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 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, 2024 filed on March 11, 2025, 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.

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 including tariffs and trade policies, 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, including the integration of a new enterprise resource planning system, 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, cybersecurity risks and cyber incidents, 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, 2025 filed on February 27, 2026, 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.s…

Excerpt shortened here; the source contains the full paragraph.

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 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.

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) 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

•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.

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. In May 2025, we acquired the assets of Apollo Medical Supply (“Apollo”), a privately-held wound care service company based in Florida. As part of the Company’s Patient Services segment, this acquisition supplements the Company’s existing wound care business by providing access to an advanced patient service fulfillment know-how and software platform that the Company plans to integrate into its existing operations.

Previous wording

•Information technology-based services: we also plan to continue to capitalize on key new information technology-based services such as EXPRESS, InfuBus or InfuConnect, Pump Portal, DeviceHub and BlockPain Dashboard®.

Current wording

•Information technology-based services: we also plan to continue to capitalize on key new information technology-based services such as EXPRESS, InfuBus or InfuConnect, Pump Portal, DeviceHub, BlockPain Dashboard® and Tracking Inhouse Management (“TIM”).

Previous wording

Patient Services net revenue of $22.4 million increased $1.6 million, or 7.6%, during the third quarter of 2025 compared to the prior year period. This increase was primarily attributable to additional treatment volume and increased third-party payer collections in Oncology and Wound Care, offset partially by lower revenue volume in Pain Management. The improved volume and collections benefited Oncology revenue by $0.7 million, or 3.6% and Wound Care by $1.0 million, or 115%. Pain Management revenue decreased by $0.1 million, or 4.1%. The Wound Care net revenues included first time sales of Pneumatic Compression Devices (PCDs) stemming from a new supplier relationship.

Current wording

Patient Services net revenue of $22.1 million increased $1.3 million, or 6.4%, during the three-month period of 2026 compared to the same prior year period. This increase was primarily attributable to additional treatment volume in Oncology and Wound Care which were partially offset by a lower amount in Pain Management. The improved volume and collections benefited Oncology revenue by $0.4 million or 2.4%, and Wound Care treatment revenue by $1.1 million, or 116.0%. Pain Management revenue decreased by $0.2 million, or 15.1%. The Wound Care net revenues included sales of compression therapy devices stemming from two new supplier relationships which were added after the end of the three-month period of 2025. Sales for the first of these new supplier relationships, which include Pneumatic Compression Devices (PCD’s), started during the third quarter of 2025 and the second supplier relationship, which is a manufacturer of Adjustable Compression Wraps (ACW’s), began during the current period. On a combined basis, compression therapy devices represented over 60% of the growth in Wound Care.

Previous wording

Gross profit of $59.9 million for the nine-month period of 2025 increased $7.7 million, or 14.7%, from $52.2 million for the nine-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 55.8% during the nine-month period of 2025 compared to 51.7% during the same prior year period. Gross profit was higher in both the Patient Services and Devices Solutions segments. Gross margin was higher for the Device Solution segment and was lower for the Patient Services segment.

Current wording

Gross profit of $19.7 million for the three-month period of 2026 increased $0.5 million, or 2.7%, from $19.2 million for the three-month period of 2025. This increase was due to the increase in gross margin partially offset by the lower net revenues. Gross margin increased to 58.4% during the three-month period of 2026 compared to 55.2% during the same prior year period. Gross profit was higher in the Patient Services segment and lower in the Devices Solutions segments. Gross margin was higher for both segments.

Previous wording

Patient Services gross profit was $41.5 million during the nine-month period of 2025, representing an increase of $2.0 million, or 5.2%, 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 2.0% to 64.1%. The decrease in gross margin reflected unfavorable product mix favoring lower gross margin revenues, offset partially by lower pump disposal expenses. The unfavorable gross margin mix was mainly related to the increase in revenue related to wound care treatments, 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, decreased by $0.1 million during the nine-month period of 2025 compared to the prior year period.

Current wording

Patient Services gross profit was $14.3 million during the three-month period of 2026, representing an increase of $1.1 million, or 8.6%, compared to the same prior year period. The improvement reflected increased net revenue and a higher gross margin, which increased from the prior year by 1.3% to 64.8%. The increase in gross margin reflected lower pump disposal and maintenance expenses offset partially by unfavorable product mix favoring lower gross margin revenue categories. Pump disposal expenses include retirements of damaged pumps and reserves for missing pumps. Pump maintenance expenses include annual preventative maintenance certification and repairs and are performed by the Device Solutions segment. On a combined basis pump disposal and maintenance expenses decreased by $0.3 million during the three-month period of 2026 compared to the prior year period. The unfavorable gross margin mix was mainly related to the increase in revenue related to wound care treatments, which have lower average gross margin than other Patient Services revenue categories.

