InfuSystem Holdings Inc. (INFU) CEO Rich DiIorio on Q1 2022 Results - Earnings Call Transcript

May 07, 2022 4:57 PM ETInfuSystem Holdings, Inc. (INFU)
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InfuSystem Holdings Inc. (NYSE:INFU) Q1 2022 Results Conference Call May 5, 2022 9:00 AM ET

Company Participants

Joe Dorame - IR, Lytham Partners

Rich DiIorio - Chief Executive Officer

Barry Steele - Chief Financial Officer

Carrie Lachance - President and Chief Operating Officer

Conference Call Participants

Alex Nowak - Craig-Hallum Capital

Brooks O'Neil - Lake Street Capital

Jim Sidoti - Sidoti & Company

Aaron Warwick - Breakout Investors


Ladies and gentlemen, good day, and thank you all for joining this InfuSystem Holdings Q1 Fiscal Year 2022 Financial Results Conference Call. As a reminder, all participants are in a listen-only but later you will have the opportunity to ask questions during our question-and-answer session. Also, please be aware today's session is being recorded.

To get us started with opening remarks and introductions, I am pleased to turn the floor over to managing partner with Lytham Partners, Mr. Joe Dorame. Welcome, sir.

Joe Dorame

Thank you, Jen, and good morning, and thank you for joining us today to review the financial results of InfuSystem Holdings, Inc. for the first quarter of 2022 ended March 31, 2022. With us today on the call are Rich DiIorio, 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'll open the call for questions. 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 or numerous other financial websites.

Before we begin with prepared remarks, I would like to remind everyone that 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 in 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, 2021. Forward-looking statements speak only as of the date of 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 DiIorio, Chief Executive Officer of InfuSystem. Rich?

Rich DiIorio

Thanks, Joe, and good morning, everyone, and welcome to our first quarter 2022 earnings call. Thank you all for taking the time to join us this morning. I'm pleased to be here today reporting on the strong start to the year.

Revenue for the first quarter was on plan, even with some rather frustrating delays to important new businesses that we will discuss in a moment. Our top line grew by 9% over the prior year quarter, led by our DME business, which grew revenue by 18%. In the quarter, our operating cash flow was especially notable, increasing by 54% compared to the prior year, proving once again the excellent cash flow characteristics of our business.

Our business is strong, and we are steadily improving the Company's prospects and ability to deliver long-term sustainable growth. We are very well positioned to participate in several macro trends, including the growing movement toward maximizing opportunities to shift treatment from clinics and hospitals to the patient's home. That trend drives demand for the last-mile solutions offered by our ITS segment.

Another favorable trend is the increasing demand for expert outsourced services. This trend is currently very relevant to our DME business unit. Coming into this call, the biggest piece of news for the Company is the recently announced deal involving our DME segment. As reported last week, InfuSystem has signed a three-year master service agreement with GE Healthcare.

Having finally signed this long-awaited contract, we have begun to onboard the work that we've been preparing to execute on since the second half of last year. Before going into details of the agreement and the potential it unlocks, it is important to note that we've been working towards this opportunity since 2020.

That year, we conducted an internal review that revealed the high return characteristics of our biomed services offering. The high return is the result of two things: first, InfuSystem's concierge model, which specifically pursues high-margin opportunities where the customers are especially concerned about quality. And second, the low capital investment required, the infusion tools used by our technicians are relatively inexpensive, and they are only needed to be acquired once.

At that time, InfuSystem had a highly certified and very well-regarded biomed team but the vast majority of the work they did was on our own fleet of devices. The strategic decision to expand upon that existing small base of business led in early 2021 to the acquisition of two Biomed services companies. One extended our capabilities beyond infusion pumps and the other one gave us significantly increased access into hospitals, most especially because the Company had an existing relationship with GE Healthcare.

Almost immediately after the capabilities of the two biomed companies were combined with InfuSystem's greater resources, national reach and proven track record, we began seeing that we had created something with truly exciting potential.

One more piece of background information. Historically, our DME segment has conducted its business in the home health care market. This suited us well when we were smaller. But as we grew larger and more capable, we were very aware of our lack of access to the acute care market and the business opportunities relating to literally millions of medical devices inside of hospitals. We bought one of the biomed companies in 2021, hoping that it would open doors to some hospital business, and it did.

