InfuSystem Holdings, Inc

Previous wording

We are a leading national health care service provider, facilitating outpatient care for Durable Medical Equipment manufacturers and health care providers. We provide our products and services to hospitals, oncology practices, ambulatory surgery centers, and other alternate site health care providers. Our headquarters is in Rochester Hills, Michigan, and we operate our business from a total of seven locations in the United States and Canada. We deliver local, field-based customer support, and we operate pump service and repair Centers of Excellence in Michigan, Kansas, California, Massachusetts, Texas and Ontario, Canada. InfuSystem, Inc., a wholly-owned subsidiary of the Company, is accredited by the Community Health Accreditation Partner (CHAP). We are also ISO 9001 certified at our Kansas, Michigan, Massachusetts, Canada and Santa Fe Springs, California locations and ISO 13485 certified at our Bakersfield, California location. During the fiscal year ended December 31, 2023, the Company also operated through First Biomedical, Inc., a Kansas Corporation, which was a wholly-owned subsidiary that merged into InfuSystem, Inc. on January 1, 2024.

Current wording

We are a leading national healthcare service provider, facilitating outpatient care for Durable Medical Equipment manufacturers and healthcare providers. We provide our products and services to hospitals, oncology practices, ambulatory surgery centers, and other alternate site healthcare providers. Our headquarters is in Rochester Hills, Michigan, and we operate our business from a total of seven locations in the U.S. and Canada. We deliver local, field-based customer support as well as operate pump service and repair Centers of Excellence in Michigan, Kansas, California, Massachusetts, Texas and Ontario, Canada. InfuSystem is accredited by the Community Health Accreditation Partner (CHAP) and is ISO 9001 certified at our Kansas, Michigan, Massachusetts, Canada and Santa Fe Springs, California locations as well as ISO 13485 certified at our Bakersfield, California location.

Previous wording

InfuSystem competes for and retains its business primarily on the basis of its long participation and strong reputation in the Durable Medical Equipment space, its long-standing relationships with Durable Medical Equipment manufacturers and its health care provider customers, and the high levels of service it provides. Current barriers to entry for potential competitors are created by our: (i) growing number of third-party payer networks under contract; (ii) economies of scale, which allow for predictable reimbursement and less costly purchase and management of the pumps, respectively; (iii) established, long-standing relationships as a provider of pumps to outpatient oncology practices in the U.S. and Canada; (iv) pump fleet of ambulatory and large volume infusion pumps for rent and for sale, which may allow us to be more responsive to the needs of physicians, outpatient oncology practices, hospitals, outpatient surgery centers, homecare practices, patient rehabilitation centers and patients than a new market entrant; (v) seven geographic locations in the U.S. and Canada that allow for same day or next day delivery of pumps; and (vi) pump repair and service capabilities at all of these facilities and at our customer's locations. We do not perform any research and development on pumps, but we have made, and continue to make, investments in our information technology applications.

Current wording

InfuSystem competes for and retains its business primarily on the basis of its long participation and strong reputation in the Durable Medical Equipment space, its long-standing relationships with Durable Medical Equipment manufacturers and its healthcare provider customers, and the high levels of service it provides. Current barriers to entry for potential competitors are created by our: (i) growing number of third-party payer networks under contract; (ii) economies of scale, which allow for predictable reimbursement and less costly purchase and management of the pumps, respectively; (iii) established, long-standing relationships as a provider of pumps to outpatient oncology practices in the U.S. and Canada; (iv) pump fleet of ambulatory and large volume infusion pumps for rent and for sale, which may allow us to be more responsive to the needs of physicians, outpatient oncology practices, hospitals, outpatient surgery centers, homecare practices, patient rehabilitation centers and patients than a new market entrant; (v) seven geographic locations in the U.S. and Canada that allow for same day or next day delivery of pumps; (vi) growing team of field-based and traveling biomedical technicians; and (vii) a wide array of pump repair and service capabilities. We do not perform any research and development on pumps, but we have made, and continue to make investments in our information technology.

