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INFU - Regime Change Needed Here.

|Includes: InfuSystem Holdings, Inc. (INFU)

Infusystems pace of business development has been disappointing since it was bought out of I-Flow in 2007. As a long time shareholder it has been a frustrating and unprofitable 'long' position. Despite operating in an attractive growing oncology market, being the largest provider, and making acquisitions to bolster the growth profile, there has been little to show for this on an earnings and cash flow basis.

The current management team, now led by Sean McDevitt (previously Chairman, now CEO & Chairman) has struggled to execute consistently. Be it acquisitions, internal growth or gross margins, investors who listened to managements' Q2 & Q3 2011 conference calls would have heard a variety of explanations/excuses as to why earnings and cashflow have failed to meet expectations. Listen to the calls! The only P&L line item that materially and consistently exceeded forecast is G&A including stock compensation.

Gross margins have fallen pretty consistently over the past two years, due to acquisitions and business mix changes. The acquisitions to date have resulted in material amortization write-off's in 2010 & 2011, illustrating some combination of managements' excessive optimism, poor deal-making judgment or failure to manage the business effectively.

These transactions may have helped overall revenue growth (the metric that management choses to focus on in their recent press releases), but organic growth (arguable a better reflection of how a company is being run) has been anemic over the past 24 months. Cashflow has been only slightly better. EPS has been de-minimus.

Investors' and Wall Street analysts' confidence in management is pretty low. The recent proxy solicitation efforts by major shareholders in December has been rebuffed by management, however, as shareholders we get the opportunity to pass judgment through making our votes count. I know how I will be voting....time for change.

Disclosure: I am long INFU.