InfuSystem(INFU) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, income, equity, cash flows, and detailed accounting notes Unaudited Condensed Consolidated Balance Sheets Total assets and stockholders' equity slightly decreased from December 2024 to June 2025, while long-term debt increased | (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | ASSETS | | | | Cash and cash equivalents | $720 | $527 | | Accounts receivable, net | $24,481 | $21,155 | | Inventories, net | $5,668 | $6,528 | | Total current assets | $34,800 | $32,165 | | Medical equipment in rental service, net | $36,862 | $39,175 | | Total assets | $100,849 | $103,614 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $15,861 | $17,661 | | Long-term debt | $26,347 | $23,864 | | Total liabilities | $46,315 | $46,085 | | Total stockholders' equity | $54,534 | $57,529 | | Total liabilities and stockholders' equity | $100,849 | $103,614 | Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Net income and operating income significantly improved for both Q2 and H1 2025, driven by increased net revenues and gross profit | (in thousands, except share and per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net revenues | $36,002 | $33,698 | $70,718 | $65,693 | | Gross profit | $19,874 | $16,668 | $39,041 | $33,142 | | Operating income | $3,777 | $1,855 | $4,395 | $1,010 | | Income before income taxes | $3,446 | $1,308 | $3,699 | $10 | | Net income (loss) | $2,599 | $717 | $2,332 | $(395) | | Basic Net income (loss) per share | $0.12 | $0.03 | $0.11 | $(0.02) | | Diluted Net income (loss) per share | $0.12 | $0.03 | $0.11 | $(0.02) | Unaudited Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased to $54.5 million by June 2025, primarily due to common stock repurchases and other comprehensive losses | (in thousands) | Balances at December 31, 2024 | Balances at June 30, 2025 | | :--------------- | :---------------------------- | :------------------------ | | Common Stock | $2 | $2 | | Additional Paid-in Capital | $113,868 | $115,338 | | Retained Deficit | $(57,460) | $(61,523) | | Accumulated Other Comprehensive Income | $1,119 | $717 | | Total Stockholders' Equity | $57,529 | $54,534 | | Key Changes (Six Months Ended June 30, 2025): | | | | Stock-based compensation expense | | $1,769 | | Common stock repurchased | | $(6,395) | | Other comprehensive loss | | $(402) | | Net income | | $2,332 | Unaudited Condensed Consolidated Statements of Cash Flows Operating cash flow significantly increased in H1 2025, while financing activities shifted to a net cash outflow due to share repurchases | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $8,789 | $2,686 | | Net cash used in investing activities | $(4,346) | $(7,114) | | Net cash (used in) provided by financing activities | $(4,250) | $4,343 | | Net change in cash and cash equivalents | $193 | $(85) | | Cash and cash equivalents, end of period | $720 | $146 | Notes to the Unaudited Condensed Consolidated Financial Statements This section provides detailed disclosures for financial statements, covering operations, accounting updates, acquisitions, revenue, assets, debt, taxes, and compensation 1. Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies InfuSystem provides infusion pumps and services in two segments, with unaudited financial statements prepared under GAAP using estimates - InfuSystem is a leading provider of infusion pumps and related products/services for patients in home, oncology clinics, ambulatory surgery centers, and other sites of care[18] - The Company operates in two reportable segments: Patient Services and Device Solutions[18] - Unaudited condensed consolidated financial statements are prepared in conformity with GAAP, requiring estimates, judgments, and assumptions[20] 2. Recent Accounting Pronouncements and Developments The company is evaluating the impact of new FASB ASUs on income tax disclosures and disaggregation of income statement expenses - The Company is evaluating the impact of ASU 2023-09 (Income Taxes: Improvements to Income Tax Disclosures), effective for annual periods beginning after December 15, 2024[21] - The Company is evaluating the impact of ASU 2024-03 (Disaggregation of Income Statement Expenses), effective for fiscal years beginning after December 15, 2026[22] 3. Business Combinations In May 2025, InfuSystem acquired Apollo Medical Supply assets for $1.412 million, primarily allocating the purchase price to intangible assets - On May 30, 2025, InfuSystem acquired certain assets of Apollo Medical Supply, a privately-held wound care service company, integrating it into the Patient Services segment[23][24] Preliminary