As part of the GE Healthcare MSA, we'll be providing our white glove biomed service in 1,200 medical facilities, including 800 hospital systems in the U.S. and Canada. GE Healthcare's preferred customer's infusion pump fleet consist of more than 300,000 pumps, and we estimate revenue under the contract will ramp to approximately $10 million to $12 million in annual revenue. Our biomed services will include annual preventative maintenance and repairs conducted on-site at the hospital or off-site at one of our seven service centers.

This is, of course, an excellent way to get started on our dual strategies of expanding our biomedical services business and expanding the reach of our DME segment into acute care. And I emphasize the word start. Having become a national partner to a Tier 1 global health care equipment and service provider, we hope to see many more opportunities open up to us. This includes additional opportunities with GE Healthcare, other large medical device and services companies and with our hospital customers.

I've been saying for a while now that I believe our biomedical services business will likely be the first to catch and pass the revenue contribution of our Oncology business. And I believe that now more than ever. Although the GE agreement took considerably longer than we anticipated to get across the finish line, we are very excited to have begun operating under the contract this week, and things are going great.

Turning to our Integrated Therapy Services platform. We saw a growth of 5% with solid gross margin of 64.5%. Our Oncology business had a record quarter for patient treatments in the first quarter with this signaling a potential for a post-COVID return to normal patient treatment levels. While March was strong, the early months of the quarter were impacted by Omicron with our Pain business again being the most impacted.

But as Omicron waned, Pain Management and Wound Care gained traction and delivered 13% revenue growth for the first quarter. The Pain team treated a record number of patients in March, which is exciting as we head into the second quarter. We remain excited and very optimistic about the future prospects of these two therapies.

So our top line momentum is strong, particularly following the signing of the GE agreement as we begin to onboard a significant amount of new revenue. Questions are certain to turn next to the health of our bottom line. Twice last year, we made strategic -- made a strategic decision to invest in building our business to capture and hopefully accelerate opportunities for long-term sustainable growth. Midyear, we added to our sales teams in Pain and Wound Care, and then toward the end of the year in anticipation of the GE business, we invested in building up our biomed services team to be ready to ramp our services as soon as the contract was signed.

As a result of these investments, our cost structure is higher, and our current adjusted EBITDA margins are lower than they would be without the investments in the growth. This situation will continue until the anticipated revenue begins to flow through. As discussed during our last earnings call, we expected that we would see incremental Pain and Wound Care revenue appearing before the end of last year, but that expectation was foiled by the appearance of Omicron and delays related to the timing of some new business wins.

As discussed above, our strong March month and continuing momentum in our ITS segment, together with even stronger momentum in the DME segment plus the GE contract, all come together to support our expectation that revenues will increase over the next few quarters sufficient to offset the cost of the investments made last year. Return on our growth investments were delayed, but they're still coming. And now with the big contract signed, we can talk about what we've been investing in and why.

I firmly believe the strategic investments we made last year have made the Company stronger and our future that much brighter, and I'm confident that this will be apparent to everyone in coming quarters. In summary, we remain confident in the long-term growth potential of the business. and we see this confidence supported by the solid momentum in our ITS and DME platforms coming out of the first quarter of '22.

Led by our core Oncology business displaying solid growth, with our Pain Management and Wound Care therapies gaining traction, our ITS segment is doing exactly what it should be. At the same time, our DME segment now led by our biomed service business, is in position for long-term sustainable growth beyond anything that could have been imagined for the segment just one year ago.

We are now working to leverage the new GE Healthcare relationship in order to capitalize on an opportunity set that we believe is as big for biomed and DME as any of the therapies being pursued in our ITS segment. This is an exciting time at InfuSystem, and we are well positioned for multiple growth opportunities. We strongly believe in our business model, and as a result, we recently took the opportunity to purchase approximately $4 million of our common shares in the open market. At these levels, we believe our stock represents a great investment and a good use of capital. Although our main priority is to utilize our capital to grow the business, we are prepared to be opportunistic when the price is right.

Looking forward, we are projecting our annual full year 2022 guidance for revenue growth to be within the range of 15% to 20% or approximately $118 million to $123 million in net revenues. And adjusted EBITDA to be within the range of $24 million to $27 million. We are forecasting adjusted EBITDA margin to be in the range of 20% to 22% for the year. Our guidance for 2022 takes into account biomedical services revenue under the GE MSA commencing in May and then ramping into next year. In addition, we have accounted for the possibility of scenarios outside of our control. For example, another COVID surge that may affect Pain or any new long-term supply chain disruptions. Even if these were to occur, we are comfortable that we will be within our range of $118 million to $123 million of top line revenue.

