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What changed in InfuSystem Holdings, Inc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of InfuSystem Holdings, Inc's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+517 added−494 removedSource: 10-K (2024-04-10) vs 10-K (2023-03-16)

Top changes in InfuSystem Holdings, Inc's 2023 10-K

517 paragraphs added · 494 removed · 351 edited across 3 sections

Item 1. Business

Business — how the company describes what it does

83 edited+45 added−20 removed156 unchanged
Biggest changeWe cannot predict the degree to which the effects of the COVID-19 pandemic will ultimately impact our operations, however, the effects of the COVID-19 pandemic, or any other global pandemic or disease outbreak, alone or taken together, could adversely affect our future business, financial condition, results of operations and cash flows, and may also heighten other risks to which the Company is subject, including other risks discussed in this annual report on Form 10-K. 17 Table of Contents We may become subject to legal and regulatory proceedings that could have a material adverse impact on our business, results of operations and financial condition.
Biggest changeWe cannot predict the degree to which the effects of the any future pandemic, epidemic or outbreak of any highly infectious disease may adversely affect, our business, financial condition and results of operations, and such may also have the effect of heightening many of the risks described in this “Risk Factors” section.
In addition to providing high quality and convenient care, we believe that our business offers significant economic benefits for patients, providers and payers. • Our clinical support team employs oncology, pain, Intravenous Certified, and Oncology Certified registered nurses trained on ambulatory infusion pump equipment who staff our 24x7 customer service hotline to address questions that patients may have about their pump treatment, the infusion pumps or other medical or technical questions related to the pumps. 5 Table of Contents • Physicians use our services to outsource the capital commitment, pump service, maintenance and billing and administrative burdens associated with pump ownership.
In addition to providing high quality and convenient care, we believe that our business offers significant economic benefits for patients, providers and payers. • Our clinical support team employs oncology, pain, Intravenous Certified, and Oncology Certified registered nurses trained on ambulatory infusion pump equipment who staff our 24x7 customer service hotline to address questions that 5 Table of Contents patients may have about their pump treatment, the infusion pumps or other medical or technical questions related to the pumps. • Physicians use our services to outsource the capital commitment, pump service, maintenance and billing and administrative burdens associated with pump ownership.
Although the COVID-19 pandemic did not had any material unfavorable effect on our results of operations to date, there can be no assurance that a resurgence of the COVID-19 pandemic, or any other global pandemic or disease outbreak, will not have a material adverse effect on our future operational and financial performance.
Although the COVID-19 pandemic did not have a material unfavorable effect on our results of operations to date, there can be no assurance that a resurgence of the COVID-19 pandemic, or any other global pandemic or disease outbreak, will not have a material adverse effect on our future operational and financial performance.
Additional areas of focus for our ITS segment are as follows: • Pain Management - providing our ambulatory pumps, products, and services for pain management in the area of post-surgical continuous peripheral nerve block. • Wound Care - launched in November 2022, the Company established a partnership, SI Wound Care, LLC ("SI Wound Care"), with Sanara MedTech Inc. ("Sanara").
Additional areas of focus for our Patient Services segment are as follows: • Pain Management : providing our ambulatory pumps, products, and services for pain management in the area of post-surgical continuous peripheral nerve block. • Wound Care : launched in November 2022, the Company established a partnership, SI Wound Care, LLC ("SI Wound Care"), with Sanara MedTech Inc. ("Sanara").
No single payer represented more than 10% of net revenue in 2022, 2021 or 2020. To the extent such dependency was to occur, significant fluctuations in revenues, results of operations and liquidity could arise if any significant contracted payer reduces its reimbursement for the services we provide.
No single payer represented more than 10% of net revenue in 2023, 2022 or 2021. To the extent such dependency was to occur, significant fluctuations in revenues, results of operations and liquidity could arise if any significant contracted payer reduces its reimbursement for the services we provide.
Additionally, our ability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our business operations, generate sufficient cash flows to service such debt and the other factors discussed in this section. Our 2021 Credit Agreement also contains certain financial covenants.
Additionally, our ability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our business operations, generate sufficient cash flows to service such debt and the other factors discussed in this section. Our 2021 Credit Agreement, as amended, also contains certain financial covenants.
Our 2021 Credit Agreement contains and the agreements that govern our future indebtedness may contain, covenants that restrict our ability to and the ability of our subsidiaries to, among other things: • engage in a transaction that results in a change of control, as defined by the 2021 Credit Agreement; • create, incur, assume or suffer to exist any lien upon any of our property, assets or revenues; • make certain investments or acquisitions; 14 Table of Contents • create, incur, assume or suffer to exist certain indebtedness; • merge, dissolve, liquidate, consolidate or sell all or substantially all of our assets; • make any disposition or enter into any agreement to make any disposition; • repurchase outstanding stock from the open market; and • declare or make, directly or indirectly, any dividend or other restricted payment, or incur any obligation (contingent or otherwise) to do so.
Our 2021 Credit Agreement, as amended, contains and the agreements that govern our future indebtedness may contain, covenants that restrict our ability to and the ability of our subsidiaries to, among other things: • engage in a transaction that results in a change of control, as defined by the 2021 Credit Agreement; • create, incur, assume or suffer to exist any lien upon any of our property, assets or revenues; • make certain investments or acquisitions; • create, incur, assume or suffer to exist certain indebtedness; • merge, dissolve, liquidate, consolidate or sell all or substantially all of our assets; • make any disposition or enter into any agreement to make any disposition; • repurchase outstanding stock from the open market; and • declare or make, directly or indirectly, any dividend or other restricted payment, or incur any obligation (contingent or otherwise) to do so.
Current barriers to entry for potential competitors are created by our: (i) growing number of third-party payer networks under contract, which included nearly 800 third-party payer networks as of December 31, 2022, an increase of 4% over the prior year period; (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) our large 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) our growing team of field-based and traveling biomedical technicians; and (vii) a wide array of pump repair and service capabilities.
Current barriers to entry for potential competitors are created by our: (i) growing number of third-party payer networks under contract, which included nearly 820 third-party payer networks as of December 31, 2023, an increase of 3% over the prior year period; (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) our large 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) our growing team of field-based and traveling biomedical technicians; and (vii) a wide array of pump repair and service capabilities.
DME Services Segment Our DME Services segment’s core service is to: (i) sell or rent new and pre-owned pole-mounted and ambulatory infusion pumps and other Durable Medical Equipment; (ii) sell treatment-related consumables; and (iii) provide biomedical recertification, maintenance and repair services for oncology practices as well as other healthcare site settings, including hospitals, home care and home infusion providers, skilled nursing and acute care facilities, pain centers and others.
Device Solutions Segment Our Device Solutions segment’s core service is to: (i) sell or rent new and pre-owned pole-mounted and ambulatory infusion pumps and other Durable Medical Equipment; (ii) sell treatment-related consumables; and (iii) provide biomedical recertification, maintenance and repair services for oncology practices as well as other healthcare site settings, including hospitals, home care and home infusion providers, skilled nursing and acute care facilities, pain centers and others.
We are required to have a Medicare Supplier Number in order to have the ability to bill Medicare for services provided to Medicare patients. Furthermore, all third-party and Medicaid contracts require us to have a Medicare Supplier Number. We are required to comply with Medicare DMEPOS Supplier Standards in order to maintain such number.
We are required to have a Medicare Supplier Number in order to have the ability to bill Medicare for services provided to Medicare patients. Furthermore, all third-party and Medicaid contracts require us to have a Medicare Supplier Number. We are required to comply with Medicare DMEPOS Supplier Standards in order to maintain our number.
If these efforts cease to be successful, our reputation and ability to attract and retain customers and contributors will be adversely affected. Furthermore, we are likely to incur expenses in connection with continuously updating and improving our technology infrastructure and services.
If these efforts cease to be successful, our reputation and ability to attract and retain customers and contributors will be adversely affected. Furthermore, we are likely to incur expenses in connection with continually updating and improving our technology infrastructure and services.
The majority of these contracts generally provide for a term of one year, with automatic one-year renewals, unless we or the contracted payer elect not to renew. We also contract with various other third-party payer organizations, Medicaid, commercial Medicare replacement plans, self-insured plans, facilities of our Medicare patients and numerous other insurance carriers.
The majority of these contracts generally provide for a term of one year, with automatic one-year renewals, unless we or the contracted payer elect not to renew. We also contract with various other third-party payer organizations, Medicaid, commercial Medicare replacement plans, self-insured 7 Table of Contents plans, facilities of our Medicare patients and numerous other insurance carriers.
Also, within ITS, we offer pain management services via electronic ambulatory infusion pumps for post-operative pain management using our pumps along with a numbing agent and a continuous nerve block catheter – continuous peripheral nerve block (“CPNB”).
Also, within Patient Services, we offer pain management services via electronic ambulatory infusion pumps for post-operative pain management using our pumps along with a numbing agent and a continuous nerve block catheter – continuous peripheral nerve block (“CPNB”).
As of December 31, 2022, we were in compliance with all the covenants contained in the 2021 Credit Agreement, however, there can be no assurance that we will be able to manage any of the risks associated with debt agreements successfully. Economic uncertainty or economic deterioration could adversely affect us.
As of December 31, 2023, we were in compliance with all the covenants contained in the 2021 Credit Agreement, as amended, however, there can be no assurance that we will be able to manage any of the risks associated with debt agreements successfully. Economic uncertainty or economic deterioration could adversely affect us.
If we are unable to comply with the relevant standards, we could lose our Medicare Supplier Number. Without such number, we would be unable to continue our various third-party and Medicaid contracts.
If we are unable to comply with the relevant standards, we could lose our Medicare Supplier Number. Without this number, we would be unable to continue our various third-party and Medicaid contracts.
If these new drugs or protocols obtain regulatory approval for use with continuous infusion protocols, we expect the pharmaceutical companies to focus their sales and marketing efforts on promoting the new drugs and protocols to physicians. Furthermore, our Oncology Business focuses mainly on the continuous infusion of chemotherapy.
If these new drugs or protocols obtain regulatory approval for use with continuous infusion protocols, we expect pharmaceutical companies in this space to focus their sales and marketing efforts on promoting the new drugs and protocols to physicians. Furthermore, our Oncology Business focuses mainly on the continuous infusion of chemotherapy.
Our acquisition of FilAMed, a privately-held biomedical services company, on January 31, 2021 has supplemented the Company’s existing biomedical recertification, maintenance and repair services for acute care facilities and other alternate site settings including home care and home infusion providers, skilled nursing facilities, pain centers and others.
Our 2021 acquisition of FilAMed, a privately-held biomedical services company has supplemented the Company’s existing biomedical recertification, maintenance and repair services for acute care facilities and other alternate site settings including home care and home infusion providers, skilled nursing facilities, pain centers and others.
DME Services Segment Other services we offer are classified under our DME Services segment and include the rental, sale or leasing and servicing of pole-mounted and ambulatory infusion pumps to oncology practices, hospitals and other clinical settings. These pumps are available for daily, weekly, monthly or annual rental periods.
