million, an increase of $7.0 million, or 7.4%, compared to $94.0 million for the nine-month period ended September 30, 2023 ("nine-month period of 2023"). The increase included higher net revenues for both the Patient Services and Device Solutions segments.

Previous wording

Patient Services net revenue of $38.8 million increased $0.7 million, or 2.0%, during the first half of 2024 compared to the same prior year period. This increase was primarily attributable additional treatment volume and increased third-party payer collections totaling $2.3 million offset partially by $1.5 million lower revenue from sales-type leases of NPWT pumps. The improved volume and collections benefited Oncology revenue by $1.4 million or 4.2%, Pain Management revenue by $0.2 million, or 8.4%, and Wound Care treatment revenue by $0.7 million, or 195.5%. Sales-Type Lease revenue of NPWT pumps, which had a tough comparison to an unusually strong prior year amount, decreased by $1.5 million.

Current wording

Patient Services net revenue of $59.6 million increased $2.2 million, or 3.9%, during the nine-month period of 2024 compared to the same prior year period. This increase was primarily attributable additional treatment volume and increased third-party payer collections totaling $4.7 million offset partially by $2.5 million lower revenue from sales-type leases of NPWT pumps. The improved volume and collections benefited Oncology revenue by $3.2 million or 6.4%, Pain Management revenue by $0.4 million, or 10.4%, and Wound Care treatment revenue by $1.2 million, or 205.4%. The decrease in Sales-Type Lease revenue of NPWT pumps was mainly due to an unusually strong prior year comparison.

Previous wording

Device Solutions net revenue of $26.9 million increased $2.8 million, or 11.8%, during the first half of 2024 compared to the same prior year period. This increase included higher biomedical services revenue, which increased by $1.6 million, or 21.4%, higher rental revenue totaling $0.7 million, or 8.0%, higher disposable medical supplies revenue, which increased by $0.3 million or 6.7% and higher medical equipment sales, which increased by $0.3 million, or 8.0%. The increased biomedical revenue was mainly attributable to increased revenue from the master services agreement that we entered into in April 2022. The increases in rental revenue and disposables are mainly attributable to a new customer added during the period.

Current wording

Device Solutions net revenue of $41.4 million increased $4.8 million, or 13.0%, during the nine-month period of 2024 compared to the same prior year period. This increase included higher biomedical services revenue, which increased by $1.6 million, or 13.7%, higher rental revenue totaling $1.5 million, or 10.7%, higher disposable medical supplies revenue, which increased by $0.3 million or 4.5% and higher medical equipment sales, which increased by $1.4 million, or 30.4%. The increased biomedical revenue was mainly attributable to increased revenue from the master services agreement that we entered into in April 2022. The increases in rental revenue and disposables are mainly attributable to a new customer added during the period. Higher medical equipment sales were due to a large sale to an existing rental customer and reflects how timing for large contracts can vary from quarter-to-quarter.

Previous wording

Gross profit of $33.1 million for the first half of 2024 increased $2.4 million, or 7.7%, from $30.8 million for the first half of 2023. This increase was due to the increase in net revenues and by a higher gross profit percentage of net revenue ("gross margin"). During the second quarter of 2024, we identified and corrected an immaterial error in our accrued liabilities associated with travel expenses resulting in a unfavorable cumulative expense adjustment to cost of revenues totaling $0.6 million during the second quarter of 2024. This adjustment represented 0.8% of net revenue for the first half of 2024. Gross profit increased for both the Patient Services and Device Solutions segments. Gross margin increased to 50.4% during the first half of 2024 compared to 49.6% during the same prior year period. Gross margin increased in the Patient Services segment but was lower in the Device Solutions segment.

Current wording

Gross profit of $52.2 million for the nine-month period of 2024 increased $5.8 million, or 12.5%, from $46.4 million for the nine-month period of 2023. This increase was due to the increase in net revenues and by a higher gross margin. During the second quarter of 2024, we identified and corrected an immaterial error in our accrued liabilities associated with travel expenses resulting in a unfavorable cumulative expense adjustment to cost of revenues totaling $0.6 million. This adjustment represented 0.6% of net revenue for the nine-month period of 2024. Gross profit increased for both the Patient Services and Device Solutions segments. Gross margin increased to 51.7% during the nine-month period of 2024 compared to 49.4% during the same prior year period. Gross profit and gross margin were each higher in both the Patient Services and Devices Solutions segments.

