Good morning, everyone and welcome to InfuSystem Holdings’ Second Quarter Earnings 2015 Conference Call. This is your operator, Eric. Let me first give you to Mr. Jonathan P. Foster, Chief Financial Officer.

Thank you, Eric. Good afternoon. First of all, let me get some administrative matters out of the way. The company issued a press release today. The release is available on most financial websites. Additionally, a web replay will be available on the company’s website for 30 days. Both the press release and Form 8-K and the company’s Form 10-Q for the second quarter of 2015 were filed with the SEC today as well. Except for the historical information contained herein, the matters discussed on the conference call are forward-looking statements that involve risks and uncertainties. Such risks and uncertainties could cause actual results to differ materially from those predicted by such forward-looking statements. The words believe, expect, anticipate, and estimate or other similar statements or expectations identify forward-looking statements. These risks and uncertainties include general, economic conditions as well as other risks detailed from time-to-time in InfuSystem’s publicly filed documents with the Securities and Exchange Commission. Specifically, information about risks and uncertainties that could cause the company’s actual results and financial conditions to differ from those predicted by forward-looking statements are disclosed in the company’s yearend report on Form 10-K for the year ended December 31, 2014 under the heading Risk Factors and elsewhere in the report and in other filings made by the company from time-to-time with the SEC including subsequent quarterly reports on our Form 10-Q. Forward-looking statements reflect management’s analysis only as of today. The company has no obligations to update the forward-looking information contained in this conference call. While discussing the company’s performance, the company will refer to certain non-GAAP measures, such as adjusted EBITDA and adjusted net income, which are not measures of the financial performance under Generally Accepted Accounting Principles. A reconciliation of the differences between non-GAAP financial measures and those measures such as adjusted EBITDA and adjusted net income and the most comparable GAAP measures are contained in today’s press release. And with that, I would like to turn the call over to Mr. Eric Steen, our Chief Executive Officer.

Good afternoon, everyone and thank you for joining the InfuSystem Holdings Inc. second quarter 2015 earnings call. Joining me today are Jan Skonieczny, Chief Operating Officer and Jon Foster, Chief Financial Officer. There are three things that I want to talk about today. The integration of the Ciscura assets, that we acquired our progress on our electronic connectivity strategy and the associated market share gains, and the organization’s allocation to capital. But first, let’s go to the numbers. In the second quarter, revenue was $17.2 million, an increase of 5% versus the second quarter of prior year. Our net collected revenue was $16.1 million, up 8% over prior as we continue to reduce bad debt through our new payer contracts. At the core, we are a rental company. And our net collected rental revenue was $14.5 million, up 8% over the second quarter of 2014. Direct sales were basically flat as we have grown both our sales of disposable products and our service and repair business. However, we have yet to have that big capital equipment pump sales so far in 2015. As I have stated previously, we are preparing for some large pump sales in the second half of the year and our guidance remains double-digit net collected revenue for 2015. Operating income was $1.3 million and net income was $783,000, down $103,000 versus the same period prior year. Adjusted earnings before taxes interest depreciation and amortization was $3.9 million, a decrease of 2% versus prior year. Adjusted earnings per share, was $0.05 per diluted share compared to $0.04 per diluted share for the second quarter of the prior year. As we look at 2015 year-to-date through June, revenue is up 1%, bad debt is down 34%. So, net collected revenue is up 5%. Our recurring net collected rental…

Thank you, Eric. I’ll highlight some of the key second quarter financial results. Our net revenue for the quarter ended June 30, 2015 was $17.2 million, an increase of $0.8 million or 5%, compared to $16.4 million for the quarter ended June 30, 2014. During the period, net revenues from rentals of $15.6 million increased $0.8 million or 6% compared to the same prior year period. This is the second straight quarter of record rental revenue. Net revenues from product sales for the quarter remained consistent over the same period in 2016. As Eric mentioned, this quarter included additional revenue of approximately $0.4 million from our Ciscura acquisition, about one month’s revenue. In the ordinary course of business, the company has unbilled rental revenue which remains at fairly consistent levels from quarter-to-quarter. Unbilled rental revenue represents revenue where we do not have all the necessary information to complete the billing, which is required by our revenue recognition policy. During the period, unbilled revenue increased by approximately $0.3 million due to a delay in receiving paperwork from the facilities necessary to complete billing in the revenue cycle. We expect this increase in unbilled rental revenue to decrease to consistent levels during the second half of 2015, thereby flowing through the P&L, primarily in the third quarter. Our net revenue for the six months ended June 30, 2015 was $33.9 million, an increase of $0.3 million over the same prior year period, which included a large capital sale during the first quarter of the prior year, of approximately $0.9 million. As we stated previously, the payer mix and the impact of the Affordable Care Act for ACA, our payer environment is continuing to change. Consequently, we continue to focus on net revenue less bad debt or as we call it net collected…

Thank you, Jon. In conclusion, we’re growing our business and expanding our market share which gives us confidence in forecasting record financial results for 2015. Our investment in IT and electronic connectivity is attracting new customers at a record rate. And we will see significant improvement in our internal operations. The improvements in managed care contracting will continue to generate the cash necessary to invest in new revenue opportunities and to pay down debt. I’m reaffirming our guidance of double-digit net collected revenue in 2015. Now, I’d like to ask the operator to open this up for questions.

