Good day and welcome to the InfuSystem Holdings, Inc. Report's first quarter fiscal year 2026 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touchtone phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Glenn Axelrod, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today to review Infuse Systems' first quarter 2026 financial results ended March 31, 2026. With us today on the call are Kerry 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 InfiaSystem 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 31, 2025. Forward-looking statements speak only as of the date the statements were 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 Keri Lachance, Chief Executive Officer of INFUSystem. Keri.

Thank you, Glenn, and good morning, everyone. Welcome to INFUSystem's first quarter fiscal year 2026 earnings call. Thank you all for joining us today. I will provide a first-quarter overview, highlighting key initiatives, and updating our progress on strategic priorities. Then Barry will provide a detailed summary of our financial results. I will then come back with some closing comments before opening the line to questions. Today we reported first quarter of 2026 revenue of $33.7 million. This represented a decline from our prior year of just over $1 million on a GAAP basis, but a 1.7% increase on a pro-forma basis. The GAAP reduction was mainly driven by the restructuring of our biomedical services contract with GE Healthcare, which reduced revenue by $1.6 million during the first quarter and is the basis for the adjustment to providing pro-forma revenue. As we reported on our last two earnings calls, this restructuring improves our earnings because it allowed for an even larger reduction in direct contract expenses. Despite the decline in revenue, we generated approximately $6.4 million in adjusted EBITDA this quarter, roughly in line with the prior year, resulting in a modest improvement in adjusted EBITDA margin to 18.9 percent, up from 18.2% in the first quarter last year. Behind these results are two very important initiatives that warrant the progress updates. First, we continue to expand our wound care product category. During the first quarter, wound care net revenue came in at $2.1 million. While the number is still small, representing only 6% of our total quarterly revenue, we are excited about the growth rate, which was more than double the prior year at just under 112%. About 60% of the growth came from our compression device product line, which we recently added during the third quarter of last year. This product line was expanded with the launch of a second compression device supplier during the first quarter of 2026. The first manufacturer relationship brought us pneumatic compression devices, or PCDs, which use sequential compression technology to treat patients with lymphedema and similar disease states. The additional supplier now adds adjustable compression wraps, which feature Velcro closures that are easier for patients with limited mobility as compared to traditional products, such as compression stockings. Adjustable compression wraps represent a significant expansion of our addressable market as they serve a diverse patient demographic ranging from simple post-surgical recovery to lifelong management of chronic disorders that may not qualify for other treatments, such as PCDs. The second key initiative I'd like to update you on reached a very important milestone during the first quarter. Sunday, March 1, 2026, was a very busy day for the team here at InfuSystem. after 20 months of intense meetings data compilation and endless process analysis and testing live transactions started running in our newly installed enterprise resource planning system our erp as is fairly typical for these type of projects the first month wasn't entirely seamless and we continue to work out initial bugs and make the necessary adjustments to stabilize the system. However, I'm happy to report that we successfully cleared the go-live hurdle and are charging forward to secure the benefit of the new system that we have been looking forward to implementing over these many months. This marks a very significant milestone for IMPU system. After putting this application in place and retiring several legacy systems, much of our data is now integrated, workflows are connected, and the many processes supporting our various business lines run through a common platform, not multiple disparate systems. While we continue to make final adjustments, resolve open items on the punch list, and get over the learning curve, we are starting to focus on capturing the benefits that we anticipate will start to pay back our investments. These benefits are expected to come in many forms and include improved ability to complete tasks with greater productivity, better cost and margin analysis to focus on high return cost optimization initiatives, improved visibility to support pricing decisions, improved utilization of our medical device fleet, and optimization of working capital levels. Additionally, we are already working to identify system enhancements and will implement those that provide the fastest payback and highest investment returns. As we look forward to the rest of the year and 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 the range of 6 to 8%. Additionally, we continue to anticipate that our adjusted EBITDA margin will remain in the low to mid-20% range. This is inclusive of the impact of costs related to our ongoing information technology systems upgrade. We are excited about the opportunities ahead and will look to update you again in future quarters. Now I'll turn it over to Barry for a detailed review of the first quarter financial results. Barry?

