InfuSystem Holdings, Inc. 2026 Q2 Earnings Call

Please go ahead. Good morning, thank you for joining us today to review InfuSystem's second quarter 2026 financial results ended June 30th, 2026.

With us today on the call are Carrie Lachance, Chief Executive Officer, and Barry Steele, Chief Financial Officer. After the conclusion of today's prepared remarks, we will open the call for questions. Before we begin with prepared remarks, I would like to remind everyone, certain statements made by the management team of InfuSystem during this conference call constitute forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. Except for statements of historical fact, this conference call may contain forward-looking statements that involve risks and uncertainties, some of which are detailed under the risk factors in the documents filed by the company with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended December 31st, 2025.

Forward-looking statements speak only as of the date the statements are made. The company can give no assurance that such forward-looking statements will prove to be correct. InfuSystem does not undertake and specifically disclaims any obligation to update any forward-looking statements except as required by law. Now, I'd like to turn the call over to Carrie Lachance, Chief Executive Officer of InfuSystem.

Carrie. Thank you, Glen, good morning, everyone.

Welcome to InfuSystem's second quarter fiscal year 2026 earnings call. Thank you all for joining us today. I will provide a second quarter overview highlighting our progress in the quarter. Barry will provide a detailed summary of our financial results. I will come back with some closing comments before opening the line to questions. During the 2026 second quarter, we made measurable progress in our efforts to drive revenue growth and to improve our operational capacity and efficiency to make the revenue growth more profitable. This morning, we reported second quarter of 2026 revenue of $36.9 million. This represented a new quarterly record and an increase from the prior year of just over one million dollars or 2.6% on a GAAP basis and a 7.5% increase on a non-GAAP pro forma basis.

On a GAAP basis, the increase was achieved despite the impact of restructuring of our biomedical services contract with GE HealthCare, which reduced revenue by $1.6 million during the second quarter and is the basis for the adjustment to providing pro forma revenue growth. As previously mentioned, this restructuring improves our earnings because it allowed for an even larger reduction in direct contract expenses. As a result of the increased revenue and the benefits of the GE restructuring and other initiatives, we generated approximately $8.6 million in adjusted EBITDA this quarter, representing a 7.6% increase over the prior year and resulting in an increase of more than 1% in our EBITDA margin, which came in at 23.4%. These results were driven by both continued steady growth in our core oncology business and accelerating growth in wound care.

Quarterly oncology revenue surpassed the $20 million mark for the first time during the second quarter and grew 6.4% over the prior year, further extending our large share of the outpatient oncology ambulatory infusion market, where we serve 18 of the top 20 U.S. hospital systems. Within wound care, compression devices for lymphedema patients represent the main growth driver. In total, wound care net revenue grew by $2.1 million or 154% year-over-year during the second quarter. Compression devices represented nearly 90% of that increase. As the newest offering in our portfolio, added less than a year ago during the last year's third quarter, we are pleased with the growth and partnerships that we have in place today.

We are now working with two manufacturers, which bring us a breadth of product offerings covering both pneumatic compression devices or PCDs, which use sequential compression technology, and adjustable compression wraps, which feature Velcro closures that are easier for patients with limited mobility as compared to traditional products such as compression stockings. This new product line is expected to continue to drive near-term growth with these existing suppliers while also opening up potential opportunities by adding additional manufacturing relationships in the future. We believe our capabilities and payer contract portfolio make us an attractive DME partner to current and potential future manufacturing partners. Less noticeable in the current period results is continued progress on our new enterprise resource planning application, or ERP, and other business applications that we've been updating.

During our first quarter call, we reported that our new ERP was launched successfully and that we were continuing to work to stabilize certain areas of the system. During the second quarter, we made significant progress towards that effort and as a result, brought down the spending rate. While refinement and enhancement work continues, we see additional opportunities and are laser-focused on using the new application to drive improved capacity and efficiencies in the many processes that operate in that application. As we look towards the second half of the year, after adjusting for the expected $7.1 million lower annual revenue related to the GE HealthCare contract restructuring, on a pro forma basis, we continue to anticipate annual revenue growth in a range of 6%-8%.

Additionally, we continue to anticipate that our adjusted EBITDA margin will remain in the low to mid 20% range, consistent with our longer-term target of a 22%-25% margin. This is inclusive of the impact of costs related to our information technology systems upgrades. We are excited about the opportunities ahead, and we'll look to update you again in future quarters. Now I'll turn it over to Barry Steele for a detailed review of the second quarter financial results.

Barry Steele? Thank you, Carrie Lachance, thank you everyone on the call for joining us today.

As Carrie Lachance mentioned, second quarter revenue increased 2.6% to $36.9 million, compared to $36 million in the prior year. Importantly, this result includes a $1.6 million reduction in biomedical services revenue from the restructuring of our GE HealthCare contract. Excluding that impact, revenue growth would have been approximately 7.5% year-over-year, demonstrating continued strength in our core operations. Patient services continued to perform exceptionally well, with revenue increasing 15.2% to $24.8 million. That included oncology revenue, which grew 6.4%, or $1.2 million, driven by higher treatment volumes and improved reimbursement collections. While wound care revenue increased by 154%, or $2.1 million, benefiting from the successful launch and expansion of pneumatic compression devices and adjustable compression wraps.

Device Solutions revenue declined by 16.1% to $12.1 million, primarily due to the planned reduction in biomedical services revenue associated with the GE HealthCare contract restructuring and a 49% decline in equipment sales resulting from a large rental customer buyout that occurred last year. However, despite the lower revenue, Device Solutions gross profit remained stable at approximately $6.1 million, reflecting significantly improved profitability. Consolidated gross profit increased 7.7% to $21.4 million, while gross margin expanded to 58% from 55.2% last year, an improvement of 2.8%. This margin improvement was largely driven by Device Solutions, where gross margin increased to 50.2%, from 41.9%, an improvement of 8.3%. The GE contract restructuring alone improved Device Solutions margin by approximately 4.8%, while procurement initiatives, productivity improvements, and a favorable revenue mix provided additional benefits.