[Operator Instructions]. Okay. And our first question comes from Chris Sampson from Sampson Advisors. Chris, please go ahead.

Hi guys, great quarter.

Hi, Chris.

Few questions for you, if you don’t mind, could you give us any general color on what the environment looks like to you guys for continuous infusion, it sounds like in your commentary that you continue to have pretty bullish expectations for the business going forward. So, I hope to hear what you’re seeing generally speaking in continuous infusion? Secondly, could you give us your take on reimbursement rate and what new information there might be in the second quarter? And I guess, lastly you paid down some debt in the quarter which is great. What do you think is the optimal or ideal debt level that you would like to achieve looking out? Thanks.

Okay, thanks Chris. Good questions. So, it was infusion drugs, reimbursement and debt level, great questions. First of all, in the infusion marketplace, we are seeing the introduction of several new important infusion pharmaceutical drugs I mentioned I think a couple of calls ago about two new drugs that CMS had approved for Medicare patients, like Blincyto. And there are some other new drugs that we are actually working with, some bit name pharmaceutical companies as they bring these drugs to the marketplace for a pump service. So, one good thing as I look about our business, and Chris when I first met you, we were so dependent on just colorectal cancer. And now as we look at the almost now 50,000 going to 60,000 patients that we serve, there are a lot of new specialty pharmacy drugs that are coming out and many of them are infusion drugs. I attended a specialty pharmacy conference recently and one of the pipelines, one of the presentations was on the pipeline of a lot of these specialty pharmacy drugs that are coming out and many of them are infusions. So, that’s why I remain bullish on our future for infusion. On our reimbursement rates, the positive thing is we are continuing to get more contracts, more managed care contracts. And you can see our debt - bad debt was down I think 21% in the quarter and 34% year-to-date. And that’s a result of payers, the commercial payers continuing to see the great value in InfuSystem and the results that we’re getting. Of course, one payer we spent a lot of time talking about is CMS and Medicare patients, and Jan is an expert in that area, and I’d like Jan to give a brief update in CMS and what we’re going to expect going forward.

Sure. So, basically, I think we’ve spoken before that we’re expecting CMS to institute some rate cuts beginning 2016. And although our product category is not included in competitive bidding for the second round of the re-compete, we still expect to receive notification probably somewhere in the fourth quarter from Medicare letting everyone know when these - what the cuts will be. And that’s generally when the post the 2016 fee schedule. I do believe that as we’ve said before, by the end of - or by 2017 we can expect to see about $3 million in cuts to CMS reimbursement. So, that is exactly the reason why we’re so focused on contracting with all these other commercial payers as well as Medicaid plans and these new Medicaid managed care plans from the exchange.

Thank you, Jan. And then I’ll make a comment on debt. Most of the people I talk to say your guys leverage is, just great and now you’re 3%, that’s fine. But I think by nature, I like to keep things tight and keep our leverage low. And then when an opportunity comes up in the future at some time, and I find myself in the right time, at the right place like being able to acquire those 1,800 pumps at 100 new clinics and get 3.5 multiple on EBITDA for Ciscura, we’ve got the ability to do it with absolutely no problem. And of course Jon, as our financial expert, I’d like to ask him to just make a couple of comments on our debt level as well.

Thanks Eric. With regard to our credit agreement with JPMorgan Chase, our maximum leverage is three times. We’re well below that on a pro forma basis of the acquisition. And getting down to 1.5 times, I think then you could, we argue that we’re under-levered. And being at that level allows us to have dry powder for, as Eric mentioned potentials for growth.

Do we answer that for you Chris, or do you have any follow-up?

I do but I’ll get back in queue in case there are other people who want to ask questions. Thank you.

Okay.

And our next question comes from Doug Weiss from DSW Investments. Doug, please go ahead.

Hi, good afternoon.

Hi Doug.

Just a couple of modeling questions, on service and supply, it looks like, and I know there were comments in the press release on that. But the press release mentioned some additional depreciation. Would that even include sort of that, it looks like it came up a little bit from prior quarters. Is that a one-quarter event or is there something which is changing there?

Jon, can you?

What are you referring to specifically?

So, the $3.6 million service and supply expense.

That would just be depreciation over the prior year quarter. Can we have your next question? Another one, I’ll follow-up with you on that.

Okay. And then, in terms of the non-recurring expense, is that in the general administrative line?

Yes. Well, for Ciscura, yes, and the debt refi, that’s down in other income and expense, that’s a separate line item. But G&A is where the Ciscura is.