Thank you, Carrie, and thank you everyone on the call for joining us today. I'm going to give details of the current quarter's results, provide a few updates on the ERP spend, and update you on our current financial position and how it changed during the quarter. Now let me start with our financial results for the period. During the first quarter of 2026, our net revenue totaled $33.7 million, representing a $1 million or 3% decrease from the prior year first quarter. Adjusting for the GE Healthcare contract, restructuring, our pro forma net revenue grew by 1.7%. Patient services net revenue increased by $1.3 million, or 6.4%, and included increased patient treatment volumes in oncology and wound care. Oncology net revenue increased by approximately $450,000, or 2.4%, and wound care treatment volumes revenue grew by $1.1 million, which represented an increase of nearly 112%, driven by compression devices, as Kerry mentioned. To buy solutions, that revenue decreased by $2.3 million, or 17%. Nearly 70% of the decrease was attributable to the GE Healthcare contract restructuring. The remaining amount of the decrease, which was about $760,000, was due to lower rental revenues and lower equipment sales of $432,000 and $1 million, respectively. Both of these decreases are related to a large customer rental buyout that began in the prior year. The buyout, which started during the prior year first quarter, elevated the amount of equipment sales in the prior year and reduced quarterly rental revenues during the subsequent quarters, including the current three-month period. These reductions were partially offset by an increase in the non-GE-related biomedical services revenue of $340,000 and higher disposable medical supplies revenue, which also increased by $340,000. Breaking down the biomedical services revenue a little further, we see that our field-based services grew by nearly $600,000 after adjusting out the GE healthcare revenue decline. This underlying increase demonstrates partial success in replacing lost GE revenue. Furthermore, as you will see when I get to discussing gross margin, the benefit to earnings for this tradeoff was rewarding. Despite the decrease in net revenue, gross profit for the first quarter of 2026 was $19.7 million, representing an increase of $515,000, or 3%, over the prior year first quarter. The gross margin percentage at just over 58% increased by 3.2% from the prior year amount. At the segment level, patient services gross profit increased by $1.3 million, and gross margin increased by 1.3% to 64.8%. driven by the higher sales and reduced pump disposal and maintenance expenses. Device Solutions gross profit declined by $623,000, mainly due to the lower amounts of rental and equipment sales revenue, but the gross margin increased by 3.4% to 46.3%. The greatest contributor to this improvement was the aforementioned tradeoff between GE Healthcare and smaller field service projects, which, despite resulting in an overall decline in revenue, netting to just over $1 million, contributed nearly $400,000 of additional gross margin, resulting in a more than 7% increase in device service's gross margin. This benefit was partially offset by unfavorable revenue mix and higher wage and employee health care expenses, which reduced the gross margin by nearly 2% and 2.5%, respectively. Selling general and administrative expenses for the first quarter of 2026 totaled $17.9 million and was $418,000, or 2.2% lower than the prior year first quarter amount. The prior year amount included a non-recurring expense related to the departure of our former CEO of $1 million. Additional reductions included a $300,000 reduction in the accrual for management bonuses, lower accounting fees toiling $200,000, and $100,000 in reduced travel expenses. These decreases were partially offset by increases in other expenses, including $400,000 in increased expenses related to information, technology, and business applications upgrades, including the replacement of the company's ERP that Cary discussed. Additional personnel directly related to increased patient services and net revenue, including revenue cycle personnel totaling $300,000, a $100,000 increase in stock-based compensation expenses, and cost inflation impacts from increased employee wage rates and higher health care expenses totaling $400,000. The ERP system upgrade project expenses were higher during the current period due to the higher intensity of activities related to the go-live phase of the project which, as Kerry mentioned, 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 the 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 cost of health care benefits, which in total increased by $374,000 during the quarter, were significantly higher than increases experienced in the prior years. Adjusted EBITDA during the 2026 first quarter was $6.3 million, which, despite the lower net revenue, was about the same amount as the prior year first quarter. This represented 18.9% of net revenue for 2026, which was slightly above the prior year rate of 18.2%. These amounts included the spending on our ERP project, which again is expected to start to decrease by the end of the second quarter here in 2026. Now a few comments on our financial position and capital reserves. During the first quarter, we generated operating cash flow of $970,000, which was $817,000 less than the prior year first quarter, mainly due to higher increases in working capital in 2026. Our net capital expenditures were $1.3 million during the 2026 first quarter, which represented a decrease from $2.6 million spent during 2025. This decrease was attributable to our overall capital spending requirements being lower as compared to amounts in prior years, as the sources of our revenue growth have been more weighted towards less capital-intensive revenue sources, including additional wound care revenues. We expect moderate amounts of capital expenditures to continue in 2026 similar to 2025. We remain well-positioned to fund continued net revenue growth with a strong cash flow from operations backed by significant liquidity reserves available from our revolving line of credit and manageable leverage and debt service requirements. Our net debt increased slightly by $1.1 million during the quarter, and we repurchased just over $800,000 of our common stock during the quarter through our stock repurchase authorization. Our available liquidity continues to be strong and total just over $57 million as of March 31, 2026. At that time, our ratio of net debt to adjusted EBITDA was a modest 0.56 times. Our debt consists of $20 million in borrowings on our $75 million revolving line of credit with no term payment requirements and a maturity date of July 2030. We continue to benefit from an outstanding interest rate swap, which fixes our interest rate on the $20 million of our outstanding borrowings at a below market rate of 3.8% until April of 2028. I will not turn the call back over to Carrie.