Previous wording

Our Patient Services segment’s core purpose is to seek opportunities to grow our business by leveraging our unique know-how in clinic-to-home health care involving Durable Medical Equipment, our logistics and billing capabilities, our growing network of third-party payers under contract, and our clinical and biomedical capabilities. This leverage may take the form of new products and/or services, strategic alliances, joint ventures and/or acquisitions. The leading service within our Patient Services segment is to supply electronic ambulatory infusion pumps and associated disposable supply kits to private oncology clinics, infusion clinics and hospital outpatient oncology clinics to be utilized in the treatment of a variety of cancers, including colorectal cancer and other disease states ("Oncology Business"). Colorectal cancer is the fourth most prevalent form of cancer in the United States, according to the American Cancer Society, and the standard of care for the treatment of colorectal cancer relies upon continuous chemotherapy infusions delivered via ambulatory infusion pumps. One of the goals for the Patient Services segment is to expand into treatment of other types of cancers. There are a number of approved treatment protocols for pancreatic, head and neck, esophageal and other types of cancers, as well as other disease states that present opportunities for growth. There are also a number of other drugs currently approved by the U.S. Food and Drug Administration (the "FDA"), as well as agents in the pharmaceutical development pipeline, which we believe could potentially be used with continuous infusion protocols for the treatment of diseases other than colorectal cancer. Additional drugs or protocols currently in clinical trials may also obtain regulatory approval over the next several years. If these new drugs or protocols obtain regulatory approval for use with continuous infusion protocols, we expect the pharmaceutical companies to focus their sales and marketing efforts on promoting the new drugs and protocols to physicians, which could benefit us.

Current wording

Our Patient Services segment’s core purpose is to seek opportunities to leverage our unique know-how in clinic-to-home healthcare involving Durable Medical Equipment, our logistics and billing capabilities, our growing network of third-party payers under contract, and our clinical and biomedical capabilities. This leverage may take the form of new products and/or services, strategic alliances, joint ventures or acquisitions. The leading service within our Patient Services segment is our Oncology Business. Colorectal cancer is the third most prevalent form of cancer in the U.S., according to the American Cancer Society, and the standard of care for the treatment of colorectal cancer relies upon continuous chemotherapy infusions delivered via ambulatory infusion pumps. One of the goals for the Patient Services segment is to expand into treatment of other types of cancers. There are a number of approved treatment protocols for pancreatic, head and neck, esophageal and other types of cancers, as well as other disease states which present opportunities for growth. There are also a number of other drugs currently approved by the FDA, as well as agents in the pharmaceutical development pipeline, which we believe could potentially be used with continuous infusion protocols for the treatment of diseases other than colorectal cancer. Additional drugs or protocols currently in clinical trials may also obtain regulatory approval over the next several years. If these new drugs or protocols obtain regulatory approval for use with continuous infusion protocols, we expect the pharmaceutical companies to focus their sales and marketing efforts on promoting the new drugs and protocols to physicians.

Previous wording

Furthermore, our Oncology Business focuses mainly on the continuous infusion of chemotherapy. Continuous infusion of chemotherapy can be described as the gradual administration of a drug via a small, lightweight, portable infusion pump over a prolonged period of time. A cancer patient can receive his or her medicine anywhere from one to 30 days per month depending on the chemotherapy regimen that is most appropriate to that individual’s health status and disease state. This may be followed by periods of rest and then repeated cycles with treatment goals of progression-free disease survival. This drug administration method has replaced intravenous push or bolus administration in specific circumstances. The advantages of slow continuous low doses of certain drugs are well documented. Clinical studies support the use of continuous infusion chemotherapy for decreased toxicity without loss of anti-tumor efficacy. The 2015 National Comprehensive Cancer Network ("NCCN") Guidelines recommend the use of continuous infusion for treatment of numerous cancer diagnoses. We believe that the growth of continuous infusion therapy is driven by three factors: (i) evidence of improved clinical outcomes; (ii) lower toxicity and side effects; and (iii) a favorable reimbursement environment.

