Good day. And welcome to the InfuSystem Holdings Fourth Quarter and Full Year 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today’s event is being recorded. I’d now like to turn the conference over to Joe Dorame with Lytham Partners. Please go ahead, sir.

Thank you, Rocco. Good morning. And thank you for joining us today to review the financial results of InfuSystem Holdings Inc. for the fourth quarter and full year 2020 ended December 31, 2020. With us today on the call are Rich Dilorio, Chief Executive Officer; Barry Steele, Chief Financial Officer; and Carrie Lachance, President and Chief Operating Officer. After the conclusion of today’s prepared remarks, we will open the call for a question-and-answer session. If anyone participating on today’s call does not have a full text copy of the press release, you can retrieve it from the company’s website at www.infusystem.com or numerous other financial websites. Before we begin with prepared remarks, I would like to remind everyone, certain statements made by the management team of InfuSystem during this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except for the statements of historical fact, this conference call may contain forward-looking statements that involve risks and uncertainties, some of which are detailed under Risk Factors and documents filed by the company with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended December 31, 2019. Forward-looking statements speak only as of the date the statements were made. The company can give no assurance that such forward-looking statements will prove to be correct. InfuSystem does not undertake and specifically disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Now, I’d like to turn the call over to Rich Dilorio, Chief Executive Officer of InfuSystem. Rich?

Thanks, Joe and good morning, everyone. And welcome to our fourth quarter and full year 2020 earnings call. Thank you all for taking the time to join us this morning. I trust that you and your families are staying safe as we hopefully work through the final stages of this COVID-19 pandemic. Looking back, the year 2020 was an unprecedented time for all of us across every aspect of our lives. At InfuSystem we focused on what’s important to us, the well being and safety of our patients and our team members. We adapted in countless ways to keep our team as safe as possible, while maintaining the highest levels of service to ensure our devices are available to our patients for uninterrupted medical treatments. I am extremely proud of our team and their ability to successfully adapt to so many changes and overcome so many challenges. It was their perseverance that makes it possible for us to report record results today. On this call, we will cover our financial results for the fourth quarter and full year 2020, reaffirm our 2021 annual guidance and provide an update on our business in 2021 and I will look for 2022 and beyond. During 2020, we found we are doing many things the old way had become impossible and the developing new ways of doing things would result in long-term advantages. Our team faced up to each challenge, adapted as necessary, often creating new efficiencies and continued to successfully execute on our growth strategy. The result of their outstanding efforts was evidenced by the record 2020 accomplishments that include the following. Record net revenue for the year of $97.4 million, an increase of 20% over 2019; adjusted EBITDA of $26.4 million, an increase of 45% from the prior year, with this translating…

Thanks, Rich, and good morning, everyone. I am very happy to be on the call today and honored to serve the company as President and Chief Operating Officer. I have held numerous management roles during my time working at InfuSystem, with each new one giving me greater ability to contribute to the strategic objectives of the organization. In addition to helping drive new revenue opportunities, my role is often to identify and execute on streamlining operations, to improve efficiencies and increase margins and net cash flows. I look forward to working with Rich in the leadership team and growing our ITS and DME platforms and making InfuSystem a leading healthcare service provider for outpatient care across many markets. Rich mentions our synergistic acquisition of FilAMed in February 2021. This small acquisition was pursued primarily as a means to expand our DME service capabilities. This acquisition broadens and enhances our scope of biomedical services, particularly in areas such as compression devices, defibrillators, electrosurgical units and patient monitors. Adding FilAMed also provides us the opportunity to enter into the acute care market. We believe there is opportunity to expand our biomedical service offerings, with the potential impact being adding double-digit millions of dollars to our topline over the next few years. This year, the incremental revenue being contributed by biomedical services might be enough to push us to the higher end of our 2021 guidance, which Rich will discuss in a few minutes.

Thanks, Carrie. For the last several years I have been firmly committed in building -- to building a strong leadership team with deep industry knowledge and proven execution abilities. I believe now we have the team in place to make InfuSystem a leading healthcare services company for years to come. Again, I am extremely proud of the entire InfuSystem team and the way that they adapted and executed on our growth plan even during extreme conditions. The patient is at the center of everything we do in delivering patient wellness and our team did an outstanding job meeting this commitment. And with that, I’d like to turn it over to our CFO, Barry Steele, to provide a review of our financial results.