Okay. Ciscura was 351 or that also include the debt refi?

You say, 351?

$351,000 was nevertheless shown as non-recurring.

In non-recurring that for the quarter, you’re talking about for the quarter?

Yes.

Yes. You’re looking at integration cost, the $351,000, yes that was for Ciscura.

Okay.

And there was no loss in early extinguishment of debt that occurred in the first quarter. And total for Ciscura is $600,000 we expect that to total $700,000 for the year.

Chris, one thing I think I wish talking about some quarter-to-date numbers, then when I was talking about the non-recurring, I went to year-to-date, when I was saying the extinguishment of debt and the integration of Ciscura.

Great, got it. And then you also mentioned you got a bit of tax benefit from some R&D credits. Is that a one-quarter phenomenon or does that carry through the year?

That was for 2014 as a one-quarter phenomenon. They have not accrued R&D tax credit in Congress for 2015, so we can’t calculate that. If it’s approved by the end of the year, we should have a credit run through 2015, for the 2015 expenditures.

Okay, all right. And how about pain, I didn’t notice too much about that this quarter, is that progressing or anything in that front, pain management?

It’s progressing. One thing we had comparing second quarter of 2015 to second quarter 2014, we had a 10-fold increase in billings. And other good news, the - we’re getting paid by the commercial payers at around the same rate now that we get paid by for our oncology business. So, and that’s a 25-year old business. So, we’re just a few years here. We’ve demonstrated the commercial payers, the benefit of the pain service. And it’s still, I think as our oncology business was growing 92 new accounts plus Ciscura, I guess I was on this call I was keeping the focus on it. And I think we’ve got a couple of things to do to further increase pain. And I’ll take this opportunity to just make a clarification because I like to talk about our electronic connectivity and our EMR integration we’re just doing that for our oncology business and I prioritized that. So, for our pain business today, our pain business looks like oncology did a few years ago where there is, paperwork and fax machines involved. And I need to do when we’re done with these projects, our EMR integration is going very well. And in the past I’ve mentioned we have done IT investment as we’ve completely redoing our workflow for our oncology business which we’re about to implement that investment to reshape our oncology business. And then as we finish that with a relatively minor IT investment to tweak the oncology platform we’ve created and just make it surgical instead of oncology and we bring our electronic connectivity of the pain market, I think that will bring some of the larger accounts in as well.

Okay. And last question, just on the accretion from Ciscura. If I just kind of used the numbers you gave based on multiple EBITDA, I guess about $0.01 of accretion not per quarter, not including any incremental cost, interest expense. Have you, does this quarter fully reflect the associated interest expense from the acquisition in other words, do you have all the whatever to the extent you took on debt for the acquisition, is that fully reflected for the three months?

We made the payment at the end of April. So, now the interest was, we’re roughly 3%, that was basically month and half roughly of interest on the acquisition. With regards to EPS, one of the reasons we didn’t state anything, any guidance on EPS for the addition of that, if you go into the depths of the footnote in the Q, which I’m sure you haven’t had time to do with the release, we have not fully allocated the purchase price between goodwill and intangibles. And so depending how the life, once we’re done with our analysis and discussion with experts on allocation the lives of those intangibles would have an impact on EPS, and that’s why we’re - we can talk about EBITDA because that amortization is not included.

I’ll just make one other comment, for little more clarification. For the revenue we recognized from the 100 new facilities that were formally with Ciscura, we only recognized one month in revenue this last quarter with those 100 facilities. The reason for that is that although the acquisition happened late in April, insurance companies only pay for one pump rental a month for the patients. And so many of those patients have been in earlier in the month to the facilities and Ciscura did that pump billing. And so it really wasn’t until May that we were able to start billing those patients for the pumps. The other thing is when you bring in 1,500 new patients into your system, there are some delays in getting everything set up for insurance billings we expected that. Everything is going according to plan. And that’s one of the reasons our pending payments from insurance companies are up a bit as Jan and her team work through that. And we will see those billings come through throughout the rest of the year now.

Okay. All right, that’s it from me. Thanks.

[Operator Instructions]. Your next question comes from Chris Sampson from Sampson Advisors. Please go ahead, Chris.

Hi, just a quick one on CapEx. What do you think maintenance CapEx will be now with the Ciscura acquisition? Thanks.

Jon.

For example, Ciscura acquisition, it’s from 1,800 pumps on a fleet of 50,000 pumps. We still estimate our maintenance CapEx to somewhere between $1 million to $2 million range, it depends. It varies year-by-year depending on most pumps and pumps that are beyond repair.

Okay. Thank you very much.

And we have no further questions at this time. And I’d like to turn the call back over to Eric Steen.

Okay. Thanks very much everybody. Thanks for joining our call today. And look forward to talking to you all next quarter.

Thank you ladies and gentlemen, this concludes today’s conference. Thank you for participating. You may now disconnect.