Current wording

Furthermore, our Oncology Business focuses mainly on the continuous infusion of chemotherapy. Continuous infusion of chemotherapy can be described as the gradual administration of a drug via a small, lightweight, portable infusion pump over a prolonged period of time. A cancer patient can receive his or her medicine anywhere from one to 30 days per month depending on the chemotherapy regimen that is most appropriate to that individual’s health status and disease state. This may be followed by periods of rest and then repeated cycles with treatment goals of progression-free disease survival. This drug administration method has replaced intravenous push or bolus administration in specific circumstances. The advantages of slow continuous low doses of certain drugs are well documented. Clinical studies support the use of continuous infusion chemotherapy for decreased toxicity without loss of anti-tumor efficacy. The NCCN Guidelines recommend the use of continuous infusion for treatment of numerous cancer diagnoses. We believe that the growth of continuous infusion therapy is driven by three factors: evidence of improved clinical outcomes; lower toxicity and side effects; and a favorable reimbursement environment.

Previous wording

We believe that oncology practitioners have a heightened sensitivity to providing quality service and to their ability to obtain reimbursement for services they provide. Simultaneously, the Center for Medicare and Medicaid Services and private insurers are increasingly focused on evidence-based medicine to inform their reimbursement decisions — that is, aligning reimbursement with clinical outcomes and adherence to standards of care. Continuous infusion therapy is a main component of the standard of care for certain types of cancers because clinical evidence demonstrates superior outcomes. Payers’ recognition of this benefit is reflected in their relative reimbursement policies for clinical services related to the delivery of this care.

Current wording

We believe that oncology practitioners have a heightened sensitivity to providing quality service and to their ability to obtain reimbursement for services they provide. Simultaneously, CMS and private insurers are increasingly focused on evidence-based medicine to inform their reimbursement decisions — that is, aligning reimbursement with clinical outcomes and adherence to standards of care. Continuous infusion therapy is a main component of the standard of care for certain types of cancers because clinical evidence demonstrates superior outcomes. Payers’ recognition of this benefit is reflected in their relative reimbursement policies for clinical services related to the delivery of this care.

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 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.

Current wording

•Wound Care: launched in November 2022, the Company established a partnership, SI Healthcare Technologies, LLC (“SI Healthcare”), 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 Cork and Genadyne Biotechnologies Inc. NPWT devices and supplies and Sanara’s advanced wound care product line to new customers through the jointly controlled entity.

Previous wording

•Acquisitions – we believe there are opportunities to acquire smaller, regional health care service providers, in whole or part that perform similar services to us but do not have the national market access, network of third-party payer contracts or operating economies of scale that we currently enjoy. We may also pursue acquisition opportunities of companies that perform similar services, but offer different therapies or utilize different devices.

Current wording

•Acquisitions: we believe there are opportunities to acquire smaller, regional healthcare service providers, in whole or in part that perform similar services to us but do not have the national market access, network of third-party payer contracts or operating economies of scale that we currently enjoy. We may also pursue acquisition opportunities of companies that perform similar services, but offer different therapies or utilize different devices.

Previous wording

The payer environment within our Patient Services segment is in a constant state of change. We continue to extend our considerable breadth of payer networks under contract as patients move into different insurance coverage plans, including Medicaid and Insurance Marketplace products. In some cases, this may slightly reduce our aggregate billed revenues payment rate but result in an overall increase in collected revenues, due to a reduction in concessions. Consequently, we are increasingly focused on revenues net of concessions.

Current wording

The payer environment within our Patient Services segment is in a constant state of change. We continue to extend our considerable breadth of payer networks under contract as patients move into different insurance coverage plans, including Medicaid and Insurance Marketplace products. In some cases, this may slightly reduce our aggregate billed revenues payment rate but result in an overall increase in collected revenues, due to a reduction in concessions. Consequently, we are increasingly focused on net revenues less concessions.

Previous wording

Our Device Solutions segment’s core service is to: (i) sell or rent new and pre-owned pole-mounted and ambulatory infusion pumps and other Durable Medical Equipment; (ii) sell treatment-related consumables; and (iii) provide biomedical maintenance services on medical equipment that include recertification, annual preventative maintenance and repair services for oncology practices as well as other alternate site settings, including, home care and home infusion providers, skilled nursing facilities, pain centers and others. We provide biomedical services at both our facilities and at our customers' locations. We also provide these products and services to customers in the hospital market. We purchase new and pre-owned pole-mounted and ambulatory infusion pumps from a variety of sources on a non-exclusive basis. We repair, refurbish and provide biomedical certification for the devices as needed. The pumps are then available for sale, rental or to be used within our ambulatory infusion pump management service.