Previous wording

Patient Services gross profit was $25.7 million during the first half of 2024, representing an increase of $2.3 million, or 10.0%, compared to the same prior year period. The improvement reflected increased net revenue and higher gross margin, which increased from the prior year by 4.8% to 66.2%. The increase in gross margin reflected increased third-party payer collections, lower pump disposal expenses, favorable gross margin mix and improved coverage of fixed costs from higher net revenue. The favorable gross margin mix was mainly related to the decrease in revenue related to NPWT equipment leases which have a lower average gross margin than other Patient Services revenue categories. Pump disposal expenses, which include retirements of damaged pumps and reserves for missing pumps, decreased by $0.6 million during the first half of 2024 compared to the prior year period.

Current wording

Patient Services gross profit was $39.4 million during the nine-month period of 2024, representing an increase of $4.2 million, or 11.9%, compared to the same prior year period. The improvement reflected increased net revenue and higher gross margin, which increased from the prior year by 4.7% to 66.1%. The increase in gross margin reflected increased third-party payer collections, lower pump disposal expenses, favorable gross margin mix and improved coverage of fixed costs from higher net revenue. The favorable gross margin mix was mainly related to the decrease in revenue related to NPWT equipment leases, which had lower average gross margin than other Patient Services revenue categories. Pump disposal expenses, which include retirements of damaged pumps and reserves for missing pumps, decreased by $0.7 million during the nine-month period of 2024 compared to the prior year period.

Previous wording

Device Solutions gross profit during the first half of 2024 was $7.4 million, which was the same amount as the prior year period. Higher gross profit associated with increased net revenue was offset by a lower gross margin. The Device Solutions gross margin was 27.6% during the current period, which was 3.2% lower than the same prior year period. This decrease included a 2.1% reduction related to the error correction. The remaining decrease was due to unfavorable sales mix favoring lower margin products including disposable medical supplies.

Current wording

Device Solutions gross profit during the nine-month period of 2024 was $12.8 million, representing an increase of $1.6 million, or 14.2%, compared to the same prior year period. The improvement reflected increased net revenue. The Device Solutions gross margin was 30.8% during the current period, which was 0.3% higher than the same prior year period. This amount included a 1.5% reduction related to the error correction which was more than offset by improved sales mix favoring higher margin products including rental revenue and sales of used medical equipment.

Previous wording

Selling and marketing expenses for the first half of 2024 were $6.4 million, representing an increase of $0.2 million, or 3.4%, compared to selling and marketing expenses for the first half of 2023. Selling and marketing expenses consist of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, travel and entertainment and other miscellaneous expenses. Selling and marketing expenses as a percentage of net revenues was 9.8% representing a slight decrease from the prior year period amount of 10.0%.

Current wording

Selling and marketing expenses for the nine-month period of 2024 were $9.2 million, representing an increase of $0.2 million, or 2.6%, compared to selling and marketing expenses for the nine-month period of 2023. Selling and marketing expenses consist of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, travel and entertainment and other miscellaneous expenses. Selling and marketing expenses as a percentage of net revenues was 9.1% representing a slight decrease from the prior year period amount of 9.5%.

Previous wording

Additionally, the amount for 2024 included a one-time $0.6 million payment to a former member of the board of directors related to a Cooperation Agreement and a one-time payment to the Company's former audit firm for services related to their consent to include their prior year audit report in our 2023 annual report totaling $0.3 million. The remaining increase of $1.4 million included increased stock-based compensation expenses of $0.4 million and other increased expenses totaling $1.0 million. The other increases were associated with revenue volume growth including the cost of additional personnel, information technology and general business expenses and included inflationary increases. G&A expenses as a percentage of net revenues for the first half of 2024 increased to 38.4% compared to 36.9% for the same prior year period.