Device Solutions Segment Other services we offer are classified under our Device Solutions segment and include the rental, sale or leasing and servicing of pole-mounted and ambulatory infusion pumps to oncology practices, hospitals and other clinical settings. These pumps are available for daily, weekly, monthly or annual rental periods.
The payer environment within our ITS segment is in a constant state of change. We continue to extend our considerable breadth of payer networks under contract as patients move into different insurance coverage plans, including Medicaid and Insurance Marketplace products.
The payer environment within our Patient Services segment is in a constant state of change. We continue to extend our considerable breadth of payer networks under contract as patients move into different insurance coverage plans, including Medicaid and Insurance Marketplace products.
DME Services are provided as a “concierge” offering, whereby InfuSystem leverages its strong service orientation to provide incremental services to our health care provider customers on a direct payer model. DME Services include equipment rental and sales, consumable sales, and biomedical support services.
Device Solutions are provided as a “concierge” offering, whereby InfuSystem leverages its strong service orientation to provide incremental services to our health care provider customers on a direct payer model. Device Solutions include equipment rental and sales, consumable sales, and biomedical support services.
Additionally, as of December 31, 2022 and 2021, we had a fleet of new and used pole-mounted pumps, ambulatory pumps and NPWT medical equipment with a historical cost of $2.8 million and $1.8 million, respectively, for sale or rental.
Additionally, as of December 31, 2023 and 2022, we had a fleet of new and used pole-mounted pumps, ambulatory pumps and NPWT medical equipment with a historical cost of $3.1 million and $2.8 million, respectively, for sale or rental.
Simultaneously, CMS and private insurers are increasingly focused on evidence-based medicine to inform their reimbursement decisions — that is, aligning reimbursement with clinical outcomes and adherence to standards of care. Continuous infusion therapy is a main component of the standard of care for certain types of cancer because clinical evidence demonstrates superior outcomes.
Simultaneously, the Center of Medicare and Medicaid Services ("CMS") and private insurers are increasingly focused on evidence-based medicine to inform their reimbursement decisions — that is, aligning reimbursement with clinical outcomes and adherence to standards of care. Continuous infusion therapy is a main component of the standard of care for certain types of cancer because clinical evidence demonstrates superior outcomes.
The partnership is expected to enable InfuSystem to offer innovative products including Cork Medical LLC’s (“Cork”) negative pressure wound therapy (“NPWT”) devices and supplies and Sanara’s advanced wound care product line to new customers through the jointly controlled entity. • Acquisitions - we believe there are opportunities to acquire smaller, regional health care 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.
The partnership enables InfuSystem to offer innovative products including Cork Medical 4 Table of Contents LLC’s (“Cork”) negative pressure wound therapy (“NPWT”) devices and supplies and Sanara’s advanced wound care product line to new customers through the jointly controlled entity. • Acquisitions : we believe there are opportunities to acquire smaller, regional health care 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.
No single payer or customer represented more than 10% of net revenue in 2022, 2021 or 2020. 7 Table of Contents Competitors We believe that our competition primarily consists of national, regional, and hospital-owned Durable Medical Equipment providers and service companies, physician providers and home care infusion providers and the competitive products and services they offer.
No single payer or customer represented more than 10% of net revenue in 2023, 2022 or 2021. Competitors We believe that our competition primarily consists of national, regional, and hospital-owned Durable Medical Equipment providers and service companies, physician providers and home care infusion providers and the competitive products and services they offer.
Such changes may be impacted by the growth in ACOs, reduction of providers by payers, the use of lower cost rental networks and other factors. Market acceptance of continuous infusion therapy may be adversely affected by changes or trends within the health care reimbursement system.
Such changes may be impacted by the growth in Accountable Care Organizations (“ACO”), reduction of providers by payers, the use of lower cost rental networks and other factors. Market acceptance of continuous infusion therapy may be adversely affected by changes or trends within the health care reimbursement system.
Information Technology Our Information Technology (“IT”) department is focused on not only supporting our internal IT infrastructure needs, but also supporting our revenue cycle management infrastructure including our electronic medical record technology (“EMR”) that allows medical facilities to use our infusion pumps and services via our solutions such as EXPRESS and InfuConnect.
Information Technology Our Information Technology (“IT”) department is focused on not only supporting our internal IT infrastructure needs, but also supporting our revenue cycle management infrastructure, which includes our electronic medical record technology (“EMR”). Our EMR allows medical facilities to use our infusion pumps and services via our solutions such as EXPRESS and InfuConnect.
Over the last 30 plus years, we have developed a unique expertise and service offering that Durable Medical Equipment manufacturers and health care providers are using to reduce costs, improve service, and most importantly, provide welcome options for patients who want to continue their healthcare treatments from home.
We believe InfuSystem has a lot to offer the healthcare community. Over the last 30 plus years, we have developed a unique expertise and service offering that Durable Medical Equipment manufacturers and health care providers are using to reduce costs, improve service, and most importantly, provide welcome options for patients who want to continue their healthcare treatments from home.
The partnership will focus on delivering a complete wound care solution targeted at improving patient outcomes, lowering the cost of care, and increasing patient and provider satisfaction.
The partnership focuses on delivering a complete wound care solution targeted at improving patient outcomes, lowering the cost of care, and increasing patient and provider satisfaction.
As of December 31, 2022, we had contracts with nearly 800 third-party payer networks, an increase of 4% over the prior year period. Material terms of contracts with third-party payer organizations are typically a pre-negotiated fee schedule rate or a then-current proprietary fee schedule rate for equipment and supplies provided.
As of December 31, 2023, we had contracts with nearly 820 third-party payer networks, an increase of 3% over the prior year period. Material terms of contracts with third-party payer organizations are typically a pre-negotiated fee schedule rate or a then-current proprietary fee schedule rate for equipment and supplies provided.
As of December 31, 2022, we had contracts with nearly 800 third-party payer networks, an increase of 4% over the prior year period. Material terms of contracts with third-party payer organizations are typically a pre-negotiated fee schedule rate or a then-current proprietary fee schedule rate for equipment and supplies provided.
As of December 31, 2023, we had contracts with nearly 820 third-party payer networks, an increase of 3% over the prior year period. Material terms of contracts with third-party payer organizations are typically a pre-negotiated fee schedule rate or a then-current proprietary fee schedule rate for equipment and supplies provided.
We are a participating provider with Medicare and as of December 31, 2022, we were under contract with nearly 800 third-party payer networks, all of which have very stringent guidelines.
We are a participating provider with Medicare and as of December 31, 2023, we were under contract with nearly 820 third-party payer networks, all of which have very stringent guidelines.
InfuSystem provides the Durable Medical Equipment and treatment consumables, handles the logistics around orders and deliveries, provides 24x7 nursing support relating to the provided equipment, assumes responsibility for third-party payer Durable Medical Equipment billing, and handles biomedical services (inspection, repair, certification and replacement) for the Durable Medical Equipment.
InfuSystem provides the Durable Medical Equipment and treatment consumables, handles the logistics around orders and deliveries, provides 24/7 nursing support relating to the provided equipment, assumes responsibility for third-party payer Durable Medical Equipment billing, and handles biomedical services (e.g., inspection, repair, certification and replacement) for the Durable Medical Equipment.
InfuSystem competes for and retains its business primarily on the basis of its long participation and strong reputation in the Durable Medical Equipment space, its long-standing relationships with Durable Medical Equipment manufacturers and its health care provider customers, and the high levels of service it provides.
InfuSystem competes for and retains its business primarily on the basis of its longstanding participation and strong reputation in the Durable Medical Equipment space, its well established relationships with Durable Medical Equipment manufacturers and its health care provider customers, and the high levels of service it provides.
From time to time, we or our suppliers may experience supply chain disruptions due to circumstances beyond our or our suppliers’ control, such as the 2020 outbreak of COVID-19. Significant delays in the delivery or service of pumps or related proprietary consumable supplies could result in possible cancellation of orders and the loss of customers.
From time to time, we or our suppliers may experience supply chain disruptions due to circumstances beyond our or our suppliers’ control. Significant delays in the delivery or service of pumps or related proprietary consumable supplies could result in possible cancellation of orders and the loss of customers.
Some of the more significant DMEPOS Supplier Standards require us to (i) advise Medicare beneficiaries of their option to purchase certain equipment, (ii) honor all warranties under state law and not charge Medicare beneficiaries for the repair or replacement of equipment or for services covered under warranty, (iii) permit CMS agents to conduct on-site inspections to ascertain compliance with the DMEPOS Supplier Standards, (iv) maintain liability insurance in prescribed amounts, (v) refrain from contacting Medicare beneficiaries by telephone, except in certain limited circumstances, (vi) answer questions and respond to complaints of beneficiaries regarding the supplied equipment, (vii) disclose the DMEPOS Supplier Standards to each Medicare beneficiary to whom we supply equipment, (viii) maintain a complaint resolution procedure and record certain information regarding each complaint, (ix) maintain accreditation from a CMS approved accreditation organization, and (x) meet certain specified surety bond requirements. 8 Table of Contents We are also subject to the provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which are designed to protect the security and confidentiality of certain protected health information.
Some of the more significant DMEPOS Supplier Standards require us to (i) advise Medicare beneficiaries of their option to purchase certain equipment, (ii) honor all warranties under state law and not charge Medicare beneficiaries for the repair or replacement of equipment or for services covered under warranty, (iii) permit CMS agents to conduct on-site inspections to ascertain compliance with the DMEPOS Supplier Standards, (iv) maintain liability insurance in prescribed amounts, (v) refrain from contacting Medicare beneficiaries by telephone, except in certain limited circumstances, (vi) answer questions and respond to complaints of beneficiaries regarding the supplied equipment, (vii) disclose the DMEPOS Supplier Standards to each Medicare beneficiary to whom we supply equipment, (viii) maintain a complaint resolution 8 Table of Contents procedure and record certain information regarding each complaint, (ix) maintain accreditation from a CMS approved accreditation organization, and (x) meet certain specified surety bond requirements.
ITS Segment The ITS segment’s core purpose is to seek opportunities to grow our business by leveraging our unique know-how in clinic-to-home health care involving Durable Medical Equipment, our logistics and billing capabilities, our growing network of third-party payers under contract, and our clinical and biomedical capabilities.
Patient Services Segment The Patient Services segment’s core purpose is to seek opportunities to grow our business by leveraging our unique know-how in clinic-to-home health care solutions involving Durable Medical Equipment, our logistics and billing capabilities, 3 Table of Contents our growing network of third-party payers under contract, and our clinical and biomedical capabilities.
The leading service within our ITS segment is to supply electronic ambulatory infusion pumps and associated disposable supply kits to private oncology clinics, infusion clinics and hospital outpatient oncology clinics to be utilized in the treatment of a variety of cancers, including colorectal cancer and other 3 Table of Contents disease states (“Oncology Business”).
The leading service within our Patient Services segment is supplying electronic ambulatory infusion pumps and associated disposable supply kits to private oncology clinics, infusion clinics and hospital outpatient oncology clinics to be utilized in the treatment of a variety of cancers, including colorectal cancer and other disease states (“Oncology Business”).
The market price of our common stock has been and may continue to be volatile. Market prices for securities of health care services companies, including ours, have historically been volatile, and the market has from time to time experienced significant price and volume fluctuations that appear unrelated to the operating performance of particular companies.