Thank you, Rich, and thank you to everyone joining the call today. As Rich mentioned, during the quarter, we met our revenue and profitability expectations, while continuing to be cash flow positive and further reducing balance sheet leverage. Net revenues for the fourth quarter of 2020 totaled $24.7 million and represented an increase of $3 million or nearly 14% over the fourth quarter of 2019. The DME Services segment led the way with net revenue growth of $1.7 million or 25%. While the net revenue of a larger ITS segment increased by $1.3 million or 9%. Similar to the 2020 second and third quarters, the DME Services segment net revenue growth was favorably impacted by higher rental revenue, which increased by $1.1 million and higher equipment sales, which increased by about $0.5 million during the quarter. Much of the rental revenue growth was represented by an expansion in the market share with national home infusion service providers and the addition of new devices to our product portfolio stemming from new partnership -- partnerships with device manufacturers. In addition to increasing -- increases -- increased results -- increases resulting from the COVID-19 driven market demand, which currently shows no signs of moderating as a pandemic resides. ITS growth continued to be driven by favorable market penetration in the oncology business, resulting from an improved market competitive landscape. Pain management net revenues, which are part of the ITS segment, continued to recover during the quarter from COVID-19 shutdowns growing by 22% compared to the prior year fourth quarter and 17% sequentially from the 2020 third quarter. The higher net revenues translated into higher adjusted EBITDA, which increased by $750,000 or 14% to $6.2 million during the 2020 fourth quarter as compared to the prior year. The adjusted EBITDA margin for the quarter…

Thanks, Barry. Looking ahead, we expect 2021 will be another record year for InfuSystem, with strong double-digit growth in both net revenue and adjusted either, driven by strong growth in our ITS segment, where pain management and Negative Pressure Wound Therapy will begin to present as growth drivers. Our focus in 2021 will be on the following, growing the three new therapies currently on our ITS platform, oncology, pain management and Negative Pressure, launching a new fourth therapy on our ITS platform in the first half of 2021, adding new products and services to our DME platform, successfully executing on a new cross-selling initiative to capitalize on our over 2,100 sites of care in oncology, developing a new strategic partnership to grow our platforms, and identifying small tuck-in acquisitions that will enhance and expand our current capabilities and offerings. Based on the competence in our business, I am reaffirming our annual full year 2021 guidance. We are projecting net revenues to be within the range of $107 million to $110 million, adjusted EBITDA to be within the range of $29 million to $39 -- to $30 million, operating cash flow to be within the range of $21 million to $23 million. We are also forecasting adjusted EBITDA margin to be 27%. Our 2021 guidance does not include any potential one-time large pump sales. Driving growth in 2021 will be our pain management and Negative Pressure businesses with net revenues to be in the range of $8 million to $10 million combined. When we exit 2021 we are projecting a $12 million run rate for net revenue in pain and Negative Pressure combined. We are at the beginning of the next phase of growth for the company and these two therapies will allow us to sustain 15% growth with solid gross margin for years to come. We have seen some recent disruption in the wound care space regarding service levels from one of our competitors. While we are still evaluating the exact impact of the market, we plan on capitalizing on the opportunity, which we believe may allow us to accelerate our growth in that market if that disruption becomes significant. We have a very strong and experienced team in place to continue to successfully execute on our strategic business plan. Our service platforms are device agnostic and I believe we are in an -- operating in a position of strength as we leverage our two operating platforms facilitating outpatient care. I am confident InfuSystem is uniquely positioned to meet the rising demand for in-home health service -- healthcare services, as we successfully expand our two operating platforms with new therapies and products to improve patient outcomes. I am very excited for the future of InfuSystem. And with that, I am happy to answer any questions.

Thank you. [Operator Instructions] Today’s first question comes from Brooks O'Neil with Lake Street Capital Markets. Please go ahead.

Good morning, Rich and Berry, and congratulations, Carrie. Welcome to the call this morning.

Thanks, Brooks.

So I was going to put Carrie on the spot first and ask if you have kind of a current idea about your priorities for 2021. Are there big things you need to accomplish or is it kind of continuation of the current activities for the company?

Yeah. Good morning. Thanks for the question. I would say, priorities are definitely operating efficiently that the integration of FilAMed is certainly a priority and kind of streamlining our workflows in Negative Pressure.

Great. Rich, you mentioned, the disruption in the Negative Pressure market, has your enthusiasm for the opportunity in that business increased in recent months?