Current wording

G&A expenses for the nine-month period of 2024 were $38.0 million, an increase of $4.1 million, or 12.1%, from the nine-month period of 2023. G&A expenses during these periods consisted primarily of accounting, administrative, third-party payer billing and contract services, customer service, nurses on staff, new product services, service center personnel salaries, fringe benefits and other payroll-related items, professional fees, legal fees, stock-based compensation, insurance and other miscellaneous items. Additionally, the amount for 2024 included a one-time $0.6 million payment to a former member of the board of directors related to a Cooperation Agreement and a one-time payment to the Company's former audit firm for services related to their consent to include their prior year audit report in our 2023 annual report totaling $0.3 million. The remaining increase of $3.2 million included increased stock-based compensation expenses of $0.5 million, and $0.3 million of expenses not incurred in 2023 related to a project to upgrade the Company's information technology and business applications. Other increased expenses totaling $2.4 million were associated with revenue volume growth including the cost of additional personnel, information technology and general business expenses and included inflationary increases. G&A expenses as a percentage of net revenues for the nine-month period of 2024 increased to 37.6% compared to 36.0% for the same prior year period.

Previous wording

During the first half of 2024, other income and expense included interest expense of $0.9 million, which was slightly lower than interest expense for the first half of 2023. This decrease was due to a decrease in outstanding borrowings on the 2021 Credit Agreement, as amended, (defined below) revolving line of credit partially offset by higher average interest rates.

Current wording

During the nine-month period of 2024, other income and expense included interest expense of $1.4 million, which was $0.3 million lower than interest expense for the nine-month period of 2023. This decrease was due to a decrease in outstanding borrowings on the 2021 Credit Agreement, as amended, (defined below) revolving line of credit.

Previous wording

During the first half of 2024, the Company recorded a provision for income taxes totaling $0.4 million on a slight amount of pre-tax income. During the first half of 2023, the Company recorded a benefit from income taxes totaling $0.1 million on a slight amount of pre-tax income. These amounts differed from the U.S. statutory amounts mainly due to the effects of local, state and foreign jurisdiction income taxes, limitations on the deductions of certain expenses including meals and entertainment expense and management compensation and differences between expense recognized for book purposes versus tax purposes associated with equity compensation expense. The impact of permanent differences weighs heavier on the effective tax rate when pre-tax earnings are close to break even.

Current wording

During the nine-month period of 2024, the Company recorded a provision for income taxes totaling $1.4 million on pre-tax income of $2.8 million, representing an effective tax rate of 49%. During the nine-month period of 2023, the Company recorded a provision for income taxes totaling $0.3 million on pre-tax income of $1.1 million, representing an effective tax rate of 29%. These amounts differed from the U.S. statutory amounts mainly due to the effects of local, state and foreign jurisdiction income taxes, limitations on the deductions of certain expenses including meals and entertainment expense and management compensation and differences between expense recognized for book purposes versus tax purposes associated with equity compensation expense.

Previous wording

As of June 30, 2024, amounts outstanding under the Revolving Facility provided under the 2021 Credit Agreement, as amended, bear interest at a variable rate equal to, at the Company’s election, Adjusted Term SOFR for Term Benchmark loans or an Alternative Base Rate for ABR loans, as defined by the First Amendment, plus a spread that will vary depending upon the Company’s leverage ratio. The spread ranges from 2.00% to 3.00% for Term Benchmark Loans and 1.00% to 2.00% for base rate loans. The weighted-average Term Benchmark loan rate at June 30, 2024 was 7.43% (Adjusted Term SOFR of 5.43% plus 2.00%). The actual ABR loan rate at June 30, 2024 was 9.50% (lender’s prime rate of 8.50% plus 1.00%). As of June 30, 2024, the Company was in compliance with all debt-related covenants under the 2021 Credit Agreement, as amended.

Current wording

As of September 30, 2024, amounts outstanding under the Revolving Facility provided under the 2021 Credit Agreement, as amended, bear interest at a variable rate equal to, at the Company’s election, Adjusted Term SOFR for Term Benchmark loans or an Alternative Base Rate for ABR loans, as defined by the First Amendment, plus a spread that will vary depending upon the Company’s leverage ratio. The spread ranges from 2.00% to 3.00% for Term Benchmark Loans and 1.00% to 2.00% for base rate loans. The weighted-average Term Benchmark loan rate at September 30, 2024 was 7.43% (Adjusted Term SOFR of 5.08% plus 2.35%). The actual ABR loan rate at September 30, 2024 was 9.25% (lender’s prime rate of 8.00% plus 1.25%). As of September 30, 2024, the Company was in compliance with all debt-related covenants under the 2021 Credit Agreement, as amended.