Now I'd like to turn over the call to our CFO, Barry Steele, who will provide a review of our first quarter financial results.

Barry Steele

Thank you, Rich, and thank you, everyone, on the call for joining us today. I'm going to focus on three topics. The main drivers for the current quarter's results, details related to the net revenue and profitability outlook for the rest of the year, including assumptions for the new GE biomed contract and the status for our financial resource reserves.

First, let me touch on our financial results for the first quarter, which was largely a repeat of the 2021 fourth quarter with one exception, which I'll mention in a minute.

Net revenues for the first quarter of 2022 totaled $26.8 million, representing a more than 9% increase from the prior year first quarter. This amount was a record and slightly ahead sequentially from the 2021 fourth quarter revenue, which was $26.5 million. The main growth drivers included revenue from the acquisitions, which rose to $1 million during the 2022 first quarter, increases in Pain Management and Negative Pressure Wound Therapy revenues and strong treatment volumes and patient collections in Oncology.

The Pain Management net revenues grew despite headwinds caused by disruptions related to Omicron variant of COVID-19 in January and February and the Negative Pressure Wound Therapy net revenue included two small equipment capital leases. Preparations for the new large biomedical services agreement continued to create additional costs during the quarter, totaling $800,000 in both cost of sales and general and administrative expenses that slightly diminished our gross profit and adjusted EBITDA margins and increased our G&A expenses. These expenses include both an increase in our workforce on the biomed team and expenses associated with the development of specialized business software, which will be used in the contract.

Three additional factors unfavorably impacted profit margins, and they include the following. First, we had increased expenses totaling $400,000 as compared to the prior year first quarter and as compared to the 2021 fourth quarter related to increased travel expenses, industry conferences and other annual meetings, which are now being held in person for the first time since the outbreak of COVID. We expect some of these expenses to moderate in the coming quarterly periods due to the typical timing of annual marketing events being concentrated in the first quarter.

Second, we incurred additional costs totaling $1 million related to the increased sales team and marketing efforts for Negative Pressure Wound Therapy and Pain Management, which started during the second quarter of 2021. A portion of this increase totaling $600,000 was included in selling expense with the remaining amount included in G&A expenses. The amount was slightly higher than the 2021 fourth quarter mainly due to additional marketing expenses.

And finally, the one exception I mentioned earlier, the 2021 fourth quarter general and administrative expenses included a reversal of a portion of an accrual for the 2021 short-term incentive bonus program, which was not repeated during the 2022 first quarter. The total difference in expense between the two periods was $1 million. Partially offsetting these were a decrease in our stock-based compensation expense due to a reduction in estimated performance restricted stock valuations and lower intangible asset amortization expense resulting from certain assets becoming fully amortized during and prior to the current first quarter.

As a result of these impacts, particularly the added investments in our IT sales force and our investment in the biomed teams, our adjusted EBITDA was $4.1 million or 15.5% of net revenue during the 2022 first quarter. This amount was $2 million lower than the fourth -- the first quarter of 2021 and $2.4 million lower sequentially from the 2021 fourth quarter. Take away the added expenses and adjusted EBITDA would have been $1.8 million higher and the adjusted EBITDA margin would have been just over 22% of net revenues, which is much closer to a normal adjusted EBITDA margin, which we expect to see in the coming quarters as we generate new revenue that will begin to absorb these expenses.

That is, in the short term, additional revenue will be highly accretive given the cost base is already in place. That takes me to the subject of the outlook for the rest of the year. So let me -- but let me share some details about the new biomedical services contract with GE Healthcare, which is very important to the outlook for 2022 and beyond. In this contract, we will be providing repair and maintenance services, including annual preventative maintenance for what we estimate to be a majority of the infusion pumps for GE Healthcare's customers. The work will be performed both locally in customer facilities and at our seven existing biomedical depots in the U.S. and Canada.

But these include a fixed annual mile for each pump under contract plus additional charges during the onboarding phase for repairs required prior to contract start and on an ongoing basis in certain special repair situations. In addition, we expect to generate additional revenue for the sale of some accessories. Services under the contract began earlier this week, are expected to ramp over a 15-month period and are expected to generate between $3 million and $4.5 million in revenue during 2022 and between $10 million and $12 million in revenue annually at full run rate.