So Negative Pressure in general, I still believe we are likely going to get to that 5% to 10% of the addressable market, which puts us in the $30 million to $60 million range. The disruption in the market we are still talking to identify kind of the extent of it and the impact. I think the good news is, regardless of what that -- of how big that opportunity is, we are going to take advantage of it and that’s what the team is assessing right now. Will it allow us to get over the 5% to 10%. I don’t really know if that’s the case, but what it might allow us to do is get to those numbers faster. So instead of being three years to five years, maybe it’s two years or three years to get to the 5% or 10%. So it will just help us…

Okay.

… accelerate the growth. So our response and execution of that response is really what’s important. And I think, we are still working out the details, but we all talk again in a couple months, most likely in May, with our first quarter numbers, we will hopefully have some more information on kind of what’s going on and exactly what our responses and what our expectations are. But anytime you are in a market and there’s an opportunity, and there’s disruption, and it benefits you as an organization with your service levels. That’s a good thing, right? So we will see to what extent, but yeah, it’s all good news.

Yeah. Great. Can you talk a little bit -- you have sort of given us a sense that you see a $30 million to $60 million kind of opportunity in Negative Pressure? Can you give us a sense for the size of the opportunities you see in pain?

Yeah. So pain is interesting. So the market we are going after right now is probably about $125 million roughly. What can our pain business do? It can probably -- while it can certainly get into double-digit millions, right? That’s what -- I think I said that in November that by the end of 2022…

Yeah.

… we should be at that point. So we should be $10 million plus. Where it goes from there? There’s some reimbursement challenges for the physician that hopefully the government will change in the next couple of years. If that happens, it kind of blows the top off the addressable market for all of us in that market. So, at that point, the potential doubles and triples. So could it be a $20 million, $30 million business, sure. Do I expect that in the next couple of years? No. But over time, we can certainly get there.

Right. And if I remember correctly, your pain therapy essentially eliminate the need to prescribe opioids, is that right? Isn’t that something that government’s going to want to promote?

Yeah. You would think so, right? You would think that that would help us get our -- get the reimbursement for the physicians. It doesn’t always eliminate the need for opioids, but it’s -- it greatly reduces it in a lot of cases eliminates it. So, instead of, our conversation with CMS is that, instead of treating a patient after they become addicted, which costs over a $0.5 million, that’s roughly the number to treat a patient. For our -- for a few $100, you can reimburse the doctor to place a catheter and hopefully eliminate the addiction altogether, right? So, financially, obviously, it makes total sense. And I think we will get there eventually and when we do, it will just -- it will grow the addressable market for everybody involved.

Absolutely. Okay. Can you give us any color on the size or the type of opportunities you are looking as for the fourth platform?

Sure. So, the number of opportunities in front of us right now. I wouldn’t go as far as saying they are unlimited, but they feel like it -- that’s -- it’s pretty close to that. There are dozens and dozens and dozens of products and therapies, and devices that go home with patients. There’s manufacturers approaching us. We are looking at markets that we want to get into. The trick is going to be and the art is to get into the right market at the right time with the right partner, where it makes sense from an economic standpoint. There’s addressable markets ranging from a few million dollars to a few billion dollars that we are looking at. And we are not afraid to get into either, if it’s the right time and the right place and depending on how much heavy lifting there is in a small addressable market, we will obviously take advantage of if we think there’s a good opportunity. But I think the one that you will see in the next few months is going to be a billion plus addressable markets. It’s a big market that we are looking at. We have narrowed it down to a couple contenders for the next therapy. We are in the phase now, where we are talking about what the agreements look like, what our licensing, what licensing we need, what the rollout plan would be. So we are getting close and in the couple that we are getting close to a pretty sizable addressable market for us.

Great. That’s very helpful. Thanks a lot and keep up all the great work.

Thanks, Brooks.

And our next question today comes from Alex Nowak with Craig-Hallum Capital. Please go ahead.

Great. Good morning, everyone. I want to first follow-up to Brooks’ question here and maybe expand on the disruption in wound care space and maybe I mentioned -- I missed it. But what specifically are you seeing? Is it around the shift to care temporarily for the physician office versus the wound care clinics? Is that an impact with your competitor? Just maybe some more color on exactly what the disruption levels you are seeing?