Market prices for securities of health care services companies, including ours, have historically been volatile, and the market has from time to time experienced significant price and volume fluctuations that appear unrelated to the operating performance of particular companies.
The Company continues to monitor shifts in past ownership (as defined under Section 382 of the Code). As of December 31, 2022, our U.S. federal net operating loss carryforwards of approximately $29.1 million will begin to expire in various years beginning in 2031 and $6.6 million of our U.S. federal net operating loss carryforward has an indefinite life.
The Company continues to monitor shifts in past ownership (as defined under Section 382 of the Code). As of December 31, 2023, our U.S. federal net operating loss carryforwards of approximately $20.0 million will begin to expire in various years beginning in 2034 and $6.6 million of our U.S. federal net operating loss carryforward has an indefinite life.
Our contracts for reimbursement with third-party payers are often for a term of one year, with automatic one-year renewals, unless we or the contracted payer elect not to renew. These evergreen contracts are subject to termination upon written notice.
The loss of a relationship with one or more third-party payers could negatively impact our business. Our contracts for reimbursement with third-party payers are often for a term of one year, with automatic one-year renewals, unless we or the contracted payer elect not to renew. These evergreen contracts are subject to termination upon written notice.
Our acquisition of OB Healthcare Corporation (“OB Healthcare”), a privately-held biomedical services company, on April 18, 2021 further develops and expands InfuSystem’s DME Services segment by adding field service capabilities and complements the Company’s purchase of FilAMed. Services ITS Segment Our core service within our ITS segment is our Oncology Business.
Our 2021 acquisition of OB Healthcare Corporation (“OB Healthcare”), a privately-held biomedical services company further develops and expands InfuSystem’s Device Solutions segment by adding field service capabilities and complements the Company’s purchase of FilAMed. Services Patient Services Segment Our core service within our Patient Services segment is our Oncology Business.
Colorectal cancer is the fourth most prevalent form of cancer in the U.S., according to the American Cancer Society, and the standard of care for the treatment of colorectal cancer relies upon continuous chemotherapy infusions delivered via ambulatory infusion pumps. One of the goals for the ITS segment is to expand into treatment of other types of cancers.
Colorectal cancer is the third most prevalent form of cancer in the U.S., according to the American Cancer Society, and the standard of care for the treatment of colorectal cancer relies upon continuous chemotherapy infusions delivered via ambulatory infusion pumps. A goal for the Patient Services segment is to expand into treatment of other types of cancers.
None of our employees are unionized. Material Suppliers We supply a wide variety of pumps and associated equipment, as well as disposables and ancillary supplies. The majority of our pumps are electronic infusion pumps. Smiths Medical, Inc. and Moog Medical Devices Group each supplied more than 10% of the ambulatory pumps purchased by us in 2022.
None of our employees are unionized. Material Suppliers We supply a wide variety of pumps and associated equipment, as well as disposables and ancillary supplies. The majority of our pumps are electronic infusion pumps. Smiths Medical, Inc., a division of ICU Medical, Inc., supplied more than 60% of the ambulatory pumps purchased by us in 2023.
Our focus on IT solutions resulted in the development of EXPRESS, a product powered by our InfuBus data integration platform, and provides for paperless delivery of the appropriate information for InfuSystem to bill payers that: • eliminates all paper; • provides an enhanced visibility as a result of real time status and reporting; • reduces risk of error; • automates treatment logs, pump assignments, tracking and physician’s orders; • provides a secure scanner for easy pump assignment to patients; and • removes interruptions from physician practices’ daily schedules, and standardizes data flow for clinics and hospitals with multiple locations.
Our focus on IT solutions resulted in the development of EXPRESS, a product powered by our InfuBus data integration platform that provides for paperless delivery of the appropriate information for InfuSystem to bill payers that: • provides an enhanced visibility as a result of real time status and reporting; • reduces risk of error; • automates treatment logs, pump assignments, tracking and physician’s orders; • provides a secure scanner for easy pump assignment to patients; and • removes interruptions from physician practices’ daily schedules, and standardizes data flow for clinics and hospitals with multiple locations. 6 Table of Contents Relationships with Physician Offices As of December 31, 2023, we had business relationships with clinical oncologists in over 2,150 outpatient oncology clinics.
Without such improvements, our operations might suffer from unanticipated system disruptions, slow application performance or unreliable service levels, any of which could negatively affect our reputation and ability to attract and retain customers and contributors. We may face significant delays in introducing new services, products and enhancements.
Without such improvements, our operations might suffer from unanticipated system disruptions, slow application performance or unreliable service levels, any of which could negatively affect our reputation and ability to attract and retain customers and contributors.
The Company’s U.S. federal net operating loss carryforward for tax purposes was $35.7 million at December 31, 2022, resulting in a federal deferred tax asset of $7.5 million. Approximately $29.1 million of the Company’s U.S. federal net operating loss carryforwards will begin to expire in various years beginning in 2031.
The Company’s U.S. federal net operating loss carryforward for tax purposes was $26.6 million at December 31, 2023, resulting in a federal deferred tax asset of $5.6 million. Approximately $20.0 million of the Company’s U.S. federal net operating loss carryforwards will begin to expire in various years beginning in 2034.
We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision. However, there can be no assurance that we will accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material impact on our results of operations.
However, there can be no assurance that we will accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material impact on our results of operations.
Available Information Our Internet address is www.infusystem.com . On this website, we post the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the U.S.
We are subject to regulations in the various states in which we operate. We believe we are in material compliance with all such regulations. Available Information Our Internet address is www.infusystem.com . On this website, we post the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the U.S.
The satisfactory performance, security, reliability and availability of our network infrastructure are critical to our reputation, our ability to attract, communicate with and retain customers and our ability to maintain adequate customer service levels. Any system interruptions, outside intrusions, or security breaches could result in negative publicity, damage our reputation and brand or adversely affect our results of operations.
Technological interruptions or the efficiency of our website and technology solutions could damage our reputation and brand and adversely affect our results of operations. The satisfactory performance, security, reliability and availability of our network infrastructure are critical to our reputation, our ability to attract, communicate with and retain customers and our ability to maintain adequate customer service levels.
As of December 31, 2022, our rental fleet of pole-mounted pumps, ambulatory pumps and NPWT medical equipment for both our ITS and DME Services segments had a historical cost of $99.2 million, up from $91.9 million at the end of 2021, and included approximately 125 makes and models of equipment dedicated to our rental services.
As of December 31, 2023, our rental fleet of pole-mounted pumps, ambulatory pumps and NPWT medical equipment for both our Patient Services and Device Solutions segments had a historical cost of $96.3 million, down from $99.2 million at the end of 2022, and included approximately 136 makes and models of equipment dedicated to our rental services.
If competitors introduce new products and services using new technologies or if new industry standards and practices emerge, our existing technology and systems may become obsolete or less competitive, and our business may be harmed.
We may face significant delays in introducing new services, products and enhancements. 18 Table of Contents If competitors introduce new products and services using new technologies or if new industry standards and practices emerge, our existing technology and systems may become obsolete or less competitive, and our business may be harmed.
Key is the ability to leverage our existing platforms – the new therapies do not require building a new infrastructure; we simply add incrementally to the systems already in place (e.g., sales, clinical, logistics, revenue cycle management, and biomedical services). ITS is presented as a “turnkey” solution allowing our health care provider customers to focus on the practice of medicine.
We simply incrementally add to the systems already in place (e.g., sales, clinical, logistics, revenue cycle management, and biomedical services). Patient Services is presented as a “turnkey” solution allowing our health care provider customers to focus on practicing medicine.
In 2022, our Oncology Business approximated 91% of our total ITS segment net revenues. In 2022, we generated approximately 47% of our total ITS segment net revenues from treatments for colorectal cancer and 44% of our ITS segment net revenues from treatments for non-colorectal disease states.
In 2023, our Oncology Business approximated 89% of our total Patient Services segment net revenues. In 2023, we generated approximately 46% of our total Patient Services segment net revenues from treatments for colorectal cancer and 43% of our Patient Services segment net revenues from treatments for non-colorectal disease states.
These opportunistic pump purchases also allow for opportunistic pump sales, which could be material. The timing of such purchases and sales vary within the course of a year.
Furthermore, as the Company’s liquidity has increased, opportunistic pump purchases are made from time to time. These opportunistic pump purchases also allow for opportunistic pump sales, which could be material. The timing of such purchases and sales vary within the course of a year.
The Company’s realization of its deferred tax assets including the loss carryforwards is dependent upon many factors, including, but not limited to, the Company’s ability to generate sufficient taxable income in sufficient amounts.
The Company’s realization of its deferred tax assets including the loss carryforwards is dependent upon many factors, including, but not limited to, the Company’s ability to generate sufficient taxable income in sufficient amounts. There can be no assurance that we will generate the required amounts of taxable income before the expiration dates are reached.
Competition for these individuals is intense, more so in the current labor market. The loss of the services of any executive officer or other key employee, or our failure to attract and retain other qualified and experienced personnel on acceptable terms, could have a material and adverse effect on our business, financial condition, results of operations and cash flows.
The loss of the services of any executive officer or other key employee, or our failure to attract and retain other qualified and experienced personnel on acceptable terms, could have a material and adverse effect on our business, financial condition, results of operations and cash flows. Item 1B. Unresolved Staff Comments. None. Item 1C.
Physician practices in the oncology field are following the overall healthcare practices trend to consolidate. However, as of December 31, 2022, we had gained more facilities than we had lost. We expect this trend to continue for the foreseeable future. Employees As of December 31, 2022, we had 438 employees, including 420 full-time employees and 18 part-time or contract employees.
Physician practices in the oncology field are following the overall healthcare practices trend to consolidate. However, for the period ended December 31, 2023, we experienced a net gain on facilities. We expect this trend to continue for the foreseeable future. Employees As of December 31, 2023, we had 516 employees, including 499 full-time employees and 17 part-time or contract employees.
We may experience temporary system interruptions for a variety of reasons, including security breaches and other security incidents, viruses, telecommunication and other network failures, power failures, software errors or data corruption.
Any system interruptions, outside intrusions, or security breaches could result in negative publicity, damage our reputation and brand or adversely affect our results of operations. We may experience temporary system interruptions for a variety of reasons, including security breaches and other security incidents, viruses, telecommunication and other network failures, power failures, software errors or data corruption.
The Company has a supply agreement in place with each of these suppliers. Certain “spot” purchases are made on the open market subject to individual negotiation. We also supply NPWT medical equipment, as well as related disposables and ancillary supplies.
The Company has a supply agreement in place with this supplier. Certain “spot” purchases are made on the open market subject to individual negotiation. We also supply NPWT medical equipment, as well as related disposables and ancillary supplies. Seasonality Revenues may be seasonal due to the impact of co-pays and deductibles for patients’ insurance that traditionally reset each January.
Please see the discussion of these conclusions below under Item 9A. “Controls and Procedures” of this Annual Report on Form 10-K. Due to the material weaknesses in the Company's internal control over financial reporting, the Company also concluded that its disclosure controls and procedures were not effective as of December 31, 2022.