Current wording

Our Device Solutions segment’s core service is to: (i) sell or rent new and pre-owned pole-mounted and ambulatory infusion pumps and other Durable Medical Equipment; (ii) sell treatment-related consumables; and (iii) provide biomedical recertification, maintenance and repair services for oncology practices as well as other healthcare site settings, including, home care and home infusion providers, skilled nursing and acute care facilities, pain centers and others. We purchase new and pre-owned pole-mounted and ambulatory infusion pumps from a variety of sources on a non-exclusive basis. We repair, refurbish and provide biomedical certification for the devices as needed. The pumps are then available for sale, rental or to be used within our ambulatory infusion pump management service. Our acquisition of FilAMed, a privately-held biomedical services company, on January 31, 2021 has supplemented the Company’s existing biomedical recertification, maintenance and repair services for acute care facilities and other alternate site settings, including, home care and home infusion providers, skilled nursing facilities, pain centers and others. Our acquisition of OB Healthcare, a privately-held biomedical services company, on

Previous 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.

Current wording

Net revenues for the three-month period ended March 31, 2025 (“three-month period of 2025”) were $34.7 million, an increase of $2.7 million, or 8.5%, compared to $32.0 million for the three-month period ended March 31, 2024 (“three-month period of 2024”). The increase included higher net revenues for both the Patient Services and Device Solutions segments.

Previous 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.

Current wording

Patient Services net revenue of $20.8 million increased $2.2 million, or 11.7%, during the three-month period of 2025 compared to the same prior year period. This increase was primarily attributable to additional treatment volume and increased third-party payer collections totaling $2.3 million offset partially by $0.1 million lower revenue from sales-type leases of NPWT pumps. The improved volume and collections benefited Oncology revenue by $1.7 million or 10.3%, Pain Management revenue by $0.1 million, or 8.7%, and Wound Care treatment revenue by $0.5 million, or 105.2%.

Previous 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.

Current wording

Device Solutions net revenue of $13.9 million increased $0.5 million, or 4.0%, during the three-month period of 2025 compared to the same prior year period. This increase included higher rental revenue totaling $0.9 million, or 19.2% offset partially by lower medical equipment sales, which decreased by $0.3 million, or 12.0% and lower biomedical services revenue, which decreased by $0.2 million, or 4.0%. The increase in rental revenue was mainly attributable to new customers added during and since the prior year period. Lower medical equipment sales were due to a large sale in the prior year to an existing rental customer and reflects how timing for large contracts can vary from quarter-to-quarter. Lower biomedical services revenue reflected a reduction in devices under contract with GE Healthcare offset partially by additional volume with other customers.

Previous 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.

Current wording

Gross profit of $19.2 million for the three-month period of 2025 increased $2.7 million, or 16.3%, from $16.5 million for the three-month period of 2024. This increase was due to the increase in net revenues and by a higher gross margin. Gross profit increased for both the Patient Services and Device Solutions segments. Gross margin increased to 55.2% during the three-month period of 2025 compared to 51.5% during the same prior year period. Gross margin was higher for the Device Solutions Segment but lower for the Patient Services Segment.

Previous 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.

Current wording

Patient Services gross profit was $13.2 million during the three-month period of 2025, representing an increase of $0.9 million, or 7.4%, compared to the same prior year period. The improvement reflected increased net revenue offset partially by a lower gross margin, which decreased from the prior year by 2.5% to 63.5%. The decrease in gross margin reflected higher pump disposal expenses and unfavorable product mix favoring lower gross margin revenues. These impacts were partially offset by increased third-party payer collections and improved coverage of fixed costs from higher net revenue. The unfavorable gross margin mix was mainly related to the increase in revenue related to wound care treatment revenue, which has lower average gross margin than other Patient Services revenue categories. Pump disposal expenses, which include retirements of damaged pumps and reserves for missing pumps, increased by $0.3 million during the three-month period of 2025 compared to the prior year period.

Previous 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.