Purchase Price Allocation (in thousands): | Item | Apollo | | :-------------------------- | :----- | | Accounts receivable | $263 | | Other assets | $6 | | Intangible assets | $1,189 | | Accounts payable and other current liabilities | $(46) | | Total purchase price | $1,412 | 4. Revenue Net revenue grew to $36.0 million (Q2) and $70.7 million (H1) in 2025, driven by both segments, with revenue recognized under ASC 606 and ASC 842 Disaggregated Revenue by Offering Type (Three Months Ended June 30, in thousands): | Category | 2025 Revenue | 2025 % of Total | 2024 Revenue | 2024 % of Total | | :------------------------------------ | :----------- | :-------------- | :----------- | :-------------- | | Total Patient Services (ASC 606) | $19,278 | 53.5% | $18,242 | 54.1% | | Total Device Solutions (ASC 606) | $8,945 | 24.8% | $8,440 | 25.0% | | Total Revenue (ASC 606) | $28,223 | 78.4% | $26,682 | 79.2% | | Total Revenue (ASC 842, Leases) | $7,779 | 21.6% | $7,016 | 20.8% | | Total Net Revenue | $36,002 | 100.0% | $33,698 | 100.0% | Disaggregated Revenue by Offering Type (Six Months Ended June 30, in thousands): | Category | 2025 Revenue | 2025 % of Total | 2024 Revenue | 2024 % of Total | | :------------------------------------ | :----------- | :-------------- | :----------- | :-------------- | | Total Patient Services (ASC 606) | $37,997 | 53.7% | $35,278 | 53.7% | | Total Device Solutions (ASC 606) | $17,152 | 24.3% | $17,031 | 25.9% | | Total Revenue (ASC 606) | $55,149 | 78.0% | $52,309 | 79.6% | | Total Revenue (ASC 842, Leases) | $15,569 | 22.0% | $13,384 | 20.4% | | Total Net Revenue | $70,718 | 100.0% | $65,693 | 100.0% | Contract Balances (in thousands): | Item | As of June 30, 2025 | As of December 31, 2024 | $ Change | | :-------------------- | :------------------ | :---------------------- | :------- | | Accounts receivable, net | $24,481 | $21,155 | $3,326 | | Contract assets | $759 | $570 | $189 | | Contract liabilities | $88 | $0 | $88 | 5. Medical Equipment Medical equipment, both for sale and rental service, decreased from December 2024 to June 2025, while depreciation expense increased Medical Equipment (in thousands): | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Medical equipment for sale or rental - net | $2,314 | $3,157 | | Medical equipment in rental service - net | $36,862 | $39,175 | | Total | $39,176 | $42,332 | | Depreciation Expense (in thousands): | | | | Three months ended June 30, 2025 | $2,800 | | | Three months ended June 30, 2024 | $2,500 | | | Six months ended June 30, 2025 | $5,600 | | | Six months ended June 30, 2024 | $4,800 | | 6. Property and Equipment Property and equipment, net, slightly decreased by June 2025, with depreciation expense remaining consistent across periods Property and Equipment (in thousands): | Category | June 30, 2025 Total | December 31, 2024 Total | | :-------------------------- | :------------------ | :---------------------- | | Furniture, fixtures, and equipment | $1,482 | $1,592 | | Automobiles | $0 | $0 | | Leasehold improvements | $2,326 | $2,438 | | Total | $3,808 | $4,030 | | Depreciation Expense (in thousands): | | | | Three months ended June 30, 2025 | $0.3 | | | Three months ended June 30, 2024 | $0.3 | | | Six months ended June 30, 2025 | $0.6 | | | Six months ended June 30, 2024 | $0.6 | | 7. Goodwill & Intangible Assets Goodwill remained stable, while intangible assets increased to $7.150 million by June 2025 due to the Apollo acquisition, with consistent amortization Goodwill (in thousands): | Segment | Balance as of December 31, 2024 | Balance as of June 30, 2025 | | :-------------- | :---------------------------- | :-------------------------- | | Device Solutions | $3,710 | $3,710 | Intangible Assets, Net (in thousands): | Category | June 30, 2025 Net | December 31, 2024 Net | | :-------------------------- | :---------------- | :-------------------- | | Nonamortizable intangible assets: Trade names | $2,000 | $2,000 | | Amortizable intangible assets: Physician and customer relationships | $3,502 | $3,838 | | Non-competition agreements | $75 | $123 | | Unpatented technology | $348 | $415 | | Software | $50 | $80 | | Acquisition - Apollo | $1,175 | $0 | | Total | $7,150 | $6,456 | | Amortization Expense (in thousands): | | | | Three months ended June 30, 2025 | $0.2 | | | Three months ended June 30, 2024 | $0.2 | | | Six months ended June 30, 2025 | $0.5 | | | Six months ended June 30, 2024 | $0.5 | | 8. Debt The company's $75.0 million revolving credit facility was extended to July 2030, with $26.580 million outstanding and $48.420 million available by June 2025 - The 2021 Credit Agreement provides