Due to the material weaknesses in the Company's internal control over financial reporting, the Company also concluded that its disclosure controls and procedures were not effective as of December 31, 2022.
As of December 31, 2022, options to purchase 1,719,526 shares of common stock were outstanding, at a weighted average exercise price of $8.19 per share, of which 1,241,156 were exercisable at a weighted average exercise price of $6.98 per share.
As of December 31, 2023, options to purchase 1,709,019 shares of common stock were outstanding, at a weighted average exercise price of $9.37 per share, of which 940,491 were exercisable at a weighted average exercise price of $8.97 per share.
If resolved against us, such proceedings could result in excessive verdicts, injunctive relief or other equitable relief that may affect how we operate our business. Similarly, if we settle such proceedings, it may affect how we operate our business. Future court decisions, alternative dispute resolution awards, business expansion or legislative activity may increase our exposure to litigation and regulatory investigations.
Similarly, if we settle such proceedings, it may affect how we operate our business. Future court decisions, alternative dispute resolution awards, business expansion or legislative activity may increase our exposure to litigation and regulatory investigations. In some cases, substantial non-economic remedies or punitive damages may be sought.
We do not believe that compliance with such laws has a material effect on our business. Significant Customers We have sought to establish contracts with as many third-party payer organizations as commercially practicable, in an effort to ensure that reimbursement is not a significant obstacle for providers who recommend continuous infusion therapy and wish to utilize our services.
Significant Customers In addition to providing our products and services to hospitals, oncology practices, ambulatory surgery centers, and other alternate site health care providers, we have sought to establish contracts with as many third-party payer organizations as commercially practicable in an effort to ensure that reimbursement is not a significant obstacle for providers recommending continuous infusion therapy and wish to utilize our services.
GENERAL RISK FACTORS The Company has identified material weaknesses in our internal control over financial reporting and those weaknesses have led to a conclusion that our internal control over financial reporting and disclosure controls and procedures were not effective as of December 31, 2022.
Due to the material weaknesses in our internal control over financial reporting, we have also concluded our disclosure controls and procedures were not effective as of December 31, 2023.
Also, rental customers tend to make buy versus rent decisions late in the year as customer capital budgets are being finalized, impacting sales revenue in the second half of the year, predominantly in the fourth quarter. Furthermore, as the Company’s liquidity has improved, opportunistic pump purchases are made from time to time.
This has been further impacted by changes in the insurance industry as it responds to increased government regulation. Also, rental customers tend to make buy versus rent decisions late in the year as customer capital budgets are being finalized, impacting sales revenue in the second half of the year, predominantly in the fourth quarter.
There can be no assurance that we will generate the required amounts of taxable income before the expiration dates are reached. 15 Table of Contents RISK FACTORS RELATING SPECIFICALLY TO OUR COMMON STOCK The market price of our common stock has been, and is likely to remain, volatile, subject to low trading volume and may decline in value.
RISK FACTORS RELATING SPECIFICALLY TO OUR COMMON STOCK The market price of our common stock has been, and is likely to remain, volatile, subject to low trading volume and may decline in value. The market price of our common stock has been and may continue to be volatile.
Our success is substantially dependent on the continued services of our executive officers and other key personnel who generally have extensive experience in our industry. Our future success also will depend in large part upon our ability to identify, attract and retain other highly qualified executive officers, managerial, finance, technical, clinical, customer service and sales and marketing personnel.
Our future success also will depend in large part upon our ability to identify, attract and retain other highly qualified executive officers, managerial, finance, technical, clinical, customer service 19 Table of Contents and sales and marketing personnel. Competition for these individuals is intense, more so in the current labor market.
We utilize statistical methods to account for such changes, but there can be no assurance that the revenue reported in any period will ultimately be collected. Any recognized revenue related to third-party reimbursement from prior periods, which remains uncollected until written off from accounts receivable, will negatively impact revenues in the period in which it is written off.
We utilize statistical methods to account for such changes, but there can be no assurance that the revenue reported in any period will ultimately be collected.
We may also pursue acquisition opportunities of companies that perform similar services, but offer different therapies or utilize different devices. 4 Table of Contents • Lymphedema Therapy – Lymphedema therapy includes providing patient care and customer service, pneumatic compression devices and associated garments through our partnership with Bio Compression Systems, Inc. to outpatients, initially targeting our existing acute care and oncology customers, estimated to be 20% of the multi-billion-dollar Lymphedema market. • 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®.
We may also pursue acquisition opportunities of companies that perform similar services, but offer different therapies or utilize different devices. • 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®.
From time to time and in the ordinary course of our business, we and certain of our subsidiaries may become involved in various legal and regulatory proceedings. All such proceedings are inherently unpredictable and, regardless of the merits of the claims, litigation and regulatory proceedings may be expensive, time-consuming and disruptive to our operations and distracting to management.
All such proceedings are inherently unpredictable and, regardless of the merits of the claims, litigation and regulatory proceedings may be expensive, time-consuming and disruptive to our operations and distracting to management. If resolved against us, such proceedings could result in excessive verdicts, injunctive relief or other equitable relief that may affect how we operate our business.
The adoption of the American Recovery and Reinvestment Act of 2009 (“ARRA”) includes a new breach notification requirement that applies to breaches of unsecured health information occurring on or after September 23, 2009. We are subject to regulations in the various states in which we operate. We believe we are in material compliance with all such regulations.
Moreover, HIPAA sets limits on how we may use individually identifiable health information and prohibits the use of patient information for marketing purposes. The adoption of the American Recovery and Reinvestment Act of 2009 (“ARRA”) includes a new breach notification requirement that applies to breaches of unsecured health information occurring on or after September 23, 2009.
Based on our retention rates and the positive results of our professional customer satisfaction research, we believe our relationships with physician offices are strong. We believe that, in general, we do not compete directly with hospitals and physician offices to treat patients.
We believe that, in general, we do not compete directly with hospitals and physician offices to treat patients.
Relationships with Physician Offices As of December 31, 2022, we had business relationships with clinical oncologists in over 2,150 outpatient oncology clinics. Although this represents a substantial number of the oncologists in the U.S., we believe that we can continue to expand 6 Table of Contents our network to further penetrate the oncology market.
Although this represents a substantial number of the oncologists in the U.S., we believe that we can continue to expand our network to further penetrate the oncology market. Based on our retention rates and the positive results of our professional customer satisfaction research, we believe our relationships with physician offices are strong.
Any failure of our systems or third-party systems may compromise our sensitive information and/or personally identifiable information of our employees or patient health information subject to HIPAA confidentiality requirements.
Any failure of our systems or third-party systems may compromise our sensitive information and/or personally identifiable information of our employees or patient health information subject to HIPAA confidentiality requirements. While we have secured cyber insurance to potentially cover certain risks associated with cyber incidents, there can be no assurance the insurance will be sufficient to cover any such liability.
There can be no assurance that our effective tax rates, tax payments, tax credits or incentives will not be adversely affected by these or other initiatives. We are subject to audits by tax authorities from time to time in federal and state jurisdictions. Tax authorities may disagree with certain positions we have taken and assess additional taxes and penalties.
We are subject to audits by tax authorities from time to time in federal and state jurisdictions. Tax authorities may disagree with certain positions we have taken and assess additional taxes and penalties. We regularly assess the likely outcomes 15 Table of Contents of these audits in order to determine the appropriateness of our tax provision.
Our headquarters is in Rochester Hills, Michigan, and we operate our business from a total of seven locations in the United States ("U.S.") and Canada. Our services are provided under a two-platform model. Our lead platform, Integrated Therapy Services (“ITS”), provides the last-mile solution for clinic-to-home healthcare where the continuing treatment involves complex Durable Medical Equipment and services.
We provide our products and services to hospitals, oncology practices, ambulatory surgery centers, and other alternate site health care providers. Our headquarters is in Rochester Hills, Michigan, and we operate our business from a total of seven locations in the United States ("U.S.") and Canada. Our services are provided under a two-platform model.
In addition, RSUs of 534,080 shares, with a weighted average grant date fair value of $11.85 per share, were outstanding and were issuable upon the vesting of certain time restrictions and PSUs of 125,117 shares, with a weighted average grant date fair value of $9.51 per share, were outstanding and were issuable upon meeting certain performance-based vesting criteria.
In addition, RSUs of 529,862 shares, with a weighted average grant date fair value of $11.42 per share, were outstanding and were issuable upon the vesting of certain time restrictions and PSUs of 112,776 shares, with a weighted average grant date fair value of $10.49 per share, were outstanding and were issuable upon meeting certain performance-based vesting criteria. 16 Table of Contents We may be subject to limitations on net operating loss carryforwards and certain built-in losses following an ownership change.
Our second platform, Durable Medical Equipment Services (“DME Services”), supports our ITS platform and leverages the Company's strong service orientation to win incremental business from our direct payer clients. We believe InfuSystem has a lot to offer the healthcare community.
Our lead platform, Patient Services, provides the last-mile solution for clinic-to-home healthcare where the continuing treatment involves complex Durable Medical Equipment and services. Our second platform, Device Solutions, supports our Patient Services platform and leverages the Company's strong service orientation to win incremental business from our direct payer clients.
Under HIPAA, we must provide patients access to certain records and must notify patients of our use of protected health information and patient privacy rights. Moreover, HIPAA sets limits on how we may use individually identifiable health information and prohibits the use of patient information for marketing purposes.
We are also subject to the provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which are designed to protect the security and confidentiality of certain protected health information. Under HIPAA, we must provide patients access to certain records and must notify patients of our use of protected health information and patient privacy rights.
Item 1. Business. Background The Company is a Delaware corporation, formed in 2005. It operates through operating subsidiaries, including InfuSystem Holdings USA, Inc., a Delaware corporation (“Holdings”), InfuSystem, Inc., a California corporation (“ISI”), First Biomedical, Inc., a Kansas corporation (“First Biomedical”), and IFC, LLC, a Delaware limited liability company (“IFC”).
Item 1. Business. Background InfuSystem Holdings, Inc. ("we," "us," "our" or the "Company") is a Delaware corporation. Formed in 2005, the Company operates through its subsidiary InfuSystem, Inc., a Delaware corporation ("InfuSystem" or "ISI").

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Item 2. Properties

Properties — owned and leased real estate

8 edited+0 added−3 removed5 unchanged
Biggest changePurchases of Equity Securities by the Issuer A summary of our purchases of our common stock during the three months ended December 31, 2022 is as follows: 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) October 1, 2022 through October 31, 2022 13,675 $ 7.31 13,675 $13,991,109 November 1, 2022 through November 30, 2022 56,830 $ 8.71 — $13,991,109 December 1, 2022 through December 31, 2022 — $ — — $13,991,109 Total 70,505 $ 8.44 13,675 (a) Of the 70,505 shares of common stock presented in the table above, 56,830 shares were originally granted to employees and directors as stock options and restricted stock awards.
Biggest changePurchases of Equity Securities by the Issuer A summary of our purchases of our common stock during the three months ended December 31, 2023 is as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (a) October 1, 2023 through October 31, 2023 — $ — — $13,838,269 November 1, 2023 through November 30, 2023 — $ — — $13,838,269 December 1, 2023 through December 31, 2023 — $ — — $13,838,269 Total — $ — — (a) On June 30, 2021, 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, 2024.