Previous wording

Selling and marketing expenses for the nine-month period of 2025 were $8.1 million, representing a decrease of $1.1 million, or 12.2%, compared to selling and marketing expenses for the nine-month period of 2024. Selling and marketing expenses as a percentage of net revenues was 7.5% for the nine-month period of 2025, representing a decrease from the prior year period amount of 9.1%. This decrease reflected a reduction in sales team members, a shift in the mix of sales favoring revenue with lower commission rates and improved coverage of fixed costs from higher net revenues. 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.

Current wording

Selling and marketing expenses for the three-month period of 2026 were $3.1 million, representing an increase of $0.1 million, or 3.2%, compared to selling and marketing expenses for the three-month period of 2025. Selling and marketing expenses as a percentage of net revenues was 9.1% representing an increase from the prior year period amount of 8.6%. This increase reflected an increase in sales team headcount, increased travel expenses and inflationary impacts including an increase in employee healthcare expenses. These amounts were partially offset by a reduction in commissions expenses. 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.

Previous wording

G&A expenses for the nine-month period of 2025 were $42.9 million, an increase of $4.9 million, or 12.9%, from the nine-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 $4.8 million, included $1.9 million of expenses related to information technology and business applications upgrades in 2025 as part of a project that began in the second half of 2024. Additional expenses above 2024 levels included personnel directly related to the increased net revenue including revenue cycle personnel and general business expenses totaling $2.8 million, a $0.5 million increase in the company’s short-term incentive plan compensation expense accrual and a $0.2 million increase in the company's bad debt reserve accrual which was a benefit in the prior year but an expense amount during 2025. These increases were partially offset by a $0.2 million reduction in stock-based compensation mainly related to the forfeiture of stock-based awards by the outgoing CEO. G&A expenses as a percentage of net revenues for the nine-month period of 2025 increased to 40.0% compared to 37.6% for the same prior year period.

Current wording

General and administrative expenses for the three-month period of 2026 were $14.8 million, a decrease of $0.5 million, or 3.3%, from the three-month period of 2025. 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 the three-month period of 2025 included a one-time accrued severance expense of $1.0 million for the Company's outgoing CEO. Additional reductions included a $0.3 million reduction in the accrual for management bonuses, lower accounting fees totaling $0.2 million and $0.1 million in reduced travel expenses. These decreases were partially offset by increases in other expenses including: $0.4 million in increased expenses related to information technology and business applications upgrades including the replacement of the Company’s enterprise resource planning system (ERP), additional personnel directly related to the increased Patient Services net revenue including revenue cycle personnel totaling $0.3 million, a $0.1 million increase in stock-based compensation expenses and cost inflation impacts from increased employee wage rates and higher healthcare expenses totaling $0.4 million. The ERP system upgrade project expenses were higher during the current period due to a higher intensity of activities related to the go-live phase of the project which occurred on March 1, 2026. While additional costs are expected to be incurred during the post go-live phase to support system stabilization and enhancement activities, project expenses are expected to begin to taper down during future quarterly periods. Similar to impacts to gross margin and selling and marketing expenses, higher wages were the result of typical annual merit and cost of living increases, however, the increase in the cost of health care benefits were significantly higher than amounts experienced in prior years. General and Administrative expenses as a percentage of net revenues for the three-month period of 2026 decreased to 43.9% compared to 44.1% for the same prior year period.

Previous wording

During the nine-month period of 2025, other income and expense included interest expense of $1.0 million, which was $0.4 million lower than interest expense for the nine-month period of 2024. This decrease was due to a decrease in average outstanding borrowings on the 2021 Credit Agreement revolving line of credit partially offset by higher commitment fees on a higher unused revolving line availability.

Current wording

During the three-month period of 2026, 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 2025. This decrease was due to a decrease in average outstanding borrowings on the 2021 Credit Agreement revolving line of credit partially offset by higher commitment fees on a higher unused revolving line availability.

Previous wording

During the nine-month period of 2025, the Company recorded a provision for income taxes totaling $2.5 million on pre-tax income of $7.1 million representing an effective tax rate of 36%. The pre-tax income amount included 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 $0.6 million, or 9% of pre-tax income. 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%. Similar to the current year, the pre-tax income amount in 2024 included significant non-deductible expenses, which exceeded the annual deduction limitation for officer compensation. Non-deductible expenses in 2024 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 $0.5 million, or 17% of pre-tax income. Other factors causing the effective rate during both periods to differ from the U.S. statutory amounts included the effects of local, state and foreign jurisdiction income taxes, limitations on the deductions of certain expenses including meals and entertainment expense.