Yeah. Sure. So, good morning, Alex. There’s -- we are still in the phase of the kind of the discovery phase of what’s going on. But it’s disruption at the customer level from a service piece. So, relationships being disrupted, clinical standards are not being -- not where they were for this competitor. It’s -- Negative Pressure just like our Oncology business. It is 100% service, right? The device really doesn’t matter as long as it does the job. It’s all about the service piece and whether that’s the clinical team, the biomed team, the sales relationships. That’s the core of the business. That’s the art on what makes us so successful in oncology and what will make us successful in Negative Pressure. And those types of things are what from a service level standpoint of being reduced, which only benefits a company like InfuSystem that, that’s who we are, right? We are a service company at the end of the day and we have perfected our service levels over 30-plus years. We are the best in the world in some of the things that we do. So, I was already kind of bullish on what we could do in that market, but when a competitor service level is dropping, it’s a perfect storm for us to go seize that opportunity and hopefully gain some share pretty quick.

Okay. No. That makes sense and maybe staying on that and actually switching over to the Oncology business. There are some big competitive wins throughout 2020 that you were able to benefit through. How do you think about the competitive environment now and continuous chemo? Anything really changed there, do you still expect more competitive wins, is there anything that might reverse? Just any help there for 2021?

Yeah. So nothing big that’s new. It’s kind of the status quo. I think we are still the dominant player in that market from a market share standpoint and service level. We don’t really have a direct competitor anymore. They are all out of the market. So now we compete against home infusion companies that have been entrenched in a customer for a long time. So, it will be -- we will go back to old fashion selling, winning one account at a time and growing market share that way, and I have no doubt that market is going to grow. It’s not going to grow 20% like it had the last couple of years. But that team I have 100% faith that we are going to continue to win customers. We don’t really lose customers in that market. I think our retention rate is 98%, 99% a year. So, if anything, we are going to grow that market over time. Just it will grow slow. It’s a pretty established market and we have a good percentage of the share.

Okay. That’s great. And I know InfuSystem was a legacy infusion service provider DME route and as you are starting to go into these other therapies, you are doing it in wound, but you happened to go beyond traditional infusion. And you made the FilAMed acquisition that gets you into some more capabilities. So, I guess, the question is, do you need to make more acquisitions to go into these new areas that you are looking at which are beyond the infusion?

Not necessarily. So, there’s kind of two ways that we are going to get into new therapies on the ITS side. It could be an acquisition for sure. If there is a therapy that we like and a product we like, and a manufacturer that it makes sense to acquire to take on those skill sets, we will go do that. The kind of better option for us from an investment standpoint at least upfront investment is something similar to a negative pressure in Cardinal, where we found a great partner with a great product that we can layer on our service and enter the market without a huge investment upfront but with a lot of cachet in that market to go take market share. So that’s kind of the ideal way of doing it, but we are not going to be shy, if there’s a great market opportunity and there’s a product out there and we need to acquire it to get in then we will do that as well.

Okay. Make sense. And then just last question and maybe I missed this or I got the interpretation wrong. But did you mention with the acquisition that you made in February and you look at the guidance that you are probably closer to the upper end of that guidance now. Is that the right way to think about it?

Yeah. Yeah. It’s not a $10 million acquisition, right? It’s relatively small. We think that this year what we can get out of that -- those enhanced capabilities will push us to the top half of that guidance, if everything goes according to plan, right? But -- and that’s why we are reiterating the number. We are not going over that number yet. It’s still too early in the year. But for now we are still comfortable with that number and FilAMed hopefully will push us to the top end of that range.

All right. That’s great. Appreciate the update. Thank you.

Thanks, Alex.

And our next question today comes from Jim Sidoti with Sidoti & Company. Please go ahead.

Hi. Good morning. Can you hear me?

Yeah. Good morning, Jim.

Great. Great. Happy St. Patrick’s Day. So, two questions for me. One, it seems to me like you got a boost last year for some of the businesses because of COVID and the trend to treat people at home. As COVID subsides, do you think that some of that sticks as doctors and patients see the benefits of home treatment?