for a revolving credit facility of $75.0 million[35] - The maturity date for the 2021 Credit Agreement was extended to April 26, 2028, by the First Amendment (April 26, 2023) and further extended to July 15, 2030, by the Second Amendment (July 15, 2025)[38][42] Revolving Facility Availability (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Gross availability | $75,000 | $75,000 | | Outstanding draws | $(26,580) | $(24,124) | | Availability on Revolving Facility | $48,420 | $50,876 | - As of June 30, 2025, the weighted-average Term Benchmark loan rate was 6.41% (Adjusted Term SOFR of 4.31% plus 2.10%), and the actual ABR loan rate was 8.50% (lender's prime rate of 7.50% plus 1.00%)[41] - The Company was in compliance with all debt-related covenants under the 2021 Credit Agreement as of June 30, 2025[39] 9. Derivative Financial Instruments and Hedging Activities The company uses $20 million notional interest rate swaps as cash flow hedges to manage variable debt risk, with a fair value of $949 thousand by June 2025 - The Company uses interest rate swap agreements to manage interest rate risk on its variable rate debt, designated as cash flow hedges[43][44][45] Fair Value of Derivative Financial Instruments (in thousands): | Item | Balance Sheet Location | Notional | Fair Value Derivative Assets (June 30, 2025) | Fair Value Derivative Assets (December 31, 2024) | | :-------------------- | :--------------------- | :------- | :------------------------------------------- | :------------------------------------------- | | Interest rate swaps | Derivative financial instruments | $20,000 | $949 | $1,481 | Effect of Derivative Financial Instruments in AOCI (in thousands): | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Beginning balance | $1,119 | $1,088 | | Unrealized (loss) gain recognized in AOCI | $(273) | $635 | | Amounts reclassified to interest expense | $(259) | $(362) | | Tax benefit (provision) | $130 | $(66) | | Ending balance | $717 | $1,295 | 10. Income Taxes Income tax provisions were $0.8 million (Q2) and $1.4 million (H1) in 2025, with effective rates impacted by state/local taxes and non-deductible expenses Income Tax Provision and Effective Tax Rates: | Period | Pre-Tax Income (Loss) (in thousands) | Provision for Income Taxes (in thousands) | Effective Tax Rate | | :------------------------------------ | :----------------------------------- | :---------------------------------------- | :----------------- | | Three months ended June 30, 2025 | $3,446 | $847 | 24.6% | | Three months ended June 30, 2024 | $1,308 | $591 | 45.2% | | Six months ended June 30, 2025 | $3,699 | $1,367 | 37.0% | | Six months ended June 30, 2024 | <$0.1 | $405 | N/A | - The effective tax rates differed from the U.S. statutory rate mainly due to local, state, and foreign jurisdiction income taxes, limitations on certain expense deductions, and differences in equity compensation expense recognition[51] - The recently enacted 'One Big Beautiful Bill Act' (OBBBA) on July 4, 2025, is not expected to have a material impact on the consolidated financial statements[52] 11. Commitments, Contingencies and Litigation The company faces ordinary course legal proceedings, but management anticipates no material adverse effect on its financial condition or operations - The Company is subject to claims and lawsuits in the ordinary course of business[53] - Management believes any liability from these matters will not have a material adverse effect on the Company's financial condition, results of operations, or cash flows[54] 12. Earnings (Loss) Per Share Basic and diluted EPS significantly improved to $0.12 (Q2) and $0.11 (H1) in 2025, reversing prior year losses, with dilutive effects considered Net Income (Loss) Per Share: | (in thousands, except share and per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $2,599 | $717 | $2,332 | $(395) | | Basic weighted average common shares outstanding | 20,806,967 | 21,299,089 | 20,965,114 | 21,262,429 | | Diluted weighted average common shares outstanding | 21,056,460 | 21,711,198 | 21,288,370 | 21,262,429 | | Basic Net income (loss) per share | $0.12 | $0.03 | $0.11 | $(0.02) | | Diluted Net income (loss) per share | $0.12 | $0.03 | $0.11 | $(0.02) | - For Q2 2025, 2,644,684 outstanding options and unvested restricted stock units were anti-dilutive and excluded from EPS calculation[56] - For H1 2024, all outstanding options and restricted stock units were anti-dilutive due to net losses and thus excluded[56] 13. Share-Based Compensation Share-based compensation plans include restricted stock, PSUs, and stock options, with significant grants made in H1 2025 