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.
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.
Under the terms of our 2021 Credit Agreement, our ability to pay dividends on our common stock is limited, and we do not anticipate paying dividends on our common stock in the foreseeable future. Unregistered Sales of Equity Securities and Use of Proceeds We did not sell any unregistered securities during the fiscal year ended December 31, 2022.
Under the terms of our 2021 Credit Agreement, as amended, our ability to pay dividends on our common stock is limited, and we do not anticipate paying dividends on our common stock in the foreseeable future. Unregistered Sales of Equity Securities and Use of Proceeds We did not sell any unregistered securities during the fiscal year ended December 31, 2023.
Repurchases under the Share Repurchase Program will be subject to market conditions, the periodic capital needs of the Company's operating activities, and the continued satisfaction of all covenants under the Company's existing credit agreement.
Repurchases under the Share Repurchase Program are subject to market conditions, the periodic capital needs of the Company's operating activities, and the continued satisfaction of all covenants under the Company's existing 2021 Credit Agreement, as amended.
Stock Performance Graph The following graph shows a comparison of cumulative total shareholder return to the Company's shareholders, the corresponding returns on the Russell 2000 Index during the five-year period ended December 31, 2022 assuming $100 was invested on December 31, 2017 with reinvestment of all dividends. 21 Table of Contents 2017 2018 2019 2020 2021 2022 InfuSystem $ 100 $ 150 $ 371 $ 817 $ 740 $ 377 Russell 2000 Index $ 100 $ 88 $ 109 $ 129 $ 146 $ 115
Stock Performance Graph The following graph shows a comparison of cumulative total shareholder return to the Company's shareholders, the corresponding returns on the Russell 2000 Index during the five-year period ended December 31, 2023 assuming $100 was invested on December 31, 2018 with reinvestment of all dividends. 22 Table of Contents 2018 2019 2020 2021 2022 2023 InfuSystem $ 100 $ 248 $ 546 $ 495 $ 252 $ 306 Russell 2000 Index $ 100 $ 124 $ 146 $ 166 $ 131 $ 150
As of December 31, 2022, the Company had repurchased 531,347 shares under the Share Repurchase Program. Dividends Historically, we have not declared or paid any dividends on our common stock.
As of December 31, 2023, the Company had repurchased approximately $6.2 million, or 553,149 shares, of the Company's outstanding common stock under the Share Repurchase Program. Dividends Historically, we have not declared or paid any dividends on our common stock.
Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on the NYSE American under the symbol INFU. As of March 10, 2023, we had approximately 266 stockholders of record of our common stock.
Mine Safety Disclosures. Not applicable. 21 Table of Contents PART II Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on the NYSE American under the symbol INFU. As of April 4, 2024, we had approximately 252 stockholders of record of our common stock.
We have insurance policies covering certain potential losses where such coverage is cost effective. We are not at this time involved in any proceedings that we believe could have a material effect on our business, financial condition, results of operations or cash flows. Item 4. Mine Safety Disclosures. Not applicable. 20 Table of Contents PART II Item 5.
We have insurance policies covering certain potential losses where such coverage is cost effective. We are not currently a party to any litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business, operating results, cash flows or financial condition. Item 4.
Removed
Our stock plans allow for the withholding of shares to satisfy tax obligations due upon the exercise of stock options and vesting of restricted stock.
Removed
Pursuant to our stock plans, the 56,830 shares reflected above were relinquished by employees or directors in exchange for our agreement to pay U.S. federal, state and local tax withholding obligations resulting from the exercise of the Company's stock options and vesting of the Company's restricted stock.
Removed
(b) On June 30, 2021, our Board of Directors approved a stock repurchase program (the "Share Repurchase Program") authorizing the Company to repurchase up to $20.0 million of the Company's outstanding common stock through June 30, 2024 (which was announced on August 12, 2021).

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

260 edited+121 added−120 removed126 unchanged
Biggest changeFederal income tax benefit 44 150 8,335 State and local income tax (expense) benefit Current (99) (167) (66) Deferred (65) 3 1,725 Total state and local income tax (expense) benefit (164) (164) 1,659 Foreign income tax benefit (expense) Current 8 177 (205) Total income tax (expense) benefit $ (112) $ 163 $ 9,789 The following table summarizes activity related to the Company’s valuation allowance (in thousands): Years Ended December 31, 2022 2021 2020 Valuation allowance at the Beginning of Period $ — $ — $ (11,250) Income tax expense — — — Increase in valuation allowance — — — Release of valuation allowance — — 11,250 Valuation allowance at the End of Period $ — $ — $ — 60 Table of Contents The following table summarizes a reconciliation of the Company’s income tax (expense) benefit from the effective income tax rate to the U.S. federal statutory rate (in thousands): Years Ended December 31, 2022 2021 2020 Income tax expense at the statutory rate $ (27) $ (264) $ (1,584) State and local income tax expense (130) (130) (387) Foreign income tax (4) (12) (12) Share-Based compensation and other permanent differences (58) 462 633 Decrease in valuation allowance — — 11,250 Credits 79 34 — Other adjustments 28 73 (111) Income tax (expense) benefit at effective income tax rate $ (112) $ 163 $ 9,789 Effective income tax rate 86.0 % (12.9) % (129.8) % The following table summarizes the temporary differences and carryforwards that give rise to deferred tax assets and liabilities (in thousands): December 31, 2022 December 31, 2021 Deferred Federal tax assets – Bad debt reserves $ 2,113 $ 1,576 Stock-based compensation 1,428 1,350 Net operating loss 7,507 8,022 Operating lease liabilities 985 980 Accrued compensation 449 253 Inventories 518 246 Goodwill and intangible assets — 21 Research & development credits / Capitalized R&D 533 533 Other credits 141 62 Other 361 89 Total deferred Federal tax assets 14,035 13,132 Deferred Federal tax liabilities – Depreciation and asset basis differences (3,661) (3,423) Goodwill and intangible assets (650) — Right-of-use assets (875) (891) Derivative financial instruments (475) (88) Total deferred Federal tax liabilities (5,661) (4,402) Net deferred Federal tax assets 8,374 8,730 Total deferred state and local tax assets (a) 1,251 1,303 Net deferred tax assets $ 9,625 $ 10,033 (a) At December 31, 2022 and 2021, this includes state and local net operating losses of $1.2 million and $1.3 million, respectively.
Biggest changeFederal income tax (expense) benefit (568) 44 150 State and local income tax (expense) benefit Current (245) (99) (167) Deferred (65) (65) 3 Total state and local income tax expense (310) (164) (164) Foreign income tax (expense) benefit Current (101) 8 177 Total income tax (expense) benefit $ (979) $ (112) $ 163 The following table summarizes a reconciliation of the Company’s income tax (expense) benefit from the effective income tax rate to the U.S. federal statutory rate (in thousands): Years Ended December 31, 2023 2022 2021 Income tax expense at the statutory rate $ (389) $ (27) $ (264) State and local income tax expense (245) (130) (130) Foreign income tax (16) (4) (12) Share-Based compensation and other permanent differences (260) (58) 462 Credits (39) 79 34 Other adjustments (30) 28 73 Income tax (expense) benefit at effective income tax rate $ (979) $ (112) $ 163 59 Table of Contents The following table summarizes the temporary differences and carryforwards that give rise to deferred tax assets and liabilities (in thousands): December 31, 2023 December 31, 2022 Deferred Federal, state and local tax assets – Bad debt reserves $ 3,318 $ 2,603 Stock-based compensation 1,812 1,668 Net operating loss (a) 6,400 8,680 Operating lease liabilities 1,864 1,210 Accrued compensation 792 552 Inventories 626 639 Research & development credits 555 555 Other credits 102 141 Other 616 432 Total deferred Federal, state and local tax assets 16,085 16,480 Deferred Federal, state and local tax liabilities – Depreciation and asset basis differences (4,131) (4,505) Goodwill and intangible assets (768) (800) Right-of-use assets (1,718) (1,075) Derivative financial instruments (353) (475) Total deferred Federal, state and local tax liabilities (6,970) (6,855) Net deferred tax assets $ 9,115 $ 9,625 (a) At December 31, 2023 and 2022, this includes state and local net operating losses of $0.8 million and $1.2 million, respectively.
The ability to borrow under the facility is subject to ongoing compliance with a number of customary affirmative and negative covenants, including limitations on indebtedness, liens, mergers, acquisitions, investments, asset sales, affiliate transactions and restricted payments, as well as financial covenants, including the following: • a minimum fixed charge coverage ratio (defined as the ratio of consolidated EBITDA (as defined in the 2021 Credit Agreement) less 50% of depreciation expense), to consolidated fixed charges (as defined in the 2021 Credit Agreement)) for the prior four most recently ended calendar quarters of 1.20 to 1.00; and • a maximum leverage ratio (defined as total indebtedness to EBITDA for the prior four most recently ended calendar quarters) of 3.50 to 1.00.
The ability to borrow under the facility is subject to ongoing compliance with a number of customary affirmative and negative covenants, including limitations on indebtedness, liens, mergers, acquisitions, investments, asset sales, affiliate transactions and restricted payments, as well as financial covenants, including the following: • a minimum fixed charge coverage ratio (defined as the ratio of consolidated EBITDA (as defined in the 2021 Credit Agreement) less 50% of depreciation expense), to consolidated fixed charges (as defined in the 2021 Credit Agreement)) for the prior four most recently ended calendar quarters of 1.20 to 1.00; and • a maximum leverage ratio (defined as total indebtedness to EBITDA for the prior four most recently ended calendar quarters) of 3.50 to 1.00.
The 2021 Credit Agreement includes customary events of default. The occurrence of an event of default will permit the lenders to terminate commitments to lend under the Revolving Facility and accelerate payment of all amounts outstanding thereunder.
The 2021 Credit Agreement includes customary events of default. The occurrence of an event of default will permit the lenders to terminate commitments to lend under the Revolving Facility and accelerate payment of all amounts outstanding thereunder.
Exhibit Index Exhibit Number Description of Document 3.1 Amended and Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K (File No. 1-35020) filed on May 12, 2014). 3.2 Amended and Restated By-Laws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on July 9, 2018). 4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1/A (File No. 333-129035) filed on March 3, 2006). 4.2 Description of Securities Registered Under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K (File No. 1-35020) filed on March 30, 2020. 10.1** InfuSystem Holdings, Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (File No. 333-150066) filed on April 3, 2008). 10.2** Form of Stock Option Award Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-35020) filed on November 10, 2014). 10.3** Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q (File No. 1-35020) filed on May 12, 2015). 74 Table of Contents Exhibit Number Description of Document 10.4** Stock Option Award Agreement by and between InfuSystem Holdings, Inc. and Richard DiIorio, dated as of November 15, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on November 20, 2017). 10.5** Stock Appreciation Right Award Agreement by and between InfuSystem Holdings, Inc. and Richard DiIorio, dated as of November 15, 2017 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on November 20, 2017). 10.6** InfuSystem Holdings, Inc. 2014 Equity Plan (as amended through May 15, 2019) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on May 17, 2019). 10.7** Form of Performance Unit Award Agreement under the 2014 Equity Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on May 27, 2020). 10.8** Composite Copy of InfuSystem Holdings, Inc.