Factors that could cause these amounts to vary include the volume of onboarding phase repairs, timing of the ramp schedule, the number of devices eventually coming onto contract and the amount of required accessories.

As Rich mentioned, we are forecasting 2022 net revenue to be between $118 million and $123 million, which represents an increase over net revenue during the prior year of 15% to 20%. In addition to the GE contract, our 2022 revenue outlook includes several additional but smaller biomedical service arrangements that are set to launch during the second and third quarters and continued growth in all three ITS therapies.

The growth for negative pressure wound therapy includes a handful of equipment leases, including at least one that is significant on a stand-alone basis. Factors that could impact where we fall within this range -- fairly wide range include the following: the GE ramp cadence, onboard timing for two large new Oncology customers, timing of the additional biomed opportunities, supply chain issues, timing of the large Negative Pressure Wound Therapy leases, impacts from additional outbreaks of COVID-19 that can unfavorably impact our Pain Management business, or a reduction in rental revenues if, God willing, additional outbreaks do not occur.

We have factored each of these items into our 2022 forecast model in a way that each factor can be both a risk and an opportunity, regardless of whether it is positive or a negative item. For example, variations in the ramp cadence for the GE contract could either be a benefit if we onboard devices quicker or unfavorable if that schedule is less than our base assumption.

As a result of these increases in revenue, we expect the adjusted EBITDA for 2022 to be within the range of $24 million to $27 million. Adjusted EBITDA margin is expected to be between 20% and 22% representing a significant recovery from the 15.5% amount during this year's first quarter.

The improvement will mainly be driven through absorption of the higher spending rate for the sales and biomedical teams, which have been put in place in anticipation of this revenue growth and additional leverage on our other current fixed costs. We expect to exit the year with an adjusted EBITDA margin run rate close to our normal rate in the mid-20s with additional accretion potential to be gained as the GE revenue continues to grow to the annual amount of $10 million to $12 million into 2023.

Turning to a few points on our financial position and capital reserves. We continue to be positioned well to fund net revenue growth, with strong cash flow from operations, backed by significant liquidity reserves available from our revolving line of credit and manageable leverage and debt service requirements. Our liquidity position was relatively unchanged during the first quarter despite having repurchased 310,000 shares of our common stock. Strong operating cash flow totaling $4.1 million essentially funded the stock repurchase, which totaled $4 million, whereas borrowings of $2 million on our revolving line of credit covered $2.1 million in net capital expenditures.

Operating cash flow improved 54% over 2021 due largely to a reduction in the annual short-term incentive plan payments. Our net debt increased by $1.6 million to $34.5 million and our available liquidity totaled $39.8 million at the end of the quarter, which represented a decrease of $1.2 million.

A combination of the increase in our total debt and lower first quarter adjusted EBITDA caused our ratio of total debt to adjusted EBITDA for the last 12 months to increase modestly to 1.57x at the end of the quarter as compared to 1.37x at the end of the 2021 fourth quarter. Most of this increase is attributable to the $4 million stock repurchase, without which we would have paid down the revolver and closed with a ratio of only 1.39x.

Our debt primarily consists of borrowings on our revolving line of credit with no term payment requirements, almost four years remaining on its term and $20 million of which is protected from increasing interest rates through an interest rate swap having the same tenor. Notwithstanding the strong financial position, our growth capital needs are expected to be lower as compared to historical growth periods. This is because the capital equipment investment requirements of our biomedical services business are relatively small compared to our ITS business.

And with that, I'd like to turn it back over to Mr. DiIorio.

Rich DiIorio

Thanks, Barry. We are building the Company into a leading health care service provider, helping people live longer and healthier lives with our last-mile solutions and unique business offerings enabling the continuity of care for patients with our two service platforms. We are seeing clear progress as we start the year with solid performance in both platforms.

And I want to emphasize that we have a relentless focus on executing our strategic growth plans, driving operational excellence and building on our momentum for the balance of 2022 and beyond. We are transforming the Company for long-term success with a patient-first culture to improve patient outcomes that will create value for our loyal shareholders.

And now with that, we're happy to answer any questions.