Yeah. So, I think, the push to treat patients at home has been going on for a while. This isn’t a new kind of concept. I think, COVID just gave it a little bit of a push, right? It was gas on the fire. So, it’s been a few years now at least that physician’s understand patients recover better at home. Patient’s satisfaction goes through the roof when they are at home versus being in a hospital and the payers like it because it’s less expensive to the healthcare system. So none of that is new news, but I think COVID gave it the push that it needed and really opened some people’s eyes that let’s look at all the potential we have to send patients home. I also think that technology has caught up with that concept where some of these devices now become small enough that you can actually take them home and they are portable, whereas before it was like an air-conditioning unit next to your bed. Now you can actually carry something home. So, I think, all of that has kind of merged perfectly and I think that’s here to stay. I think it’s going to just accelerate the move to the patient’s home. And that’s what COVID has really helped. From a boost standpoint within our businesses, it was definitely felt more on the DME side in pump sales and rentals. The good news is the boost in pump rentals was from newer customers and we really believe now that we are basically a year out that those customers are here to stay. So we might have won the customer because of COVID, but that rental revenue for the most part is here to stay and it’s part of our new kind of baseline and foundation of our revenue.

All right. And then I have similar question on the cost side. I am sure that you guys reacted to COVID like everybody else and figured out ways to reduce costs and we weren’t sure where the businesses were headed. Are some of those initiatives going to stick in 2021?

Sure. So, yeah, I think, I mentioned earlier on that, doing things, look, pre-COVID and post-COVID are much different. Some of the things we used to do don’t work anymore and the good news is some of the adaptations we have made have allowed us to do business better and smarter and more efficiently, and absolutely, those are going to stay. So, there’s no need to change things back, if they are working now and we think they will work kind of post-COVID, as hopefully, it loosens its grip on all of us here pretty soon. But, yeah, just like customers, it forced every company to adapt. Fortunately, for InfuSystem, we are extremely nimble as a company and we were able to adapt really quickly and make some -- make a lot of really good decisions early on that I think are here to stay, which will just help us in the long-term.

All right. And then the last one for me is in regard to this the fourth therapy you think you will enter in 2021 in it. It sounds like you have a pretty good idea where you are going. So, the question is, are you going to be able to use the same infrastructure you have in place already for reimbursement and to sell this therapy or do you think you are going to have to build out and people build out new infrastructure for this fourth therapy?

Yeah. Great questions. So, the whole concept of adding therapies especially on the ITS platform is that we are going to leverage the infrastructure we have. We are not going to have to build plants and buy machinery to make things. That’s just not who we are. We are not a manufacturer. Our revenue cycle team, our clinical team or biomed team, the core structures are already there, even the sales team in some cases. We will supplement that as new revenue comes in and more paperwork is processed and more customers are online. But it’s an incremental add as opposed to kind of rebuilding or even building something from scratch. So we are absolutely going to leverage what we have in place and that’s part of the art of picking the next therapy. So it’s not just about the right market, the right time, the right partner. A lot of it is, how does it fit into our core competencies today and the less we have to change or tweak, the better off we are and the more we can leverage. So, absolutely, it’s part of how we look at this going -- moving forward.

Great. Thank you.

Thanks, Jim.

[Operator Instructions] Today’s next question comes from Aaron Warwick with ES Capital. Please go ahead.

Hey. Good morning, guys, and Carrie congratulations on your promotion. I hope your families are well, like you said hopefully when the backside of this pandemic. Yeah. Before this call I went back to your dialogue, Rich, on the transcript from last May. That time you would set your target or your guidance for $89 million in revenue, and I was doing the math and saying you know it should be closer to $95 million and you push back and here we are. Not quite a year later…

Yeah.

… you guys did $97 million. So congratulations on that. But I kind of bring this up, the second guy in the call as well mention this. Your target now the upper end of it $110 million, obviously, nice growth rate, but I am kind of surprised you haven’t raised that since November given everything that you have been saying on today’s call. I don’t know if you could provide a little more why you are sticking with that rather than raising it?

Yeah. So, it’s still early in the year, right? We are only halfway through March. We are not done with the first quarter yet. I think what people have learned about us over time is that, when we put out a number, it’s a number that we know we can hit, right? There’s inherent risk in there. There’s a little bit of upside in there, especially with the range this year, which is a newer kind of concept for us over the last six months to nine months.

Yeah. Yeah.

Going outside of that guidance, right now I am just not comfortable doing. That doesn’t mean when we talk in May that we don’t raise it. I think each of the last two years or three years we have raised our guidance throughout the year. I think you guys can be confident that we are comfortable that we are in the number that we gave out already, the $107 million to $110 million on the topline. And that as we see opportunities and they start to crystallize for us, that we will give you guys visibility into that by raising the guidance, right? So, we are not against moving the number as we get clear -- more clarity throughout the year and I think over the last couple of years we have raised it more than once during the year. But for now, it’s still early enough that there’s always inherent risk out there just like there’s opportunities. So, I would say for now, we are kind of a little bit more conservative. But we will stick to it for now and we will see what happens in May in future calls.