Exhibit Index Exhibit Number Description of Document 3.1 Amended and Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K (File No. 1-35020) filed on May 12, 2014). 3.2 Amended and Restated By-Laws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on July 9, 2018). 4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1/A (File No. 333-129035) filed on March 3, 2006). 4.2 Description of Securities Registered Under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K (File No. 1-35020) filed on March 30, 2020. 10.1** InfuSystem Holdings, Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (File No. 333-150066) filed on April 3, 2008). 10.2** Form of Stock Option Award Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-35020) filed on November 10, 2014). 10.3** Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q (File No. 1-35020) filed on May 12, 2015). 78 Table of Contents Exhibit Number Description of Document 10.4** Stock Option Award Agreement by and between InfuSystem Holdings, Inc. and Richard DiIorio, dated as of November 15, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on November 20, 2017). 10.5** Stock Appreciation Right Award Agreement by and between InfuSystem Holdings, Inc. and Richard DiIorio, dated as of November 15, 2017 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on November 20, 2017). 10.6** InfuSystem Holdings, Inc. 2014 Equity Plan (as amended through May 15, 2019) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on May 17, 2019). 10.7** Form of Performance Unit Award Agreement under the 2014 Equity Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-35020) filed on May 27, 2020). 10.8** Composite Copy of InfuSystem Holdings, Inc.
The Company’s approach is to make operational decisions and assess performance based on delivering products and services that together provide solutions to its customer base utilizing a functional management structure. Based upon this business model, the Company’s Chief Executive Officer, whom the Company has determined to be its chief operating decision-maker, reviews segment financial information.
The Company’s approach is to make operational decisions and assess performance based on delivering products and services that together provide solutions to its customer base utilizing a functional management structure. Based upon this business model, the Company’s Chief Executive Officer, whom the Company has determined to be its chief operating decision-maker ("CODM") , reviews segment financial information.
Basis of Presentation and Nature of Operations InfuSystem Holdings, Inc. and its consolidated subsidiaries (the “Company”) are a leading national provider of infusion pumps and related products and services for patients in the home, oncology clinics, ambulatory surgery centers, and other sites of care from seven locations in the United States ("U.S.") and Canada.
Basis of Presentation and Nature of Operations InfuSystem Holdings, Inc. and its consolidated subsidiaries (collectively, the “Company”) are a leading national provider of infusion pumps and related products and services for patients in the home, oncology clinics, ambulatory surgery centers, and other sites of care from seven locations in the United States ("U.S.") and Canada.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Directors, Executive Officers and Corporate Governance The information required by Part III, Item 10 is incorporated herein by reference to the sections titled “Election of Directors,” “Board of Directors and Committees of the Board of Directors,” “Executive Officers,” and “Security Ownership of Certain Beneficial Owners and Management” in our definitive proxy statement relating to the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
Directors, Executive Officers and Corporate Governance The information required by Part III, Item 10 is incorporated herein by reference to the sections titled “Election of Directors,” “Board of Directors and Committees of the Board of Directors,” “Executive Officers,” and “Security Ownership of Certain Beneficial Owners and Management” in our definitive proxy statement relating to the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
Certain Relationships and Related Transactions, and Director Independence The information required by Part III, Item 13 is incorporated herein by reference to the sections titled “Election of Directors – Director Independence” and “Certain Relationships and Related Party Transactions” in our definitive proxy statement relating to the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
Certain Relationships and Related Transactions, and Director Independence The information required by Part III, Item 13 is incorporated herein by reference to the sections titled “Election of Directors – Director Independence” and “Certain Relationships and Related Party Transactions” in our definitive proxy statement relating to the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
The term “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.
The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.
Executive Compensation The information required by Part III, Item 11 is incorporated herein by reference to the sections titled “Advisory Vote Regarding Executive Compensation,” and “Executive Compensation” in our definitive proxy statement relating to the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
Executive Compensation The information required by Part III, Item 11 is incorporated herein by reference to the sections titled “Advisory Vote Regarding Executive Compensation,” and “Executive Compensation” in our definitive proxy statement relating to the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
The Company elected the “combining lease and non-lease components” practical expedient and also elected to apply the short-term lease recognition exemption to certain leases; therefore, the Company did not recognize ROU assets and lease liabilities for these leases. In adopting Topic 842, the Company determined and will continue to determine whether an arrangement is a lease at inception.
The Company elected the “combining lease and non-lease components” practical expedient. The company also elected to apply the short-term lease recognition exemption to certain leases; therefore, the Company did not recognize ROU assets and lease liabilities for these leases. In adopting ASC 842, the Company determined and will continue to determine whether an arrangement is a lease at inception.
We did not have any foreign currency derivative contracts outstanding at any time during the three-year period ended December 31, 2022. The maximum length of time over which we hedge our exposure to short-term interest rate risk is equal to the remaining term for the debt obligation being hedged.
We did not have any foreign currency derivative contracts outstanding at any time during the three-year period ended December 31, 2023. The maximum length of time over which we hedge our exposure to short-term interest rate risk is equal to the remaining term for the debt obligation being hedged.
Item 16. 10-K Summary None. 77 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. INFUSYSTEM HOLDINGS, INC.
Item 16. 10-K Summary None. 81 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. INFUSYSTEM HOLDINGS, INC.
The Company’s operating leases are primarily for office space, service facility centers and equipment under operating lease arrangements that expire at various dates over the next nine years. The Company’s leases do not contain any restrictive covenants. The Company’s office leases generally contain renewal options for periods ranging from one to five years.
The Company’s operating leases are primarily for office space, service facility centers and equipment under operating lease arrangements that expire at various dates over the next eight years. The Company’s leases do not contain any restrictive covenants. The Company’s office leases generally contain renewal options for periods ranging from one to five years.
These amounts have not been paid for as of December 31, 2022, 2021 and 2020, respectively, but will be included as a cash outflow from investing activities for purchases of medical equipment and property when paid. (b) Amount consists of current liabilities for contingent consideration that have not been included in financing activities.
These amounts have not been paid for as of December 31, 2023, 2022 and 2021, respectively, but will be included as a cash outflow from investing activities for purchases of medical equipment and property when paid. (b) Amount consists of current liabilities for contingent consideration that have not been included in financing activities.
These state net operating losses can be used for a period of 5 to 20 years and vary by state, and if unused, begin to expire in 2023, though a substantial portion expires beyond 2023. Approximately $0.1 million of the state net operating loss carryforwards have an indefinite life.
These state net operating losses can be used for a period of 5 to 20 years and vary by state, and if unused, begin to expire in 2024, though a substantial portion expires beyond 2024. Approximately $0.1 million of the state net operating loss carryforwards have an indefinite life.
The Company has insurance policies covering potential losses where such coverage is cost effective. The Company is not at this time involved in any proceedings that the Company currently believes could have a material effect on the Company’s financial condition, results of operations or cash flows. 12.
The Company has insurance policies covering potential losses where such coverage is cost effective. The Company is not at this time involved in any proceedings that the Company currently believes could have a material effect on the Company’s financial condition, results of operations or cash flows. 11.
Leases The Company has historically entered into a number of lease agreements under which the Company is the lessee for equipment and office leases.
Leases As Lessee: The Company has historically entered into a number of lease agreements under which the Company is the lessee for equipment and office leases.
Long-Term Debt Activities: The 2021 Credit Agreement provides for a revolving credit facility (the “Revolving Facility”) of $75.0 million, maturing on February 5, 2026. The Revolving Facility may be increased by $25.0 million, subject to certain conditions, including the consent of the Agent and obtaining necessary commitments.
Long-Term Debt Activities: The 2021 Credit Agreement provides for a revolving credit facility (the “Revolving Facility”) of $75.0 million, maturing on February 5, 2026. The Revolving Facility may be increased by $35 million, subject to certain conditions, including the consent of the Agent and obtaining necessary commitments.
Net revenues are adjusted when changes in estimates of variable consideration occur. Changes in estimates typically arise as a result of new information obtained, such as actual payment receipt or denial, or pricing adjustments by payers. Subsequent changes to estimates of transaction prices are recorded as adjustments to net revenue in the period of the change.
Net revenues are adjusted when changes in estimates of variable consideration occur. Changes in estimates typically arise as a result of new information obtained, such as changes in volume and actual payment receipt or denial, or pricing adjustments by payers. Subsequent changes to estimates of transaction prices are recorded as adjustments to net revenue in the period of the change.
The forward-looking statements included in this discussion and elsewhere in this Form 10-K involve risks and uncertainties, including those set forth under “ Cautionary Statement About Forward-Looking Statements. ” Actual results and experience could differ materially from the anticipated results and other expectations expressed in our forward-looking statements as a result of a number of factors, including but not limited to those discussed in this Item and in Item 1A - “ Risk Factors. ” For discussion and analysis of the year ended December 31, 2021 compared to the year ended December 31, 2020, please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 15, 2022.
The forward-looking statements included in this discussion and elsewhere in this Form 10-K involve risks and uncertainties, including those set forth under “ Cautionary Statement About Forward-Looking Statements. ” Actual results and experience could differ materially from the anticipated results and other expectations expressed in our forward-looking statements as a result of a number of factors, including but not limited to those discussed in this Item and in Item 1A - “ Risk Factors. ” For discussion and analysis of the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 16, 2023.
Additional areas of focus for our ITS segment are as follows: • Pain Management - providing our ambulatory pumps, products, and services for pain management in the area of post-surgical continuous peripheral nerve block. • Wound Care - launched in November 2022, the Company established the SI Wound Care partnership with Sanara.
Additional areas of focus for our Patient Services segment are as follows: • Pain Management: providing our ambulatory pumps, products, and services for pain management in the area of post-surgical continuous peripheral nerve block. • Wound Care: launched in November 2022, the Company established the SI Wound Care partnership with Sanara.
Current barriers to entry for potential competitors are created by our: (i) growing number of third-party payer networks under contract, which included nearly 800 third-party payer networks as of December 31, 2022, an increase of 4% over the prior year period; (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.
Current barriers to entry for potential competitors are created by our: (i) growing number of third-party payer networks under contract, which included nearly 820 third-party payer networks as of December 31, 2023, an increase of 3% over the prior year period; (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.
The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Item 6. [Reserved] 22 Table of Contents Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in this Form 10-K.
Item 6. [Reserved] 23 Table of Contents Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in this Form 10-K.
The Company performed its annual impairment analysis by using a quantitative assessment as of October 31, 2022 and determined that the fair value of the trade names with indefinite lives was greater than their carrying value, resulting in no impairment.
The Company performed its annual impairment analysis by using a quantitative assessment as of October 31, 2023 and determined that the fair value of the trade names with indefinite lives was greater than their carrying value, resulting in no impairment.
Fair Value of Financial Instruments The carrying amounts reported in the consolidated balance sheets as of December 31, 2022 and 2021 for cash, accounts receivable, accounts payable and other current liabilities approximate fair value because of the short-term nature of these instruments (Level I).