Current wording

During the three-month period of 2026, the Company recorded a provision for income taxes totaling $0.4 million on pre-tax income of $1.4 million representing an effective tax rate of 28%. 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 206%. The pre-tax income amount for 2025 included 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 $0.6 million, or 9% of pre-tax income. Other factors causing the effective rate during both periods to differ from the U.S. statutory amounts included the effects of local, state and foreign jurisdiction income taxes, limitations on the deductions of certain expenses including meals and entertainment expense.

Previous wording

As of September 30, 2025, amounts outstanding under the Revolving Facility 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 Second Amendment, plus a spread that will vary depending upon the Company’s leverage ratio. The spread ranges from 2.05% to 3.05% for Term Benchmark Loans and 1.05% to 2.05% for base rate loans. The weighted-average Term Benchmark loan rate at September 30, 2025 was 6.27% (Adjusted Term SOFR of 4.22% plus 2.05%). The actual ABR loan rate at September 30, 2025 was 8.30% (lender’s prime rate of 7.25% plus 1.05%). As of September 30, 2025, the Company was in compliance with all debt-related covenants under the 2021 Credit Agreement, as amended.

Current wording

As of March 31, 2026, amounts outstanding under the Revolving Facility 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 Second Amendment, plus a spread that will vary depending upon the Company’s leverage ratio. The spread ranges from 2.05% to 3.05% for Term Benchmark Loans and 1.05% to 2.05% for base rate loans. The weighted-average Term Benchmark loan rate at March 31, 2026 was 5.72% (Adjusted Term SOFR of 3.67% plus 2.05%). The actual ABR loan rate at March 31, 2026 was 7.80% (lender’s prime rate of 6.75% plus 1.05%). As of March 31, 2026, 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 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 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. As of September 30, 2025, the Company had repurchased and retired approximately $9.7 million, or 1,360,482 shares, of the Company's outstanding common stock under the Share Repurchase Program.

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 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. As of March 31, 2026, the Company had repurchased and retired approximately $11.8 million, or 1,587,626 shares, of the Company's outstanding common stock under the Share Repurchase Program.

Previous wording

Operating Cash Flow. Operating cash flows provided $17.3 million in cash during the nine-month period of 2025 and $12.5 million of cash during the nine-month period of 2024. This $4.8 million improvement was attributable to an increase in net income adjusted for non-cash items and a reduction in cash used to fund working capital items. During the nine-month period of 2025 net income adjusted for non-cash items was $18.4 million, an increase of $4.5 million compared to net income (loss) adjusted for non-cash items of $13.9 million during the nine-month period of 2024. Also during the nine-month period of 2025 cash used to fund working capital items was $1.1 million, a decrease of $0.3 million compared to $1.4 million during nine-month period of 2024. The increase in net income 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 nine-month period of 2025 included a $2.2 million increase in accounts receivable a $0.8 million increase and a $0.1 million decrease in accounts payable and other liabilities, net of capital items. These cash flow uses were partially offset by a $1.0 million decrease in other assets and a $0.9 million decrease in inventories. The cash used for working capital items during the nine-month period of 2024 included a $1.3 million increase in accounts receivable, a $1.2 million decrease in accounts payable and other liabilities, net of capital items and a $0.3 million increase in inventories. These uses of cash were partially offset by a $1.1 million decrease in other assets and a $0.4 million decrease in other current assets.

Current wording

Operating Cash Flow. Operating cash flows provided $1.0 million in cash during the three-month period of 2026 and $1.8 million of cash during the three-month period of 2025. This $0.8 million reduction was attributable to an increase in cash used to fund working capital items offset partially by an increase in net income adjusted for non-cash items. During the three-month period of 2026 net income adjusted for non-cash items was $6.3 million, an increase of $2.2 million compared to net income (loss) adjusted for non-cash items of $4.2 million during the three-month period of 2025. Also during the three-month period of 2026 cash used to fund working capital items was $5.3 million, an increase of $3.0 million compared to $2.4 million during three-month period of 2025. The increase in net income adjusted for non-cash items, was primarily attributable to higher gross profit, lower selling expenses and lower general and administrative expenses in 2026, as described above. The use of cash for working capital items during the three-month period of 2026 included a $3.3 million decrease in accounts payable and other liabilities, net of capital items, a $2.3 million increase in accounts receivable, a $0.1 million increase in other current assets, and a $0.2 million increase in inventories. These cash flow uses were partially offset by a $0.6 million decrease in other assets. The cash used 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 uses of cash 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.

Previous 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 nine-month period of 2024 when the revenue increased by a higher amount. Accounts payable and other liabilities net of capital items decreased by $0.1 million during the nine-month period of 2025 and decreased $1.2 million during the nine-month period of 2024, representing a $1.1 million favorable cash flow swing, mainly due to timing of payments to suppliers, a lower amount of fourth quarter commission accrual as of December 31, 2023 as compared to December 31, 2024 and other timing differences. The decrease in inventories during 2025 reflected better management of inventory levels held to support recurring revenues. Furthermore, much of the increase in net revenues during 2025 was in business lines that do not require inventory stock, such as equipment rentals, or where products are drop-shipped directly to the customer such as wound care. The decrease in other assets during 2025 was due to a decrease in long-term lease receivables due to payments on equipment leases during 2025 exceeding sales on new equipment leases.