Yeah. And I give you guys credit for that, I mean, you are very reliable as it relates to that. So I kind of use that as a bottom number in my own assessment. Listening to you guys talk about the FilAMed acquisition that you announced back in February and even looking at that press release, it mentioned something about how it allows you the opportunity to enter the acute care market. You kind of pitched this and announced this as an acquisition on the DME side of your business. But, I mean, it sounds to me like it presents what I would consider perhaps a materially relevant new therapy on ITS side. Is that a fair way to think about it?

Yeah. So, we’d say, new therapies especially in the ITS that’s kind of a fitting way to describe it or to categorize it. On the DME side, it’s usually more products and more services. It’s just different language based on the platform itself. I think FilAMed fits into the DME side as effectively a new product or service. The biomed offering for us is a capability that we already have, right? We already work on our pump fleet of a 100,000 plus pumps in addition to customer devices. With FilAMed, it allows us, you are right, to get into the acute care market, the hospital market with enhanced capabilities on existing pumps, pumps we already fixed, as well as devices that we didn’t currently have the skill set for. In today’s market with everything going on with COVID and the crunch on hospitals financially, what we are going to see and what we expect to see is that hospitals aren’t going to have the capital to go out and buy new devices. They are going to want to keep their existing fleet and repair them, maintain them, inventory them and the FilAMed acquisition allows us an entry into the acute care market to do that for them. So, I think, it’s perfect timing for the acquisition. It was certainly opportunistic. But I think, Carrie mentioned it, it is without a doubt potentially $10 million, $20 million, $30 million in revenue over time, over time meaning three years, five years, six years from now.

Okay.

And it’s without a lot of -- there’s no huge upfront investment, right? We are not buying devices. It’s really just manpower to get out there and do the maintenance and service on the devices.

Great. Then final one for me, you mentioned, it sounds very promising with the addressable market so for this new therapy in the first half of 2021. And it sounds like in your response to Brooks you have got a promising pipeline there and I am just wondering if we should expect maybe in the back half of the year another therapy or you kind of -- to be added to the ITS side, are you looking kind of further down the road for that? What’s the timeline looking like there for you?

Yeah. So, we are not really forcing a timeline on new therapies for a couple of reasons. Number one, we could come up with a new therapy and a new device almost every month for the next two years if we wanted to, but if we don’t execute on it what’s the point, right? So, I think what we are looking at is, we are going to be methodical and deliberate on rolling out new therapies. We are not in any rush especially if there’s an opportunity in Negative Pressure here in the short-term and that we have to focus and energy there. But we want to rollout a therapy. Carrie is going to make sure that on the back end we are efficient, when we have everything in line so that we are really up and running during the rollout. Once we get to that point, then we are more willing to kind of roll the next therapy in. So, it will depend on the next one and that’s kind of how it will be. It -- the next one will depend on the one we just rolled out and how fast we get it up and running, and how successful it is before we rollout future ones. That being said, can we rollout one in the second half of the year? Sure. I mean, if we think that it’s something that really just kind of lays into our existing infrastructure, and to Jim’s point, leverage our existing team and infrastructure that’s in place, then it’s easier to rollout. Yeah, it’s not crazy to think we will have one in the second half of the year. But I don’t want to put a timeline on it either. I want to make sure that Negative Pressure is up and running, pain continues their momentum, which is they are at a torrid pace right now and that the next their therapy really gets up and running and integrate on the back end of our system and then we will talk about the next one.

Okay. Sounds like a good approach. So just a clarification, we -- Cardinal approached you guys and it sounds like from what you said earlier that that’s kind of happening more and more now on this side of things that you are being approached by others. Is that -- did I hear that correctly?

Yeah. So it’s both. There’s some markets we want to get into that we think we have some real core competencies that we can do some damage in that market. But there’s a lot of manufacturers coming to us for help, whether it’s on the logistic side, the sales team relationship side, our operational capabilities, our revenue cycle capabilities. It’s any and all of the above. So, like I mentioned earlier, I wouldn’t say, it’s unlimited, but it kind of feels that way, some days that there’s a lot of opportunity out there and now it’s the trust in the team to pick the right one for the next one and I have 100% faith that we are going to do that and we are going to execute on the next therapy.