Question-and-Answer Session


[Operator Instructions] We'll hear first from Alex Nowak at Craig-Hallum Capital.

Alex Nowak

Great. Appreciate the initial launch of the 2022 guidance. There was a lot of detail there. I got the $3 million to $4.5 million inclusion for GE. But I guess I just want to kind of break out what are the growth assumptions for the ITS business, growth assumptions for DME, sans biomedical but also including biomedical in there? And then maybe just an update on where the Pain and the Wound business is for ITS, what the run rate is and where that run rate is going to go this year?

Rich DiIorio

Alex. Good question. So the growth for the year is going to come -- basically, it's going to be split down the middle. It's about half out of ITS and half out of DME. So on the DME side, it's going to be a little bit of kind of our core DME business, right? Our rentals and sales will grow at a mid-single-digit number. And then a lot of it will come out of the GE agreement, right, the $3 million to $4 million or so this year. So that's going to be half. The other half is going to be out of ITS. We know Oncology doesn't grow a ton, but again, mid-single digits and then you add in the Pain and Wound Care.

I actually think Pain is going to probably outpace Wound Care this year, even with the first couple of months being effectively offline with Omicron. They had such a good month in March that we're kind of seeing what this business can do without all the noise of COVID. That being said, we don't know if another wave is going to hit us and take them offline, but we don't see that today, although we have accounted for it in our guidance. So it's about half and half, half DME, half ITS. ITS mainly being driven by Wound Care and Pain and a little bit from Oncology, and DME driven quite a bit by the GE contract.

Alex Nowak

Understood. That's helpful. And then the run rate for -- it was originally pegged for, I think, $12 million to $15 million for last -- due to Omicron, we came up short on that. Any updates to that number and where we could head through the end of the year? I know we can run through the numbers in the model, but just curious what you're seeing.

Rich DiIorio

Yes. So I think by the end of the year -- I don't have the model in front of us, but I think by the end of the year, the combined run rate of that -- those two is pushing almost $20 million in annual revenue.

Barry Steele

Yes. The one thing to throw out there, though, is that we do have these, as I mentioned, large capital lease opportunities, which will -- that run rate will jump around a little bit based on the timing of those.

Alex Nowak

Okay. Understood. And it sounds like the GE agreement did morph a little bit at the end here to become a master service agreement and there's potential to add some additional products on there. So maybe some background: what could be added where that number could go through from the, I guess, annual revenue potential?

And then the other biomedical contracts that you have under works. How large are those? Are any big ones such like a GE-like contract in there?

Rich DiIorio

Sure. So you're right, the MSA basically gives us preferred vendor status with GE. So the current statement of work is for this contract that we've talked about that we were waiting for. There are other opportunities, not really in the infusion pump space, but more in other devices. So if you remember, the two acquisitions, right? One was OB Health, it gave us the entree into GE and the hospitals.

The other was FilAMed, which gives us entree into other devices. So that's really the growth capability under that GE contract over time. It doesn't mean we're going to get it. We have to go and prove ourselves to GE and prove that we can be a good partner and execute and provide the quality of service we expect to provide. But there's definitely upside there.

I can't put a number on what it means. I mean it could be $1 million more, it could be $10 million more, I don't know. As far as other biomed contracts. Is there another one sitting out there that's $10 million or $12 million a year? Not something we see today, but there are manufacturers that are coming to us to help them with issues that they're having with their devices, getting on site to repair devices.

There's some big hospital systems that we're talking to for big deals -- not to the magnitude of $10 million to $12 million, but they're certainly in the hundreds of thousands, if not low single-digit millions. And that's why this opportunity is exciting, and that's why I continue to believe that biomed services will be the first to catch Oncology from a revenue standpoint, and that will be over the next couple of years, I think.

Barry Steele

Yes. The couple that I mentioned in talking about the forecast there, they're in that single-digit millions for the year.

Alex Nowak

Okay. That's helpful. And then what do the gross margins and, I guess, operating margins look like for the new biomedical businesses that are coming online?

Barry Steele

Yes. So if you look at the way that, that is structured, the DME segment is lower gross margin, and these will be towards the lower end of the range of products within the DME segment. The good thing, though, is there's not a lot of G&A. So they are still viewed as accretive to our EBITDA margin at any point -- and not the EBITDA margin we just had for the first quarter, but our normalized EBITDA margin.