Current wording

Device Solutions gross profit during the three-month period of 2025 was $6.0 million, representing an increase of $1.8 million, or 42.4%, compared to the same prior year period. The improvement reflected increased net revenue and higher gross margin. The Device Solutions gross margin was 42.9% during the current period, which was 11.6% higher than the same prior year period. This increase was attributable to favorable product mix favoring higher gross margin revenues, such as rental revenue, and improved cost efficiency in biomedical services.

Previous 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%.

Current wording

Selling and marketing expenses for the three-month period of 2025 were $3.0 million, representing a decrease of $0.4 million, or 11.6%, compared to selling and marketing expenses for the three-month period of 2024. 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 8.6% representing a decrease from the prior year period amount of 10.6%. This decrease reflected a reduction in sales team members and improved coverage of fixed costs from higher net revenues.

Previous 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.

Current wording

General and administrative (“G&A”) expenses for the three-month period of 2025 were $15.3 million, an increase of $1.6 million, or 11.8%, from the three-month period of 2024. 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 2025 included a one-time accrued severance expense of $1.0 million for the Company's outgoing CEO, which was substantially in accordance with his employment agreement. This amount was higher than the total of one-time expenses in 2024 which included a $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, net of these amounts of $1.5 million, included $0.5 million of expenses related to a project to upgrade the Company's information technology and business applications in 2025 but not in 2024 since the project began in the second half of 2024, additional personnel directly related to the increased net revenue including revenue cycle personnel totaling $0.4 million and a $0.2 million increase in the company's bad debt accrual which was a benefit in the prior year but an expense amount during 2025. Other increased expenses totaling $0.4 million were indirectly 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 three-month period of 2025 increased to 44.1% compared to 42.8% for the same prior year period.

Previous 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.

Current wording

During the three-month period of 2025, other income and expense included interest expense of $0.3 million, which was $0.1 million lower than interest expense for the three-month period of 2024. 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 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.

Current wording

During the three-month period of 2025, the Company recorded a provision for income taxes totaling $0.5 million on pre-tax income of $0.3 million representing an effective tax rate of 205%. The tax amount was higher than the pre-tax income amount due to significant non-deductible expenses including the severance expense for the outgoing CEO which exceeded the annual deduction limitation for officer compensation. Non-deductible expenses also included a shortfall in the amount of stock compensation expense recognizable for tax purposes verses the amount recognized for book purposes. Together, these items impacted tax expense by $0.4 million, or 173% of pre-tax income. During the three-month period of 2024, the Company recorded a benefit from income taxes totaling $0.2 million on pre-tax loss of $1.3 million, representing an effective tax rate of 14%. During 2024, there were no severance expenses subject to the annual compensation limitation. Also during 2024, the tax expense amount included an impact from a shortfall in stock compensation expense for tax purposes totaled $0.2 million, or 16% of the pre-tax loss. The tax expense amounts for both years also differed from the U.S. statutory amounts due to the effects of local, state and foreign jurisdiction income taxes and limitations on the deductions of certain expenses including meals and entertainment expense.

Previous 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.

Current wording

As of March 31, 2025, 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 March 31, 2025 was 6.42% (Adjusted Term SOFR of 4.32% plus 2.10%). The actual ABR loan rate at March 31, 2025 was 8.50% (lender’s prime rate of 7.50% plus 1.00%). As of March 31, 2025, the Company was in compliance with all debt-related covenants under the 2021 Credit Agreement, as amended.

Previous wording

On May 16, 2024, our Board of Directors approved a stock repurchase program (the "Share Repurchase Program") that authorizes the Company to repurchase up to $20.0 million of the Company’s outstanding common stock through June 30, 2026. The Share Repurchase Program supersedes the previous authorization, which was set to expire on June 30, 2024. Repurchases under the Share Repurchase Program are subject to market conditions, the periodic capital needs of the Company’s operating activities, and the continued satisfaction of all covenants under the Company’s existing 2021 Credit Agreement, as amended. Repurchases under the Share Repurchase Program may take place in the open market or in privately negotiated transactions and may be made under a Rule 10b5-1 plan. The Share Repurchase Program does not obligate the Company to repurchase shares and may be suspended, terminated, or modified at any time at the discretion of the Board.