Current wording

The increase in accounts receivable during 2026 was attributable to a change in mix of revenue favoring Patient Services which has a longer average revenue collection time as compared with Device solutions. The increase in accounts receivable during 2025 was mainly due to the sequential increase in quarterly revenue during the three-month period of 2025 as compared to the three-month period of ended December 31, 2024. Accounts payable and other liabilities net of capital items decreased by $3.3 million during the three-month period of 2026 and decreased $1.6 million during the three-month period of 2025, representing a $1.8 million unfavorable cash flow swing, mainly due to a $1.0 million accrual recorded in 2025 related to the severance of the former CEO which was subsequently paid after the end of the period. Additional differences are related to variations in timing of payments to suppliers and other timing differences. The increase in inventories during 2026 reflected higher sales levels for disposable medical supplies for the period. The decrease in inventories during 2025 reflected better management of inventory levels held to support recurring revenues and reflected the fact that much of the increase in net revenues during 2025 was in business lines that do not require inventory stock, such as equipment rentals, or where products are drop-shipped directly to the customer such as wound care.

Previous wording

Investing Cash Flow. Net cash used in investing activities was $4.6 million for the nine-month period of 2025 compared to $10.0 million for the nine-month period of 2024, a decrease of $5.4 million. The decrease was due to a decrease totaling $7.0 million in cash used to purchase medical equipment and other property and equipment during the nine-month period of 2025 compared to the nine-month period of 2024. Purchases of medical equipment were higher during 2024 compared to 2025 because a higher portion of the revenue growth in 2024 came from rental revenues that require capital equipment purchases. This decrease was partially offset by cash used in 2025 to acquire certain assets of Apollo Medical Supply (“Apollo”), a privately-held wound care service company totaling $1.4 million and a $0.2 million decrease in proceeds from sale of medical equipment, property and equipment. There were no acquisitions in 2024. The decrease in proceeds from sale of medical equipment, property and equipment reflects a lower allocation of equipment sales taken from the Company’s existing fleet versus purchased for sale in 2025 as compared to 2024.

Current wording

Investing Cash Flow. Net cash used in investing activities was $1.3 million for the three-month period of 2026 compared to $2.7 million for the three-month period of 2025, a decrease of $1.4 million. The decrease was due to a decrease totaling $1.6 million in cash used to purchase medical equipment during the three-month period of 2026 compared to the three-month period of 2025. Purchases of medical equipment were higher during 2025 compared to 2026 mainly due to normal variations in the timing of purchase of medical equipment used to replace devices taken out of service or to support new customer growth. This decrease was partially offset by a $0.2 million decrease in proceeds from sale of medical equipment, property and equipment. The decrease in proceeds from sale of medical equipment, property and equipment reflects the lower amount of sales of medical equipment and a lower allocation of equipment sales taken from the Company’s existing fleet versus purchased for sale in 2026 as compared to 2025.

Previous wording

Financing Cash Flow. Cash flow used in financing activities during nine-month period 2025 totaled $12.3 million, included $8.6 million in cash used to repurchase the Company's common stock, net revolving line of credit repayments under the 2021 Credit Agreement totaling $2.8 million, cash used to pay debt issue costs associated with an amendment to extend the maturity date of the 2021 Credit Agreement and cash used to satisfy statutory withholding on employee stock-based compensation plans totaling $1.0 million. These amounts were partially offset by proceeds from employee stock option exercises and employee stock purchase plan proceeds totaling $0.3 million. Cash used in financing activities during the nine-month period of 2024 was $2.4 million and primarily related to net revolving line of credit repayments under the 2021 Credit Agreement totaling $1.2 million, $1.0 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 $0.6 million. These amounts were partially offset by $0.4 million in cash proceeds from employee stock option exercises and employee stock purchase plan proceeds.

Current wording

Financing Cash Flow. Cash flow used in financing activities during three-month period 2026 totaled $0.8 million, included $0.8 million in cash used to repurchase the Company's common stock, cash used to satisfy statutory withholding on employee stock-based compensation plans totaling $0.2 million. These amounts were partially offset by proceeds from employee stock option exercises and employee stock purchase plan proceeds totaling $0.2 million. Cash used in financing activities during the three-month period of 2025 was $1.9 million and primarily related to net revolving line of credit borrowings under the 2021 Credit Agreement totaling $4.8 million offset partially by $2.9 million in cash used to repurchase the Company's common stock.