Previous wording

As of June 30, 2024, the Company had repurchased and retired approximately $0.3 million, or 41,139 shares, of the Company's outstanding common stock under the Share Repurchase Program. The Company had repurchased and retired approximately $6.2 million, or 553,149 shares under the previous authorization.

Current wording

As of September 30, 2024, the Company had repurchased and retired approximately $1.0 million, or 149,670 shares, of the Company's outstanding common stock under the Share Repurchase Program. The Company had repurchased and retired approximately $6.2 million, or 553,149 shares under the previous authorization.

Previous wording

Operating Cash Flow. Operating cash flows provided $2.7 million in cash during the first half of 2024 and $2.3 million of cash during the first half of 2023. This $0.4 million favorable difference was attributable to a reduction of cash used to fund working capital items, which was $4.4 million during first half of 2024 compared to $5.3 million during first half of 2023, a decrease of $0.9 million. This amount was offset by a decrease in net (loss) income adjusted for non-cash items, which was $7.1 million during the first half of 2024 compared to $7.6 million during the first half of 2023, a decrease of $0.5 million. The decrease in net (loss) income adjusted for non-cash items was primarily attributable to the increased general and administrative, offset partially by the higher revenue and gross profit described above. The use of cash for working capital items during the first half of 2024 included a $3.3 million decrease in accounts payable and other liabilities net of capital items, a $1.2 million increase in accounts receivable, a $0.4 million increase in other current assets and a $0.4 million increase in inventories. These cash flow uses were partially offset by a $0.9 million decrease in other assets. The cash used for working capital items during the first half of 2023 included a $1.7 million increase in other assets, a $1.0 million increase in other current assets, a $0.9 million increase in inventories and a $0.5 million increase in accounts receivable. These were partially offset by a $1.2 million decrease in accounts payable and other liabilities net of capital items.

Current wording

Operating Cash Flow. Operating cash flows provided $12.5 million in cash during the nine-month period of 2024 and $6.6 million of cash during the nine-month period of 2023. This $6.0 million favorable difference was attributable to a reduction of cash used to fund working capital items, which was $1.4 million during nine-month period of 2024 compared to $6.0 million during nine-month period of 2023, a decrease of $4.6 million. The increase in operating cash flows also included an increase in net income adjusted for non-cash items, which was $13.9 million during the nine-month period of 2024 compared to $12.6 million during the nine-month period of 2023, an increase of $1.3 million. The increase in net income adjusted for non-cash items was primarily attributable to higher revenue and gross profit in 2024, offset partially by increased general and administrative expenses described above. The use of cash for working capital items during the nine-month period of 2024 included a $1.2 million decrease in accounts payable and other liabilities net of capital items, a $1.3 million increase in accounts receivable and a $0.3 million increase in inventories. These cash flow uses were partially offset by a $1.1 million decrease in other assets and a $0.4 million decrease in other current assets. The cash used for working capital items during the nine-month period of 2023 included a $2.3 million increase in other assets, a $1.1 million increase in other current assets, a $1.3 million increase in inventories, a $1.0 million increase in accounts receivable and a $0.3 million decrease in accounts payable and other liabilities net of capital items.

Previous wording

The increase in accounts receivable during both periods was mainly due to the increase in revenue during each period. This increase was greater during the first half of 2023 when the revenue was growing at a higher rate and increased revenue attributable to sales-type leases was included, which resulted in higher lease receivables (of which the long-term portion is included in other assets versus accounts receivable) and to the biomedical master services agreement described above, a part of which increased the related contract asset (which is included in other current assets versus accounts receivable). Revenue increased in the first half of 2024, but at a lower rate than the first half of 2023, largely resulting in an increased accounts receivable balance. Accounts payable and other liabilities net of capital items decreased by $3.3 million during the first half of 2024 and decreased $1.2 million during the first half of 2023, representing a $2.1 million unfavorable cash flow swing, mainly due to an increase in the amount paid in 2024 for the 2023 short-term incentive bonus plan as compared to the amount paid in 2023 for the 2022 short-term incentive bonus plan. The increase in inventories during 2023 reflected the higher revenue growth during that period. The decrease in other assets was due to lower long-term lease receivables due to customer payments received and a decrease in the amount of equipment sales on leases during 2024 as compared to 2023.