Great. You certainly have the track record to speak to that. So look forward to watching this play out and seeing what happen this year. Thank you, guys.

Thanks, Aaron.

And our question today comes from Douglas Weiss with DSW Investment. Please go ahead.

Hey. Good morning. I wondered if you could lay out a little bit more on the wound therapy side. How that $600 million addressable market breaks out in terms of third-party providers and doctors who were just buying devices directly. So, in terms of what -- where you see the competition and what you see is directly addressable market?

Yeah. So the $600 million is actually a piece of the overall wound care market. This is specific to negative pressure and it’s specific to patients going home. So leaving the hospital and going home. There’s a -- it’s probably about a $2 billion addressable market, if you count patients at home patients, patients in the hospital and patients that stepped down in long-term care facilities as well. We are focusing 100% on just the patients that are being discharged from the hospital and going home with their device, and that’s where the $600 million market comes in, so it’s kind of a breakdown of the bigger wound care space. In that space, it’s because its patients going home, there’s four or five players. Obviously, us with Cardinal, we expect it to take some share over the years. The biggest player in that market by far is KCI, which is now owned by 3M. They have owned the space for years. They are like we are in Oncology, in the Negative Pressure space. So that’s really the big competitor. The hospitals do buy their own devices and they own them outright. But that’s not really part of the market we are going after, because that’s inpatient acute -- in the inpatient acute care setting. We are really going after outpatient in the patient’s home.

Okay. Thanks. And what do you expect as far as capital investment to reach if you get to that 5% to 10% level?

Certainly, our capital investment will be less intensive than in the past as we have more revenue streams that are -- that don’t require devices in that. That said, as we are growing in the 20% range, as we -- I think, we have said before, we are in the consumer of capital, we don’t have quite enough cash flow to cover like the needs for buying devices and that. While we are growing at the current rate or in the mid double-digit rate, we definitely would generate cash. We don’t need the -- we will -- we don’t need to buy as many devices in that -- in those cases. Hope that helps.

Yeah. Is it possible to speak directly to the wound care investment in terms of what it would cost to -- what it will cost?

Yeah. I think I can answer that. So, the devices are a couple of thousand dollars. We have only been in that market for a year, so we don’t know what the life span is going to be. Our infusion pumps we depreciate them over seven years. Some of them last 10 years or 12 years. But for every new patient, because we didn’t have to go buy a whole bunch of them and stick them on the shelf. So as we get new customers and new patients we go and buy new devices. The way it works in the pump side is, basically for every dollar you spend on a pump in the first year that’s what you are going to get back in revenue and then obviously the pump lasts another six years to 10 years. So the economics get a lot better after year one. I would say it’s similar if not even faster on the negative pressures. The reimbursement is just more. So the device is a little bit more, but the reimbursement better. So, same kind of thing, for every dollar Negative Pressure revenue roughly in the first year of new revenue you are going to spend about $1 on a device.

Okay. And then in terms of the guidance, it looks like, so you are guiding to a similar margins on the incremental revenues that you are forecasting on an EBITDA basis. It looks like your margins can be pretty flat and maybe up slightly. Can you just explain -- my understanding was a lot of these new revenues were leveraging your existing infrastructure and would be higher margin. So, I guess, if you could just talk to that.

Yeah. So, for my contribution margin perspective, we -- the ITS segment is -- from a gross margin perspective in the 60% range. However, we do need to add clinicians, revenue cycle team members and other things and there will be commissions and things like that that will add to our SG&A. That said, we see as we add revenue a higher contribution margin than the current EBITDA margin. We do have to make some investments in the infrastructure to grow, to manage higher volumes that will happen over time. But generally speaking, we don’t see it as a need to make significant SG&A investments to add new therapies. That’s where we get the leverage. So our expectation is that, our EBITDA margin will grow steadily, if not double digits, but it will grow steadily and it will improve as we have the new revenue.

Okay. Okay. Thanks. Nice quarter.

And ladies and gentlemen, this concludes the question-and-answer session. I’d like to turn the conference back to Rich Dilorio for closing remarks.

Thanks, Rocco. I’d like to thank everybody for participating on today’s call. I hope everyone has a good day and I look forward to talking to you again when we report our first quarter 2021 results. Please stay safe and thank you.

And thank you, sir. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.