Alex Nowak

Okay. Perfect. And then just lastly, we've seen a number of payers make acquisitions and investments centered around at home care, such as UNH acquiring LHC. While I know that doesn't necessarily touch Infu2's business, just could you talk to the macro environment out there for the last mile -- care, what you're seeing in the market?

Rich DiIorio

Yes. I mean it's what you've heard everywhere, right? And exactly your point about UHG and LHC. I think it was already moving that way. And I think we've probably talked about this in the past. But the market was already going that way. I think COVID just gave it a push, right? So the patients wanted to be home, devices got smaller and more capable to be transportable.

And then what people realized with COVID is that there were a lot of people in hospitals that didn't need to be in hospitals, right? So they came to that decision when they needed the space for COVID patients. But the reality is there were a lot of people spending nights there that didn't need to be spending nights. So what we're starting to see is hospitals realizing that and payers starting to realize that and actually incenting people to go home. And as that continues and accelerates, that puts us in a perfect position.


Our next question will come from Brooks O'Neil at Lake Street Capital.

Brooks O'Neil

Congratulations on the strong start, and I personally am very excited about the outlook for the Company. I have a couple of quick questions. First, labor is one of the big hot buttons out there in the broad economy today. Can you just comment on whether you're seeing difficulty hiring the people you need to grow these businesses?

Rich DiIorio

Yes, that's definitely the question of the quarter, Brooks. It's definitely tougher than it used to be, but certainly not impossible. I think we're fortunate that we offer great benefits and programs for our teams.

So we get to retain a lot of our people. So we don't have a lot of turnover to start. So we don't have to backfill a bunch of positions, which helps us, right? We're at a better starting point. Yes, certainly, we've had to put up some incentives to people -- for people to kind of walk in the door and interview. But once they go through that process, we've been able to find everyone we've needed to find. So we don't have any real open positions that have been sitting out there for months.

Maybe where it used to take 30 days, it takes 45 or 60 to get people in. But it's not easy, but our HR team and our hiring managers have done a great job bringing in good talent and really improving the team even in the last year or two when it's been difficult just to keep steady for a lot of companies. So we're pretty fortunate.

Brooks O'Neil

Yes. Good for you. The second question, so excited about the growth of DME. Hear everything you guys said about that. Could you just talk about how you sell in the DME marketplace or whether these opportunities are just knocking on your door? I'm just curious about the environment out there.

Rich DiIorio

Yes. So it's a little bit of both. I think when we're talking about big companies like GE or big manufacturers that need help with their devices in the marketplace, a lot of those guys come to us, right? They know that we're in the space. They know we've been around for so long that they know the quality that we provide and on the service side and the team does a phenomenal job. So I think in that case, a lot of it comes to us. On the hospital side, it's us going to them, right? It's kind of old fashioned salesmanship and knocking on doors and making phone calls and talking about our offering.

The good news is we're in a lot of hospitals already, right? A lot of our 2,100 Oncology customers are hospitals, a lot of our Pain Management customers or Negative Pressure Customers are all hospital-based. So we already have an existing relationship, which helps us open the door a little bit. It just makes it a little bit easier. It's certainly not easy, but it makes it easier. So it's a combination of the two. I would say at the hospital, at the customer level, it's old-fashioned selling. When it comes to big manufacturers and big health care providers, to a degree, they come to us, which is nice.

Brooks O'Neil

That's great. Okay. Just one more quickie. Excited to see the stock repurchase. Do you think that will continue here in 2Q or during 2Q? Or how you feel about your ability to continue buying stock in the current valuation of the shares?

Barry Steele

Brooks, this is Barry. Certainly, we will -- we view the current price even today as being attractive. Certainly, the intrinsic value of this company is much, much higher. I mentioned that our liquidity position is very, very strong. We do have some limitations on how much we can buy back, and our buyback program of $20 million was supposed to be over three years. We've brought in over $4 million now, $4.6 million I think. So I think that you'll probably see some buy at some point, but that will -- we'll keep quiet when and how much so that we can get the best price possible. Because the strategy is to get the lowest price possible.


Our next question today comes from Jim Sidoti at Sidoti & Company.

Jim Sidoti

Again, back to the GE contract. Who was providing the maintenance on this equipment before you guys got this contract?