Current wording

The increase in accounts receivable during both periods was mainly due to the increase in revenue during each period. This increase was greater during the nine-month period of 2023 when the revenue was growing at a higher rate and increased revenue attributable to sales-type leases was included, which resulted in higher lease receivables (of which the long-term portion is included in other assets versus accounts receivable) and to the biomedical master services agreement described above, a part of which increased the related contract asset (which is included in other current assets versus accounts receivable). Revenue increased in the nine-month period of 2024, but at a lower rate than the nine-month period of 2023, resulting in a smaller accounts receivable balance increase. Accounts payable and other liabilities net of capital items decreased by $1.2 million during the nine-month period of 2024 and decreased $0.3 million during the nine-month period of 2023, representing a $0.9 million unfavorable cash flow swing, mainly due to an increase in the amount paid in 2024 for the 2023 short-term incentive bonus plan as compared to the amount paid in 2023 for the 2022 short-term incentive bonus plan. The increase in inventories during 2023 reflected the higher revenue growth during that period. The 2024 decrease in other assets was due to lower long-term lease receivables due to customer payments received and a decrease in the amount of equipment sales on leases during 2024 as compared to 2023.

Previous wording

Investing Cash Flow. Net cash used in investing activities was $7.1 million for the first half of 2024 compared to $5.4 million for the first half of 2023, an increase of $1.7 million. The increase was due to an increase totaling $1.8 million in cash used to purchase medical equipment and other property and equipment during the first half of 2024 compared to the first half of 2023. Purchases of medical equipment were higher during 2024 compared to 2023 because a higher portion of the revenue growth in 2024 came from rental revenues that require capital equipment purchases.

Current wording

Investing Cash Flow. Net cash used in investing activities was $10.0 million for the nine-month period of 2024 compared to $5.7 million for the nine-month period of 2023, an increase of $4.3 million. The increase was due to an increase totaling $3.6 million in cash used to purchase medical equipment and other property and equipment during the nine-month period of 2024 compared to the nine-month period of 2023. Purchases of medical equipment were higher during 2024 compared to 2023 because a higher portion of the revenue growth in 2024 came from rental revenues that require capital equipment purchases.

Previous wording

Financing Cash Flow. Net cash provided by financing activities for the first half of 2024 was $4.3 million compared to $3.1 million for the first half of 2023. The amount of cash flow provided by financing activities during 2024 included net revolving line of credit borrowings under the 2021 Credit Agreement totaling $5.0 million and cash proceeds from employee stock option exercises and employee stock purchase plan proceeds totaling $0.2 million combined. These cash sources were partially offset by cash used to satisfy statutory withholding on employee stock based compensation plans totaling $0.6 million and $0.3 million to repurchase the Company's common stock. Cash provided by financing activities during 2023 primarily related to net revolving line of credit borrowings under the 2021 Credit Agreement totaling $3.1 million and $0.8 million in cash proceeds from employee stock option exercises and employee stock purchase plan proceeds combined. These were partially offset by cash used to satisfy statutory withholding on employee stock based compensation plans totaling $0.5 million, $0.2 million to repurchase the Company's common stock and $0.2 million in debt issuance costs related to the First Amendment to the 2021 Credit Agreement.

Current wording

Financing Cash Flow. Net cash used in financing activities for the nine-month period of 2024 was $2.4 million compared to $0.9 million for the nine-month period of 2023. The amount of cash flow used by financing activities during 2024 included net revolving line of credit repayments under the 2021 Credit Agreement totaling $1.2 million, cash used to satisfy statutory withholding on employee stock based compensation plans totaling $0.6 million and $1.0 million to repurchase the Company's common stock. These cash uses were partially offset by cash proceeds from employee stock option exercises and employee stock purchase plan proceeds totaling $0.4 million. Cash used by financing activities during 2023 primarily related to net revolving line of credit repayments under the 2021 Credit Agreement totaling $0.4 million, $0.2 million in debt issuance costs related to the First Amendment to the 2021 Credit Agreement, cash used to satisfy statutory withholding on employee stock based compensation plans totaling $1.1 million and $0.2 million to repurchase the Company's common stock. These were partially offset by $1.0 million in cash proceeds from employee stock option exercises and employee stock purchase plan proceeds combined.