Thanks, Barry. As I reflect on the progress we have made during the first quarter, the updates shared with you today, and what we are focused on as we move through the rest of 2026, I hope you will agree that we continue to be diligent in pursuing the strategic priorities previously laid out for our shareholders. Those priorities are to execute with discipline, deliver profitable growth, and drive long-term value creation for shareholders. Operator, we are ready for the Q&A portion of the call.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. To withdraw your question, please press star, then 2. And at this time, we will pause momentarily to assemble our roster. And the first question will be from Anderson Schock from B. Riley. Please go ahead.

Hi, good morning. Thank you for taking our questions, and congrats on all the progress. So first, the ERP went live at the start of March. Can you talk about how the conversion is going, and have you seen any billing or collections disruption or impact on the working capital? And when do you expect the cost step down to begin showing in the P&L? Is it more second or third quarter weighted?

Yeah, I'll take that one, Kerry. As any ERP implementation, we definitely had our glitches that we dealt with. It affected a number of different areas. We do not think that anything is going to cause any disruptions in our cash flow or billings or anything like that. So we think we're pretty good. It's more kind of working out some of our processes and making them as efficient as they are expected to be. As far as the long-term outlook for the impact for the system, Carrie mentioned a lot of the benefits that we can see sort of from a summary perspective. We believe that, you know, still going through the learning curve, still fixing a few glitches. By the end of the year, we'll be able to, I think, articulate very well and have plans in place for, you know, going and getting the cost savings that the system should be able to provide to us. And I believe that next year we'll see some of that actually pay off. and we'll start seeing the expenses that we have today reverse to be actual proceeds from the reduced reduction costs.

Okay, got it. And then on the last call, you indicated oncology would begin migrating to the Apollo-based RCM platform in the back half of the year. Now that the ERP is live, is the timeline for oncology RCM migration shifted?

Yeah, no, it should still be. Thanks for the question, Anderson. It should still be kind of second half of the year. That is some of the progress and why we decided to be second half of the year and delay that just a little bit to get the ERP behind us and some of those, you know, continued kind of processes through the ERP improvements in the system. So it is on track to, you know, hopefully finish up by the end of the year, but we've started to begin that process.

I would just add we use a lot of internal resources for the ERP. They're a lot of the same resources that this other conversion will require, so that's why we had to stagger them.

Okay. Got it. That's helpful. And then on the new oncology customers signed in the back half of last year, could you give us a sense of the typical ramp curve for a new hospital system? And specifically, how much of the contract volume signed in the back half of 25 has shown up in the first quarter versus what's still to come?

Yeah, we can see sometimes in a new oncology account, they could have several hundred patients. A lot of times that process will, the newer patients will start to come on board, but the older patients that are on their older device, say an elastomeric, for instance, they'll finish out their continued therapy and the rest of their cycles on that same device. So it can take from, you know, a month or two, depending on how many new patients they have, through a few months. We are pretty well on board with that newer customer from last year.

Okay, got it. Thank you for taking the questions.

Yeah.

And the next question will be from Jim Sidoti with Sidoti & Company. Please go ahead.

Hi, good morning, and thanks again for taking questions. So with regards to lymphedema, you know, this isn't the first time you've been in that market. You know, why do you think you're doing better this time than in previous attempts?