Fair Value of Financial Instruments The carrying amounts reported in the consolidated balance sheets as of December 31, 2023 and 2022 for cash, accounts receivable, accounts payable and other current liabilities approximate fair value because of the short-term nature of these instruments (Level I).
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB.
Accounts at banks with an aggregate excess of the amount of outstanding checks over the cash balances are included in accounts payable in current liabilities in the consolidated balance sheet. At December 31, 2022, the Company did not have any cash equivalents.
Accounts at banks with an aggregate excess of the amount of outstanding checks over the cash balances are included in accounts payable in current liabilities in the consolidated balance sheet. At December 31, 2023, and 2022, the Company did not have any cash equivalents.
A cancer patient can receive his or her medicine anywhere from one to 30 days per month depending on the chemotherapy regimen that is most appropriate to that individual’s health status and disease state. This may 23 Table of Contents be followed by periods of rest and then repeated cycles with treatment goals of progression-free disease survival.
A cancer patient can receive his or her medicine anywhere from one to 30 days per month depending on the chemotherapy regimen that is most appropriate to that individual’s health status and disease state. This may be followed by periods of rest and then repeated cycles with treatment goals of progression-free disease survival.
We had interest rate derivative contracts with a notional value of $20.0 million as of December 31, 2022 and 2021, respectively. We do not enter into derivative financial instruments for speculative or trading purposes.
We had interest rate derivative contracts with a notional value of $20.0 million as of December 31, 2023 and 2022, respectively. We do not enter into derivative financial instruments for speculative or trading purposes.
We also take into consideration our overall capital allocation strategy which includes investment for future organic growth, potential acquisitions and share repurchases. We believe we have adequate sources of liquidity and funding available for at least the next year from the filing date of this report, as well as for our currently anticipated long-term needs.
We also take into consideration our overall capital allocation strategy which includes investment for future organic growth, potential acquisitions and repurchases of our common equity. We believe we have adequate sources of liquidity and funding available for at least the next year from the filing date of this report, as well as for our currently anticipated long-term needs.
Principal Accounting Fees and Services The information required by Part III, Item 14 is incorporated herein by reference to the sections titled “Ratification of Independent Registered Public Accounting Firm” and “Independent Auditor’s Fees” in our definitive proxy statement relating to the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. 73 Table of Contents PART IV Item 15.
Principal Accounting Fees and Services The information required by Part III, Item 14 is incorporated herein by reference to the sections titled “Ratification of Independent Registered Public Accounting Firm” and “Independent Auditor’s Fees” in our definitive proxy statement relating to the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. 77 Table of Contents PART IV Item 15.
We purchase new and pre- 24 Table of Contents owned pole-mounted and ambulatory infusion pumps from a variety of sources on a non-exclusive basis. We repair, refurbish and provide biomedical certification for the devices as needed. The pumps are then available for sale, rental or to be used within our ambulatory infusion pump management service.
We purchase new and pre-owned pole-mounted and ambulatory infusion pumps from a variety of sources on a non-exclusive basis. We repair, refurbish and provide biomedical certification for the devices as needed. The pumps are then available for sale, rental or to be used within our ambulatory infusion pump management service.
The Company performs a similar analysis of slow-moving Equipment for sale or rent and records a reserve, which was less than $0.1 million as of both December 31, 2022 and 2021.
The Company performs a similar analysis of slow-moving Equipment for sale or rent and records a reserve, which was less than $0.1 million as of both December 31, 2023 and 2022.
Management ’ s Report on Internal Controls Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) and 15d-15(f).
Management ’ s Report on Internal Controls Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).
("First Biomedical") are both operating subsidiaries of the Company. The Company’s core service is to supply electronic ambulatory infusion pumps and associated disposable supply kits to oncology clinics, infusion clinics and hospital outpatient chemotherapy clinics to be utilized in the treatment of a variety of cancers including colorectal cancer, pain management and other disease states.
InfuSystem, Inc. and First Biomedical, Inc. are both operating subsidiaries of the Company. The Company’s core service is supplying electronic ambulatory infusion pumps and associated disposable supply kits to oncology clinics, infusion clinics and hospital outpatient chemotherapy clinics to be utilized in the treatment of a variety of cancers including colorectal cancer, pain management and other disease states.
Leasehold improvements are amortized using the straight-line method over the life of the asset or the remaining term of the lease, whichever is shorter. Maintenance and minor repairs are charged to operations as incurred.
Leasehold improvements are amortized using the straight-line method over the life of the asset or the remaining term of the lease, whichever is shorter. Maintenance and minor repairs are expensed to operations as incurred.
Tax benefits of operating loss and tax credit carryforwards are 61 Table of Contents evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. The Company continues to monitor shifts in past ownership (as defined under Section 382 of the Code).
Tax benefits of operating loss and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. The Company continues to monitor shifts in past ownership (as defined under Section 382 of the Code).
The other information required by Part III, Item 12 is incorporated herein by reference to the section titled “Security Ownership of certain Beneficial Owners and Management” in our definitive proxy statement relating to the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. 72 Table of Contents Item 13.
The other information required by Part III, Item 12 is incorporated herein by reference to the section titled “Security Ownership of certain Beneficial Owners and Management” in our definitive proxy statement relating to the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. 76 Table of Contents Item 13.
Amortization expense for capitalized software was $0.1 million in 2022, $1.6 million in 2021 and $1.9 million in 2020. The Company assesses impairment indicators related to its internally-developed, internal-use software, specifically looking at the effectiveness and useful lives of each project and sub-project to determine if impairment indicators are present.
Amortization expense for capitalized software was $0.1 million in 2023, $0.1 million in 2022 and $1.6 million in 2021. The Company assesses impairment indicators related to its internally-developed, internal-use software, specifically looking at the effectiveness and useful lives of each project and sub-project to determine if impairment indicators are present.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Capitalized software costs are included in intangible assets, net and are amortized using the straight-line method over the estimated useful life of three to five 47 Table of Contents years. Capitalization of such costs ceases when the project is substantially complete and ready for its intended purpose.
Capitalized software costs are included in intangible assets, net and are amortized using the straight-line method over the estimated useful life of three to five years. Capitalization of such costs ceases when the project is substantially complete and ready for its intended purpose.
The 2021 Plan replaces and supersedes the 2014 Plan, so as of the adoption date of the 2021 Plan, no common shares remained available for future grant under the 2014 Plan. Stock-Based Compensation Expense All stock option awards are amortized based on their graded vesting over the requisite service period of the awards.
The 2021 Plan replaces and supersedes the 2014 Plan, so as of the adoption date of the 2021 Plan, no common shares remained available for future grant under the 2014 Plan. 63 Table of Contents Stock-Based Compensation Expense All stock option awards are amortized based on their graded vesting over the requisite service period of the awards.
Inherent Limitations over Internal Controls and Procedures A company's internal control over financial reporting is a process designed by, or under the supervision of, its principle executive and principal financial officers, and effected by such company's board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles ("US GAAP") and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US GAAP, and that the receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Inherent Limitations over Internal Controls and Procedures A company's internal control over financial reporting is a process designed by, or under the supervision of, its principle executive and principal financial officers, and effected by such company's board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US GAAP and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; 72 Table of Contents • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US GAAP, and that the receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
The underlying hedge transaction is realized when the interest payments 51 Table of Contents on debt are accrued; the applicable amount of gain or loss included in AOCI is reclassified into earnings in the consolidated statements of operations on the same line as the gain or loss on the hedged item attributable to the hedged risk.
The underlying hedge transaction is realized when the interest payments on debt are accrued; the applicable amount of gain or loss included in AOCI is reclassified into earnings in the consolidated statements of operations on the same line as the gain or loss on the hedged item attributable to the hedged risk.
The payer environment within our ITS segment is in a constant state of change. We continue to extend our considerable breadth of payer networks under contract as patients move into different insurance coverage plans, including Medicaid and Insurance Marketplace products.
The payer environment within our Patient Services segment is in a constant state of change. We continue to extend our considerable breadth of payer networks under contract as patients move into different insurance coverage plans, including Medicaid and Insurance Marketplace products.
The Company doesn’t believe it is probable that a significant reversal of revenue will occur in future periods because (i) there is no significant uncertainty about the amount of considerations that are expected to be collected based on collection history and (ii) the large number of sufficiently similar contracts allows the Company to adequately estimate the component of variable consideration.
The Company doesn’t believe it is probable that a significant reversal of revenue will occur in future periods because (i) there is no significant uncertainty about the amount of consideration that is expected to be collected based on collection history and (ii) the large number of sufficiently similar contracts allows the Company to adequately estimate the components of variable consideration.
The Company periodically performs an analysis to identify potentially missing Equipment and records a reserve equal to the underlying net book value, which was $2.3 million and $1.1 million as of December 31, 2022 and 2021, respectively. This amount approximates the accelerated depreciation the Company would recognize over the remaining useful lives of the assets.
The Company periodically performs an analysis to identify potentially missing Equipment and records a reserve equal to the underlying net book value, which was $2.1 million and $2.3 million as of December 31, 2023 and 2022, respectively. This amount approximates the accelerated depreciation the Company would recognize over the remaining useful lives of the assets determined to be missing.
These amounts have not been paid for as of December 31, 2021, but will be included as a cash outflow from financing activities for contingent consideration when paid. (c) Amount consists of receivables for cash proceeds from stock plans that have not been included in financing activities.
These amounts have not been paid for as of December 31, 2021, but was included as a cash outflow from financing activities for contingent consideration when paid. (c) Amount consists of receivables for cash proceeds from stock plans that have not been included in financing activities.
Our acquisition of OB Healthcare, a privately-held biomedical services company, on April 18, 2021 further develops and expands InfuSystem’s DME Services segment by adding field service capabilities and complements the Company’s purchase of FilAMed.
Our acquisition of OB Healthcare, a privately-held biomedical services company, on April 18, 2021 further develops and expands InfuSystem’s Device Solutions segment by adding field service capabilities and complements the Company’s purchase of FilAMed.
The Company, under the CARES Act, deferred paying $0.7 million of applicable gross payroll taxes as of December 31, 2020, which was included in other liabilities. The $0.7 million balance of the deferred Social Security taxes was paid in two annual installments during the years ending December 31, 2021 and 2022, respectively.
The Company, under the CARES Act, deferred paying $0.7 million of applicable gross payroll taxes as of December 31, 2020, which was included in other liabilities. The $0.7 million balance of the deferred Social Security taxes was paid in two annual installments during the years ending December 31, 2021 and 2022, respectively. 60 Table of Contents 10.
See Note 9 to our consolidated financial statements for information related to the fair values of derivative instruments in our consolidated balance sheet as of December 31, 2022 and 2021 and information related to the effect of derivative instruments included in our consolidated income statement and statement of comprehensive income including the amount of unrealized gain associated with our interest rate derivatives reported in accumulated other comprehensive income that was reclassified into earnings during 2022 and 2021.
See Note 8 to our consolidated financial statements for information related to the fair values of derivative instruments in our consolidated balance sheet as of December 31, 2023 and 2022 and information related to the effect of derivative instruments included in our Consolidated Statement of Operations and Comprehensive Income Statement including the amount of unrealized gain associated with our interest rate derivatives reported in accumulated other comprehensive income that was reclassified into earnings during 2023 and 2022.