and a weighted average option fair value of $2.73 Restricted Stock Awards Activity (Six Months Ended June 30, 2025): | Item | Number of shares | Weighted average grant date fair value | | :------------------------------------ | :--------------- | :------------------------------------- | | Unvested at December 31, 2024 | 503,894 | $8.55 | | Granted | 227,539 | $6.09 | | Vested | (95,335) | $9.44 | | Forfeitures | (71,444) | $7.21 | | Unvested at June 30, 2025 | 511,214 | $7.39 | Performance-Based Restricted Stock Units (PSU) Activity (Six Months Ended June 30, 2025): | Item | Number of shares | Weighted average grant date fair value | | :------------------------------------ | :--------------- | :------------------------------------- | | Unvested at December 31, 2024 | 189,221 | $7.92 | | Granted | 364,905 | $5.70 | | Forfeitures | (121,324) | $9.17 | | Unvested at June 30, 2025 | 432,802 | $5.70 | Stock Options Activity (2021 Plan, Six Months Ended June 30, 2025): | Item | Number of Authorized Shares | Weighted Average Exercise Price | | :------------------------------------ | :-------------------------- | :------------------------------ | | Outstanding at December 31, 2024 | 1,840,786 | $8.93 | | Granted | 869,421 | $6.04 | | Forfeitures and expirations | (216,077) | $6.96 | | Outstanding at June 30, 2025 | 2,494,130 | $8.10 | | Exercisable at June 30, 2025 | 1,117,523 | $9.80 | Stock Options Grant Assumptions (Six Months Ended June 30): | Item | 2025 | 2024 | | :------------------------------------ | :--- | :--- | | Expected volatility | 46% to 50% | 46% to 51% | | Risk free interest rate | 3.87% to 4.01% | 4.25% to 4.60% | | Expected lives at date of grant (in years) | 4.27 | 4.08 | | Weighted average fair value of options granted | $2.73 | $2.95 | 14. Leases As lessee, H1 2025 operating lease costs were $1.276 million; as lessor, total lease revenue was $15.569 million, primarily from operating leases Total Lease Cost (as Lessee, in thousands): | Period | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $1,016 | $945 | | Variable lease cost | $260 | $172 | | Total lease cost | $1,276 | $1,117 | Weighted Average Lease Terms and Discount Rates (as Lessee): | Item | As of June 30, 2025 | As of June 30, 2024 | | :------------------------------------ | :------------------ | :------------------ | | Weighted average remaining lease term | 4.9 Years | 5.8 Years | | Weighted average discount rate | 7.6% | 7.8% | Total Lease Revenue (as Lessor, in thousands): | Period | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net operating lease revenue | $15,382 | $12,983 | | Sales-type lease revenue | $187 | $401 | | Total lease revenue | $15,569 | $13,384 | 15. Business Segment Information The company's Patient Services and Device Solutions segments both reported increased revenues and gross profits in H1 2025, with Patient Services leading in revenue - The Company's reportable segments are Patient Services (higher margin rental revenues) and Device Solutions (lower margin product sales, direct payer rental, and services revenues)[72] Segment Financial Information (Three Months Ended June 30, 2025, in thousands): | Item | Patient Services | Device Solutions | Total | | :-------------------------- | :--------------- | :--------------- | :---- | | Net revenues - external | $21,518 | $14,484 | $36,002 | | Gross profit | $13,803 | $6,071 | $19,874 | | Total assets | $52,285 | $46,564 | $100,849 | | Purchases of medical equipment | $493 | $537 | $1,030 | Segment Financial Information (Six Months Ended June 30, 2025, in thousands): | Item | Patient Services | Device Solutions | Total | | :-------------------------- | :--------------- | :--------------- | :---- | | Net revenues - external | $42,292 | $28,426 | $70,718 | | Gross profit | $26,988 | $12,053 | $39,041 | | Total assets | $52,285 | $46,564 | $100,849 | | Purchases of medical equipment | $2,269 | $2,045 | $4,314 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results, including business overview, segment strategies, operational analysis for Q2 and H1 2025, liquidity, and critical accounting policies Cautionary Statement Regarding Forward-Looking Statements This statement identifies forward-looking statements and outlines risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements subject to various factors, risks, and uncertainties that could cause actual results to differ materially[81] - Key risk factors include public health emergencies, changes in healthcare reimbursement, competition, dependency on suppliers, acquisitions, and compliance with credit facility covenants[81] Overview InfuSystem is a leading national healthcare