Yeah, it's a great question, Jim. Good morning. You know, the difference today is really our partnerships. So we have a new partner that came on board, as we mentioned, third quarter, fourth quarter, excuse me, of last year. Really strong partnership with them. They bring us the PCDs. The partnership that we had a few years ago when we tried this, you know, we need the paperwork. We need clean referrals. We need all of the ability to bill those claims, and we weren't receiving that during that prior start of our PCD and compression go live. And so the new partner that we received or that we onboarded in Q4 of last year has been very strong. We continue to grow and stabilize and even improve that relationship. As well as Q1 this year, we have another compression opportunity there and very, very strong relationship there, and we're looking forward to growing them for the rest of the year.

And can you talk a little bit about pain management? I know there's some reimbursement changes. Have you seen any impact from that, and where do you think pain goes in 2026?

We haven't yet seen. There's definitely been some changes in that market. We're pretty excited about that. We do work with our current manufacturers that are in that space to continue to grow. We're working closely with one of our partners on one of the pumps. They're growing their pain team and including some of our third-party payer opportunities as part of their bag and what they're offering for their customers. So we're excited for the year. We haven't seen a lift as of yet. We did add a decent-sized customer over the past couple of months in Q1 of this year. So we continue to be excited for pain management and see what the changes in the market will hold this year.

And I know you don't like to give quantitative guidance on cash flow, but just qualitatively, I mean, can you just give us some direction? Do you think it will be up materially from last year, about the same?

I would say about the same. I think that the operating cash flow and how we spend it will probably be similar.

Okay.

And the next question will come from Matt Hewitt with Craig Hallam Capital Group. Please go ahead.

And thanks for taking the question. This is Talif Quormanon from Matt Hewitt. Apologies if you already stated it. I've been going through different calls here this morning. So, can you provide an update on chemo mouthpiece, please?

I sure can. And so KEMA Mouthpiece did not receive their current application for coding that was submitted in 2025, was due out in early of 2026. They did not receive approval for that code. So as we mentioned, as you may remember last year, we did take that out of kind of our pipeline moving forward. It was not in our guidance for this year. So we do still have clinics that do love the program. CMT continues to work on reimbursement opportunities for them. So we are still providing that device to patients. We're working with them currently and some of the patients, but, you know, I wouldn't expect it in our guidance. And they are looking. We may look to slow down on some of the referrals for that just until they get some coding.

Thank you very much.

Oh, no problem. again if you'd like to ask a question please press star then one the next question will be from benjamin hayner with lake street capital markets please go ahead good morning thanks for taking the questions uh first off for me you know just with wound care nice to see the trajectory you guys are on there um you know with it being six percent of revenue now it looks like that's its way to double digits you know how should we think about that you know how quickly does it get there what could this ultimately be any sort of color that you could provide there would be very helpful yeah that's it that's a

tough question Ben you know we're really excited for the growth and the opportunities that we're seeing ahead again a few new partnerships in compression have been really beneficial for that product line there you know I would say with the Lymphogema Patient Treatment Act that came out in reimbursement, we are seeing and, you know, the market is seeing some growth in that compression space and, you know, a good CAGR for that market. So we are looking forward to continuing into that as far as Barry.

I would only add that when we gave our guidance, obviously the wound care was a very important element to the growth that we're expecting for this year. And as we look at where we would fall into our range, if we fall into the higher end of the range, it's probably going to be PCDs or the compression devices that help us get there. Very important for us. Okay, got it. That's helpful.

And then just with the CMS putting the prior auth requirement in or policy in, I think it kicked in April 13th for these PCDs. Is that something that has impacted you guys in any way collecting the paperwork? I know that was an issue historically with prior partners, but any issues on that front?

No, I think that's what's so great about our current partnerships that we do have in that space. We are receiving the appropriate paperwork that we need to bill. The nice part is it's not a change for our current customers that we have. Again, we're a little bit newer to this space, so it's not a change we're going to ask for something that's abnormal for us to ask for, so it's just part of the process that we're really kind of growing with, so no hesitations from us there.

Excellent. Well, that's it for me. Thanks for taking the questions.

Thanks, Ben. And ladies and gentlemen, this concludes today's question and answer session. I would like to turn the conference back to Carrie Lachance for any closing remarks.

Thank you, and thank you everyone for joining today's call. We look forward to speaking with you again on our second quarter call, where we will provide an update on our results and progress.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.