Provision for/Benefit from Income Taxes During the year ended December 31, 2022, the Company recorded a provision for income taxes of $0.1 million, representing an effective tax rate of negative 86.0% on pre-tax income totaling $0.1 million.
During the year ended December 31, 2022, the Company recorded a provision from income taxes of $0.1 million, representing an effective tax rate of 86% on pre-tax income totaling $0.1 million.
However, any projections of future earnings and cash flows are subject to substantial uncertainty, including factors such as the successful execution of our business plan and general economic conditions.
However, any projections of future earnings and cash flows are subject to substantial uncertainty, 29 Table of Contents including factors such as the successful execution of our business plan and general economic conditions.
Employee Benefit Plans and Other The Company has a defined contribution plan in which the Company makes discretionary matching contributions for a certain percentage of employee contributions. For the years ended December 31, 2022, 2021 and 2020, the Company’s matching contributions were $1.2 million, $0.9 million and $0.8 million, respectively.
Employee Benefit Plans and Other The Company has a defined contribution plan in which the Company makes discretionary matching contributions for a certain percentage of employee contributions. For the years ended December 31, 2023, 2022 and 2021, the Company’s matching contributions were $1.3 million, $1.2 million and $0.9 million, respectively.
Management believes that the predominant source of revenues and cash flows from the Unallocated Assets is from rentals and most equipment purchased is likely to be 46 Table of Contents rented prior to being sold.
Management believes that the predominant source of revenues and cash flows from the Unallocated Assets is from rentals and most equipment purchased is likely to be rented prior to being sold.
Lease costs for the year ended December 31, 2021 of approximately $1.5 million and $0.1 million, were recorded to G&A expenses and cost of revenues, respectively. Lease costs for the year ended December 31, 2020 of approximately $1.3 million and $0.6 million, were recorded to G&A expenses and cost of revenues, respectively.
Lease costs for the year ended December 31, 2022 of approximately $1.6 million were recorded to G&A expenses. Lease costs for the year ended December 31, 2021 of approximately $1.5 million and $0.1 million, were recorded to G&A expenses and cost of revenues, respectively.
For the Company’s office leases, the implicit rate is typically not available, so the Company used and will use its incremental borrowing rate as the 32 Table of Contents discount rate. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments.
For the Company’s office leases, the implicit rate is typically not available, so the Company used and will use its incremental borrowing rate as the discount rate. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments.
Resources are allocated and performance is assessed for these segments by the Company’s Chief Executive Officer, whom the Company has determined to be its chief operating decision-maker. The Company believes that reporting performance at the gross profit level is the best indicator of segment performance.
Resources are allocated and performance is assessed for these segments by the Company’s Chief Executive Officer, whom the Company has determined to be its CODM. The Company believes that reporting performance at the gross profit level is the best indicator of segment performance.
The Company provides products and services to hospitals, oncology practices and facilities and other alternate site health care providers. Headquartered in Rochester Hills, Michigan, the Company delivers local, field-based customer support, and also operates pump service and repair Centers of Excellence in Michigan, Kansas, California, Massachusetts, Texas and Ontario, Canada. InfuSystem Inc. (“ISI”) and First Biomedical, Inc.
The Company provides products and services to hospitals, oncology practices and facilities and other alternate site health care providers. Headquartered in Rochester Hills, Michigan, the Company delivers local, field-based customer support, and also operates pump service and repair Centers of Excellence in Michigan, Kansas, California, Massachusetts, Texas and Ontario, Canada.
For the year ended December 31, 2022, the Company assessed the impairment indicators and found none to be present.
For the year ended December 31, 2023, the Company assessed the impairment indicators and found none to be present.
The state income tax returns and other state tax filings of the Company are subject to examination by the state taxing authorities, for various periods generally up to four years after they are filed. Canadian income tax returns of the Company for the years 2018 through 2022 are subject to examination by the Canada Revenue Agency.
The state income tax returns and other state tax filings of the Company are subject to examination by the state taxing authorities, for various periods generally up to four years after they are filed. Canadian income tax returns of the Company for the years 2019 through 2023 are subject to examination by the Canada Revenue Agency.
These amounts have not been received as of December 31, 2021, but will be included as a cash inflow from financing activities for cash proceeds from stock plans when received. See accompanying notes to consolidated financial statements. 44 Table of Contents INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.
These amounts have not been received as of December 31, 2021, but was included as a cash inflow from financing activities for cash proceeds from stock plans when received. See accompanying notes to consolidated financial statements. 43 Table of Contents INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.
Rochester Hills, Michigan Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of InfuSystem Holdings, Inc. and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).
Rochester Hills, Michigan Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of InfuSystem Holdings, Inc. and subsidiaries (the “Company”) as of December 31, 2022, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
For the years ended December 31, 2022, 2021 and 2020, the Company received 136,718 shares, 57,067 shares and 146,763 shares, respectively, from employees for tax withholding obligations. Restricted Stock Awards Restricted stock awards entitle the holder to receive, upon meeting certain time-based vesting criteria, a specified number of shares of the Company’s common stock.
For the years ended December 31, 2023, 2022 and 2021, the Company received 115,979 shares, 136,718 shares and 57,067 shares, respectively, from employees for tax withholding obligations. Restricted Stock Awards Restricted stock awards entitle the holder to receive, upon meeting certain time-based vesting criteria, a specified number of shares of the Company’s common stock.
Business Segment Information The Company’s reportable segments are organized based on service platforms, with the ITS segment reflecting higher margin rental revenues that generally include payments made by third-party and direct payers and the DME Services segment reflecting lower margin product sales, direct payer rental and services revenues.
Business Segment Information The Company’s reportable segments are organized based on service platforms, with the Patient Services segment reflecting higher margin rental revenues that generally include payments made by third-party and direct payers and the Device Solutions segment reflecting lower margin product sales, direct payer rental and services revenues.
Based on this assessment, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2022 due to the material weaknesses described below.
Based on this assessment, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2023 due to the material weakness described below.
Other long-lived assets include medical equipment in rental service which consists of equipment that the Company purchases from third-parties and is (1) for sale or rent, and (2) used in service to generate rental revenue. The Company periodically performs an analysis to identify potentially missing medical equipment and records a reserve equal to the underlying net book value.
Reserve for Missing Medical Equipment Medical equipment in rental service consists of equipment that the Company purchases from third-parties and is (1) for sale or rent, and (2) used in service to generate rental revenue. The Company periodically performs an analysis to identify potentially missing medical equipment and records a reserve equal to the underlying net book value.
Employee Stock Purchase Plan In May 2014, the Company received approval from stockholders to adopt an employee stock purchase plan ("ESPP") effective October 2014 (collectively the “Original ESPP”). Under the Original ESPP, 200,000 shares of common stock were authorized for purchase by eligible employees at a 15% discount through payroll deductions during the six-month offering periods.
In May 2014, the Company received approval from stockholders to adopt the Original ESPP effective October 2014. Under the Original ESPP, 200,000 shares of common stock were authorized for purchase by eligible employees at a 15% discount through payroll deductions during the six-month offering periods.
As allowed under the ESPP, a participant may elect to withdraw from the plan, effective for the purchase period in progress at the time of the election with all accumulated payroll deductions returned to the participant at the time of withdrawal. As of December 31, 2022, there were 95,379 shares remaining available for future issuance.
As allowed under the ESPP, a participant may elect to withdraw from the plan, effective for the purchase period in progress at the time of the election with all accumulated payroll deductions returned to the participant at the time of withdrawal. As of December 31, 2023, there were 323,756 shares remaining available for future issuance.
For the Company’s office leases, variable payments include amounts for the Company’s proportionate share of operating expenses, utilities, property taxes, insurance, common area maintenance and other facility-related expenses. For the Company’s equipment leases, variable payments may consist of sales taxes, property taxes and other fees.
Payments due under the Company’s operating leases include fixed payments as well as variable payments. For the Company’s office leases, variable payments include amounts for the Company’s proportionate share of operating expenses, utilities, property taxes, insurance, common area maintenance and other facility-related expenses. For the Company’s equipment leases, variable payments may consist of sales taxes, property taxes and other fees.
The following table presents the total stock-based compensation expense, which is included in selling, general and administrative expenses (in thousands): Years Ended December 31, 2022 2021 2020 Restricted share expense $ 2,683 $ 4,491 $ 1,687 Stock option and SARs expense 1,142 1,913 923 Total stock-based compensation expense $ 3,825 $ 6,404 $ 2,610 Tax benefit related to stock-based compensation $ 857 $ 2,234 $ 1,652 Shares Forgone to Satisfy Minimum Statutory Withholdings During the years ended December 31, 2022, 2021 and 2020, shares of common stock were issued to employees and directors as their restricted stock awards vested or stock options were exercised.
The following table presents the total stock-based compensation expense, which is included in selling, general and administrative expenses (in thousands): Years Ended December 31, 2023 2022 2021 Restricted share expense $ 2,584 $ 2,683 $ 4,491 Stock option expense 1,490 1,142 1,913 Total stock-based compensation expense $ 4,074 $ 3,825 $ 6,404 Tax benefit related to stock-based compensation $ 1,045 $ 857 $ 2,234 Shares Forgone to Satisfy Minimum Statutory Withholdings During the years ended December 31, 2023, 2022 and 2021, shares of common stock were issued to employees and directors as their restricted stock awards vested or stock options were exercised.
Date: March 16, 2023 By: /s/ RICHARD DiIORIO Richard DiIorio Chief Executive Officer and Director (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated.
Date: April 9, 2024 By: /s/ RICHARD DiIORIO Richard DiIorio Chief Executive Officer and Director (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated.
Deferred Debt Issuance Costs Capitalized debt issuance costs as of December 31, 2022 and 2021 relate to the Company’s credit facility. The costs related to the agreement are netted against current and non-current debt. The Company amortizes these costs using the interest method through the maturity date of the underlying debt.
Deferred Debt Issuance Costs Capitalized debt issuance costs as of December 31, 2023 and 2022 relate to the Company’s credit facility. The costs related to the agreement are netted against current and non-current debt and is recognized in Interest expense. The Company amortizes these costs using the interest method through the maturity date of the underlying debt.
The pump reserve for medical equipment in rental service represents an estimate for medical equipment that is considered to be missing. The reserve calculated is equal to the net book value of assets that have not returned from the field within a certain timeframe.
The pump reserve for medical equipment in rental service represents an estimate for medical equipment that is considered to be missing. The reserve calculated is equal to the net book value of assets that have not returned from the field within a certain timeframe. Sales of the Company's medical equipment are included in net revenue. 5.
Remediation Efforts The Company has begun the process of, and is focused on, designing and implementing effective internal control measures to improve its internal control over financial reporting and remediate the material weaknesses identified above.
Remediation Plan for Material Weaknesses in Internal Control Over Financial Reporting The Company has begun the process of, and is focused on, designing and implementing effective internal control measures to improve its internal control over financial reporting to remediate the material weakness identified above.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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