service provider for Durable Medical Equipment, leveraging payer networks, scale, and diverse services for competitive advantage - InfuSystem is a leading national healthcare service provider facilitating outpatient care for Durable Medical Equipment manufacturers and healthcare providers[83] - Competitive barriers include a growing number of third-party payer networks, economies of scale, established relationships, a diverse pump fleet, seven geographic locations, and a growing team of field-based biomedical technicians[84] Patient Services Segment The Patient Services segment focuses on clinic-to-home healthcare, with Oncology as its core, and is expanding into pain management, wound care, and IT-based services - The Patient Services segment's core purpose is to leverage its know-how in clinic-to-home healthcare, logistics, billing, payer networks, and clinical/biomedical capabilities[85] - The leading service is the Oncology Business, focusing on continuous chemotherapy infusions, with growth driven by improved clinical outcomes, lower toxicity, and favorable reimbursement[85][87][89] - Additional focus areas include Pain Management, Wound Care (through a partnership with Sanara MedTech Inc.), strategic acquisitions of regional providers, and information technology-based services (e.g., EXPRESS, InfuBus, Pump Portal)[92] Device Solutions Segment The Device Solutions segment offers sales, rentals, consumables, and biomedical services for infusion pumps and DME, with recent acquisitions enhancing capabilities - The Device Solutions segment's core services include selling/renting infusion pumps and DME, selling consumables, and providing biomedical recertification, maintenance, and repair services[91] - Acquisitions of FilAMed (January 2021) and OB Healthcare (April 2021) have supplemented and expanded the segment's biomedical and field service capabilities[91][93] Results of Operations for the Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024 Q2 2025 saw net revenues increase by 6.8% to $36.0 million, gross profit by 19.2% to $19.9 million, and net income rise to $2.6 million, driven by both segments Key Financial Highlights (Three Months Ended June 30, in thousands): | Item | 2025 | 2024 | Change (Better/Worse) | | :------------------------------------ | :--- | :--- | :-------------------- | | Net revenues | $36,002 | $33,698 | $2,304 | | Gross profit | $19,874 | $16,668 | $3,206 | | Operating income | $3,777 | $1,855 | $1,922 | | Income before income taxes | $3,446 | $1,308 | $2,138 | | Net income | $2,599 | $717 | $1,882 | | Basic Net income per share | $0.12 | $0.03 | $0.09 | | Diluted Net income per share | $0.12 | $0.03 | $0.09 | Net Revenues (Q2) Q2 2025 net revenues increased by $2.3 million (6.8%) to $36.0 million, with growth in both Patient Services and Device Solutions segments - Net revenues for Q2 2025 increased by $2.3 million (6.8%) to $36.0 million compared to Q2 2024[95] - Patient Services net revenue increased by $1.3 million (6.3%) to $21.5 million, primarily from Oncology (+$0.7 million, 4.0%) and Wound Care (+$0.8 million, 175%), partially offset by lower Pain Management revenue (-$0.2 million, 15.4%)[96][97] - Device Solutions net revenue increased by $1.0 million (7.7%) to $14.5 million, driven by increased medical equipment sales (+$0.6 million, 40.0%) and higher rental revenue (+$0.5 million, 10.5%)[98] Gross Profit (Q2) Q2 2025 gross profit increased by $3.2 million (19.2%) to $19.9 million, with gross margin improving to 55.2%, driven by strong Device Solutions performance - Gross profit for Q2 2025 increased by $3.2 million (19.2%) to $19.9 million, with gross margin improving to 55.2% from 49.5% in Q2 2024[99] - Patient Services gross profit increased by $0.4 million (2.7%) to $13.8 million, but gross margin decreased to 64.1% due to an unfavorable revenue mix (higher wound care revenue with lower margin)[100] - Device Solutions gross profit increased by $2.8 million (88.3%) to $6.1 million, with gross margin rising to 41.9% due to improved procurement costs, increased biomedical productivity, and a favorable sales mix[101] Selling and Marketing Expenses (Q2) Q2 2025 selling and marketing expenses decreased by 11.1% to $2.7 million, reflecting fewer sales team members and improved fixed cost coverage - Selling and marketing expenses decreased by 11.1% to $2.7 million in Q2 2025[102] - As a percentage of net revenues, selling and marketing expenses decreased to 7.5% in Q2 2025 from 9.0% in Q2 2024[102] - The decrease reflected a reduction in sales team members and improved coverage of fixed costs from higher net revenues[102] General and