Current wording

On May 16, 2024, our Board of Directors approved a stock repurchase program (the “Share Repurchase Program”) that authorizes the Company to repurchase up to $20.0 million of the Company’s outstanding common stock through June 30, 2026. The Share Repurchase Program superseded the previous authorization, which expired on June 30, 2024. Repurchases under the Share Repurchase Program are subject to market conditions, the periodic capital needs of the Company’s operating activities, and the continued satisfaction of all covenants under the Company’s existing 2021 Credit Agreement, as amended. Repurchases under the Share Repurchase Program may take place in the open market or in privately negotiated transactions and may be made under a Rule 10b5-1 plan. The Share Repurchase Program does not obligate the Company to repurchase shares and may be suspended, terminated, or modified at any time at the discretion of the Board.

Previous 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.

Current wording

As of March 31, 2025, the Company had repurchased and retired approximately $4.1 million, or 553,745 shares, of the Company's outstanding common stock under the Share Repurchase Program.

Previous 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.

Current wording

Operating Cash Flow. Operating cash flows provided $1.8 million in cash during the three-month period of 2025 and $0.4 million of cash during the three-month period of 2024. This $1.4 million favorable difference was attributable to an increase in net income (loss) adjusted for non-cash items, which was income of $4.2 million during the three-month period of 2025 compared to income of $1.9 million during the three-month period of 2024, an increase of $2.3 million. This amount was partially offset by an increase in cash used to fund working capital items, which was $2.4 million during three-month period of 2025 compared to $1.5 million during three-month period of 2024, an increase of $0.9 million. The increase in net income (loss) adjusted for non-cash items, was primarily attributable to higher revenue and gross profit in 2025, offset partially by increased general and administrative expenses described above. The use of cash for working capital items during the three-month period of 2025 included a $2.1 million increase in accounts receivable and a $1.6 million decrease in accounts payable and other liabilities net of capital items. These cash flow sources were partially offset by a $0.7 million decrease in other assets, a $0.4 million decrease in inventories and a $0.1 million decrease in other current assets. The cash used for working capital items during the three-month period of 2024 included a $1.1 million decrease in accounts payable and other liabilities net of capital items, a $0.7 million increase in other current assets, and a $0.2 million increase in accounts receivable. These uses of cash were partially offset by a $0.4 million decrease in other assets and a $0.2 million decrease in inventories.

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 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.

Current wording

The increase in accounts receivable during both periods was mainly due to the sequential increase in quarterly revenue during each period. This increase was greater during the three-month period of 2025 when the revenue increased by a higher amount. Accounts payable and other liabilities net of capital items decreased by $1.6 million during the three-month period of 2025 and decreased $1.1 million during the three-month period of 2024, representing a $0.5 million unfavorable cash flow swing, mainly due to an increase in the amount paid in 2025 for the 2024 short-term incentive bonus plan as compared to the amount paid in 2024 for the 2023 short-term incentive bonus plan. The higher increase in inventories during 2025 reflected the higher revenue growth during that period. The higher 2025 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 2025 as compared to 2024.

Previous 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.

Current wording

Investing Cash Flow. Net cash used in investing activities was $2.7 million for the three-month period of 2025 compared to $0.4 million for the three-month period of 2024, an increase of $2.2 million. The increase was due to an increase totaling $1.7 million in cash used to purchase medical equipment and other property and equipment during the three-month period of 2025 compared to the three-month period of 2024. Purchases of medical equipment were higher during 2025 compared to 2024 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 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.

Current wording

Financing Cash Flow. Net cash provided by financing activities for the three-month period of 2025 was $1.9 million compared to $0.6 million for the three-month period of 2024. The amount of cash flow provided by financing activities during 2025 included net revolving line of credit borrowings under the 2021 Credit Agreement totaling $4.8 million and cash proceeds from employee stock option exercises and employee stock purchase plan proceeds totaling $0.2 million. These amounts were partially offset by $2.9 million in cash used to repurchase the Company's common stock and cash used to satisfy statutory withholding on employee stock based compensation plans totaling $0.2 million. Cash provided by financing activities during 2024 primarily related to net revolving line of credit borrowings under the 2021 Credit Agreement totaling $0.8 million and $0.2 million in cash proceeds from employee stock option exercises and employee stock purchase plan proceeds combined. These amounts were partially offset by cash used to satisfy statutory withholding on employee stock based compensation plans totaling $0.4 million.