Rich DiIorio

Yes, a little bit of everything. So GE has some of their own people that they were providing the maintenance on. They tend, especially with it being a challenge to keep and hire people, they want to put those guys on the higher ticket items, the imaging equipment, those sorts of things. Some of the hospitals were doing it themselves. They used some regional providers. This was a way to consolidate all that and give a nice offering to their hospitals.

Jim Sidoti

And the way the contract is written, if things work out on the infusion pumps and you work out a deal with GE for other equipment, do you have to go back to the drawing board and start a new contract? Or can you just expand this one?

Rich DiIorio

Yes. So that's a great question. So the MSA is in place. So the ability to do business with GE was really the longest part of this process. So that's in place now, and we're kind of under that umbrella. At this point, if they call us and they want us to work on defibrillators, we add a new statement of work with the pricing and the time frame and we're off and running. So it's much, much easier now to layer in new products and services.

Jim Sidoti

All right. And then with regards to the outlook for 2022, can you talk about what you expect for cash flow?

Barry Steele

We haven't disclosed that today. Clearly, it would be strong because it will be -- we're right along the lines with the higher EBITDA than we had in the first quarter. Keep in mind, too, that the higher amount we had in Q1 will certainly not impact future quarters in terms of being lower, right? So the benefit that we have will continue to be for the full year.

Jim Sidoti

And what are your thoughts regarding cash? You talked a little bit about potentially buying back some more stock. But would you rather use the cash for additional acquisitions to add capabilities or do you see yourself using it to pay down debt?

Barry Steele

Yes. So the nice thing is our debt is all revolver. So if we have extra cash flow, we'll pay down debt. I don't see that as a high priority. Even buying back shares isn't a high priority in the normal course -- when our stock is trading way below intrinsic value, we definitely see that as attractive. But our first priority is to invest in the business, which is a little bit less capital intensive, which makes it nice. We can do more things. But investing in devices that we need to grow Pain and Negative Pressure -- even Oncology -- is our highest priority. And potential acquisitions are certainly being considered as well.


Our next question today will come from the line of Aaron Warwick at Breakout Investors.

Aaron Warwick

Thank you for the guidance. Looking forward to the rest of the year. On the EBITDA margins, given that it was low this year for the reason -- excuse me, this quarter for the reasons you stated and then the guidance for the rest of the year -- so what should we be thinking about as you get towards the back half of the year as sort of the normal run rate on those margins?

Barry Steele

Yes. That's what we mentioned is that as we get to the -- in the coming quarters, certainly has to go up a lot for us to hit the full year guidance, but we expect to end the year at a pretty close to normal rates, which is in the mid-20s in terms of percentage.

Aaron Warwick

Do you think there's any room to go up beyond that? Or is that sort of the way your -- steady state going forward even?

Barry Steele

Yes. Always our goal to do that and the way we build our model, we have contingencies in there that we sometimes need, sometimes we don't. So I think that we're giving ourselves the ability to be successful on the guidance, for sure.

Aaron Warwick

Great. Great. And as it relates to that, the service agreement with GE. Congratulations on that. We had talked earlier about it, I think, more privately and you just sort of indicated you were real happy about the way that, that came together and the terms you had. And then of course, after that, it took several more months for the contract to be finalized. I'm just wondering, are you guys still -- did anything change as it relates to the terms of the contract? Is it still something you're quite pleased with? Or were there -- it was just a matter of waiting on them to execute the agreement?

Rich DiIorio

Yes. I mean if you go back and look at GE, what they decided to do, I think it was back in November, December split into three entities. That might have been the single biggest hold up, right? I mean, when you're trying to get lawyers' attention, they're breaking up into three public companies, it's a tough swim against the tide. Yes, I mean we wouldn't have signed the agreement if the terms weren't good. It's -- as tough as it would have been to come back to you guys and said we walked away from the agreement, we would have done it. At the end of the day, we want to grow, but we want to grow smartly and profitably. So we believe the terms are good and we're looking to some -- looking forward to some really fun things with GE in the future.


And at this point, I would like to turn the floor back to Mr. Rich DiIorio for any additional or closing remarks.

Rich DiIorio

Thanks, Jim. I want to thank everyone for participating on today's call. I hope everyone has a great day, and I look forward to talking with you again when we host our second quarter call.

Please stay safe, and thank you.


Ladies and gentlemen, this does conclude today's financial results. We thank you all for your participation. You may now disconnect your lines, and we hope that you enjoy the rest of your day.

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