Administrative Expenses (Q2) Q2 2025 G&A expenses increased by $1.6 million (14.1%) to $13.1 million, driven by IT upgrades, personnel, and incentive compensation, partially offset by lower stock compensation - G&A expenses increased by $1.6 million (14.1%) to $13.1 million in Q2 2025[103] - G&A expenses as a percentage of net revenues increased to 36.5% in Q2 2025 from 34.2% in Q2 2024[104] - Increases were driven by $0.6 million for IT/business application upgrades, $0.8 million for revenue cycle personnel, and $0.4 million for short-term incentive compensation, partially offset by a $0.3 million reduction in stock-based compensation[103][104] Other Expenses (Q2) Q2 2025 interest expense decreased by $0.1 million to $0.4 million, primarily due to lower average outstanding debt balances - Interest expense in Q2 2025 was $0.4 million, a $0.1 million decrease from Q2 2024[105] - The decrease resulted from lower average outstanding debt balances, partially offset by higher commitment fees on unused revolving line availability[105] Provision For Income Taxes (Q2) Q2 2025 income tax provision was $0.8 million (25% effective rate), lower than Q2 2024, with rates influenced by state/local taxes and permanent differences - Q2 2025 provision for income taxes was $0.8 million on pre-tax income of $3.4 million, with an effective tax rate of 25%[106] - Q2 2024 provision was $0.6 million on pre-tax income of $1.3 million, with an effective tax rate of 45%[106] - Differences from the U.S. statutory rate are mainly due to local, state, and foreign income taxes and permanent differences from non-deductible expenses[106] Results of Operations for the Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024 H1 2025 net revenues increased by 7.6% to $70.7 million, gross profit by 17.8% to $39.0 million, and net income reached $2.3 million, reversing a prior year loss Key Financial Highlights (Six Months Ended June 30, in thousands): | Item | 2025 | 2024 | Change (Better/Worse) | | :------------------------------------ | :--- | :--- | :-------------------- | | Net revenues | $70,718 | $65,693 | $5,025 | | Gross profit | $39,041 | $33,142 | $5,899 | | Operating income | $4,395 | $1,010 | $3,385 | | Income before income taxes | $3,699 | $10 | $3,689 | | Net income (loss) | $2,332 | $(395) | $2,727 | | Basic Net income (loss) per share | $0.11 | $(0.02) | $0.13 | | Diluted Net income (loss) per share | $0.11 | $(0.02) | $0.13 | Net Revenues (H1) H1 2025 net revenues increased by $5.0 million (7.6%) to $70.7 million, with growth across both Patient Services and Device Solutions segments - Net revenues for H1 2025 increased by $5.0 million (7.6%) to $70.7 million compared to H1 2024[109] - Patient Services net revenue increased by $3.5 million (8.9%) to $42.3 million, primarily from Oncology (+$2.5 million, 7.0%) and Wound Care (+$1.3 million, 155.3%)[110][111] - Device Solutions net revenue increased by $1.6 million (5.8%) to $28.4 million, driven by higher rental revenue (+$1.4 million, 14.7%) and medical equipment sales (+$0.3 million, 9.2%), partially offset by a $0.2 million decrease in biomedical services revenue[112] Gross Profit (H1) H1 2025 gross profit increased by $5.9 million (17.8%) to $39.0 million, with gross margin improving to 55.2%, driven by strong Device Solutions performance - Gross profit for H1 2025 increased by $5.9 million (17.8%) to $39.0 million, with gross margin improving to 55.2% from 50.4% in H1 2024[113] - Patient Services gross profit increased by $1.3 million (4.9%) to $27.0 million, but gross margin decreased to 63.8% due to higher pump disposal expenses and unfavorable product mix (wound care treatment revenue)[114] - Device Solutions gross profit increased by $4.6 million (62.4%) to $12.1 million, with gross margin rising to 42.4% due to a prior year error correction, improved procurement, biomedical productivity, and favorable product mix[115] Selling and Marketing Expenses (H1) H1 2025 selling and marketing expenses decreased by $0.7 million (11.4%) to $5.7 million, reflecting fewer sales team members and improved fixed cost coverage - Selling and marketing expenses decreased by $0.7 million (11.4%) to $5.7 million in H1 2025[116] - As a percentage of net revenues, selling and marketing expenses decreased to 8.0% in H1 2025 from 9.8% in H1 2024[116] - The decrease reflected a reduction in sales team members and improved coverage of fixed costs from higher net revenues[116] General and Administrative Expenses (H1) H1 2025 G&A expenses increased by $3.2 million (12.9%) to $28.5 million, driven by CEO severance, IT upgrades, and personnel costs, partially offset by lower stock compensation - G&A expenses increased by $3.2 million (12.9%) to $28.5 million in H1 2025[117] - G&A expenses as a percentage of net revenues increased to 40.2% in H1 2025 from 38.4% in H1 2024[118] - Key increases included a $1.0 million severance expense for the outgoing CEO, $1.1 million for IT/business application upgrades, and $2.2 million for revenue cycle personnel and general business expenses, partially offset by a $0.3 million reduction in stock-based compensation[118] Other Expenses (H1) H1 2025 interest expense decreased by $0.2 million to $0.7 million, primarily due to lower average outstanding borrowings on the revolving credit line - Interest expense in H1 2025 was $0.7 million, a $0.2 million decrease from H1 2024[119] - The decrease was due to lower average outstanding borrowings on the 2021 Credit Agreement revolving line of credit, partially offset by higher commitment fees[119] Provision For Income Taxes (H1) H1 2025 income tax provision was $1.4 million (37% effective rate), impacted by non-deductible expenses including CEO severance and stock compensation shortfalls - H1 2025 provision for income taxes was $1.4 million on pre-tax income of $3.7 million, with an effective tax rate of 37%[120] - Non-deductible expenses, including CEO severance and stock compensation shortfalls, impacted tax expense by $0.5 million (12% of pre-tax income)[120] - H1 2024 provision was $0.4 million on a slight pre-tax income, with rates differing from statutory due to state/local/foreign taxes and permanent differences[120] Liquidity and Capital Resources The company maintains $49.1 million in liquidity, with its credit facility extended to 2030, and continues its share repurchase program Overview (Liquidity) InfuSystem funds operations via cash flow and credit, holding $49.140 million in available liquidity by June 2025, deemed adequate for future needs - The Company finances operations and capital expenditures with cash from operations and borrowings under its 2021 Credit Agreement[121] Available Liquidity (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $720 | $527 | | Availability on revolving facility | $48,420 | $50,876 | | Available liquidity | $49,140 | $51,403 | - Management believes it has adequate liquidity and funding to meet requirements for at least the next year and anticipated long-term needs[122] Long-Term Debt Activities The revolving credit facility had $48.420 million available by June 2025, with variable interest rates, and its maturity was extended to July 2030 Revolving Facility Availability (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Gross availability | $75,000 | $75,000 | | Outstanding draws | $(26,580) | $(24,124) | | Availability on Revolving Facility | $48,420 | $50,876 | - The weighted-average Term Benchmark loan rate at June 30, 2025, was 6.41%, and the actual ABR loan rate was 8.50%[123] - On July 15, 2025, the maturity date for the 2021 Credit Agreement was extended to July 15, 2030[124] Share Repurchase Program (Liquidity) The company's $20.0 million share repurchase program, authorized through June 2026, has seen $7.6 million in repurchases by June 2025 - A Share Repurchase Program, approved on May 16, 2024, authorizes repurchases of up to $20.0 million of common stock through June 30, 2026[125] - As of June 30, 2025, the Company had repurchased and retired approximately $7.6 million, or 1,150,112 shares, under the program[126] Cash Flows H1 2025 operating cash flow significantly increased, investing cash flow decreased, and financing activities shifted to a net use due to share repurchases Cash Flow Summary (in thousands): | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | 2025 vs. 2024 Change | | :------------------------------------ | :----------------------------- | :----------------------------- | :------------------- | | Net cash provided by operating activities | $8,789 | $2,686 | $6,103 | | Net cash used in investing activities | $(4,346) | $(7,114) | $2,768 | | Net cash (used in) provided by financing activities | $(4,250) | $4,343 | $(8,593) | - Operating cash flow increased by $6.1 million due to higher net income (adjusted for non-cash items) and a reduction in cash used for working capital[127] - Investing cash flow decreased by $2.8 million, mainly from a $4.7 million decrease in medical equipment purchases, partially offset by the $1.4 million Apollo acquisition and lower proceeds from asset sales[129] - Financing cash flow shifted to a net use of $4.3 million, primarily due to $6.4 million in common stock repurchases, compared to a net provision of $4.3 million in the prior year[130] Critical Accounting Policies and Estimates Financial statements rely on GAAP-compliant estimates and judgments, with management affirming their appropriateness and no material changes to critical accounting policies - Financial statements are prepared using estimates, judgments, and assumptions in conformity with GAAP[131] - No material changes have occurred to the critical accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2024[131] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages market risks from interest rates and foreign currency using $20.0 million notional interest rate swaps, with no material impact expected from SOFR changes - The Company is exposed to market risk from changes in foreign currency exchange rates and short-term interest rates, primarily related to its 2021 Credit Agreement[132] - The Company uses interest rate derivative contracts (swaps) with a notional value of $20.0 million to hedge short-term interest rate risk, not for speculative purposes[133][134] - Due to hedging relationships, a 50% change in the market rate of SOFR would not have a material impact on financial results[134] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The CEO and CFO evaluated disclosure controls and procedures as of June 30, 2025, and determined them to be effective[136] - There has been no material change in internal control over financial reporting during the most recent calendar quarter[137] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in ordinary course legal proceedings, with management expecting no material adverse effect on its financial position or operations - The Company is subject to certain claims and lawsuits in the ordinary course of business[139] - Management believes any liability from these matters will not have a material adverse effect on the Company's financial condition, results of operations, or cash flows[139] Item 1A. Risk Factors Refer to the Annual Report on Form 10-K for a comprehensive discussion of risk factors affecting the company's operations, financial condition, and liquidity - Refer to the 'Risk Factors' section in the Annual Report on Form 10-K for the year ended December 31, 2024, for information on factors affecting results, financial condition, and liquidity[140] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 632,427 shares at an average of $5.88 in Q2 2025, with $12.425 million remaining authorized under its repurchase program Purchases of Equity Securities by the Issuer (Three Months Ended June 30, 2025): | Period | Total Number of Shares Purchased (a) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (b) | | :------------------------------------ | :----------------------------------- | :--------------------------- | :------------------------------------------------------------------- | :---------------------------------------------------------------------------------------------------- | | April 1, 2025 through April 30, 2025 | 855 | $4.94 | — | $15,925,147 | | May 1, 2025 through May 31, 2025 | 363,732 | $5.75 | 328,527 | $14,048,976 | | June 1, 2025 through June 30, 2025 | 267,840 | $6.06 | 267,840 | $12,425,150 | | Total | 632,427 | $5.88 | 596,367 | | - The Share Repurchase Program, approved on May 16, 2024, authorizes repurchases of up to $20.0 million of common stock through June 30, 2026[142] - As of June 30, 2025, the Company had repurchased 1,150,112 shares under the Share Repurchase Program[142] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[143] Item 4. Mine Safety Disclosures Mine Safety Disclosures are not applicable to the company's operations - Mine Safety Disclosures are not applicable to the Company[144] Item 5. Other Information No director or officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 - No director or officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[145] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, material contracts, SOX certifications, and Inline XBRL documents - Key exhibits include the Second Amended and Restated Certificate of Incorporation, Amended and Restated By-Laws, Separation Agreement with Richard DiIorio, Second Amended and Restated Employment Agreement with Carrie Lachance, and the Second Amendment to Credit Agreement[146] - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included[146] - Inline XBRL documents for the instance, schema, calculation, definition, label, and presentation linkbases are also filed[146] Signatures The report is signed by the CEO and CFO of InfuSystem Holdings, Inc. on August 5, 2025 - The report is signed by Carrie Lachance, Chief Executive Officer and Director, and Barry Steele, Chief Financial Officer, on August 5, 2025[150]