Infusystems Holdings, Inc. · AMEX:INFU
Infusystems — InfuSystem Holdings — Proxy Contest (July 2018)
26 slides from Infusystems's proxy contest presentation, Jul 5, 2018
Slide 1: InfuSystem Corporate Presentation
CInfuSystem INFUSION MADE EASY (NYSE: INFU) Corporate Presentation July 5, 2018
Slide 2: Forward-looking statements
Statements made in this presentation that are not historical facts are considered to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"
Slide 3: Additional Information and Where to Find It
Additional Information and Where to Find It Infusystem Holdings, Inc. filed with the Securities and Exchange Commission (the "SEC") on June 14, 2018 a definitive proxy statement in connection with the election of nomineesnominated by the Board of Directors for election as directors, and certain othe
Slide 4: Founded in 1986, InfuSystem rents ambulatory infusion pumps
Founded in 1986, InfuSystem’s business is based around renting ambulatory infusion pumps to health care providersin the oncology space infusion at home + InfuSystem pumps enables patients to leave the clinic and continue thei * Outpatient, at-home treatment substantially lowers the cost of care * In
Slide 5: Public since 2007; INFU's History Includes Three Distinct Periods
Public since 2007; INFU’s History Includes Three Distinct Periods 1. Team that acquired business via SPAC was pushed out by activist group in 2012 2. Morris (Chair) / Steen (CEO) pursued aggressive growth via acquisition; pump purchases, IT etc. 3. Refocus period following Medicare reimbursement cha
Slide 6: Refocus Period Began April 2017
Refocus Period Began April 2017 Major Initiatives Included + IT-corrected ever-expanding projects and costs (INFU is nota software company); reduced spend by > $1m * Billing and Collections — was never given strategic focus, now in process of being turned into a core competency + Finance —in process
Slide 7: Refocus initiatives and results
NOP WNP AEBITDA, or Adjusted EBITDA, isanon- GAAP financial measure. Adjusted EBITDA representsnet income (calculated in accordance with GAAP), excluding interest expense, income tax F expense, and depreciation and amortization, or EBITDA, as further adjusted to exclude stock compensation expenses,
Slide 8: Net debt decreased rapidly
aus ms Formation of 332 a Office ofthe 38 38.0 39.2 a President 380 = 3727, 78) i mt wpo3ZS3745— aS = J 36.0 4 | | ory Be 2520 safes A Bey >< y ; Pe ee Eee 2g Fg Roy oe FI FI ora et} 302 30.1303 . 290 A z A 2as204 280 Net Debt Net Debt decreased rapidly following mee formation of the Office of the P
Slide 9: New Management Team and Board
New Management Team and Board New Focused Leadership * C-suite — new CEO and CFO replacing former team of CEO, CFO, CAO, COO, CTO, CLO * Elevated functional experts to replace departed executives * Board will have 6 of 8 members with tenures of less than 2 years CEO and director since Nov. 2017. Beg
Slide 10: New Attention to Operational Excellence
New Attention to Operational Excellence Can be Seen in Pump Utilization Rates Data for Oncology Fleet 68% : [ 67.63% Pad ) 2017-02 2017-03 2017-04 2017-05 2017-06 2017-07 2017-08 2017-09 2017-10 2018-02 2018-04 2018-05 2017-11 2017-12 2018-01 2017 2018 10
Slide 11: Upcoming drivers of value
PONE Significant costs savings still in process of rolling through P&L Improved billing and collections have potential of $ millions add’l revenue and cash Incentive compensation is now keyed off improved cash flows Ongoing savings from rationalized IT and pump capex Ongoing conversion of customers
Slide 12: Oncology: Going on the Offensive for Market Share Gains
Oncology: Going on the Offensive for Market Share Gains CinfuSystem: Differentiation ° Safety — InfuSystem MOBILE — Smart Pump Technology ° Service — 24/7 Support — Patient/Customer Satisfaction * Cost — Per Dose Cost Under $19 — Elastomerics Cost More 12
Slide 13: Emphasizing Delivery of Highest Levels of Safety and Service
Emphasizing Delivery of Highest Levels of Safety and Service 1. Improved Safety For Patients 2. Increased Patient Touch Points 3. Pocket-sized Clinical Support CinfuSystem’ —MOBI|1UCER Clinical Support... Connected Portable (infuSystem [torsos | Tt one 96 eeatnonems i | o> AlnfuSystem B
Slide 14: IPD: Smart Growth
IPD: Smart Growth ¢ Refocused on Profitability * Reorganized department, reviewed clients, pared unprofitable relationships * Disposable sales profitability in 1Q of 2018 was up 6% from prior year period ¢ Finding Growth Opportunities — during just 2Q2018: * Agreed to expand existing pump rental rel
Slide 15: Pain Management and Pump Sales
¢ Pain Management Business is slowly but steadily ramping Adding sales reps at measured pace New relationships with major health centers Progress despite efforts being hampered by last year’s Puerto Rico hurricane which damaged key industry manufacturing facility ¢ Pump Sales Have long been a variab
Slide 16: Peer group comparison
Ekso Bionics Holdings, Inc. (NasdagCM:E KSO) NasdagCM:EKSO $96 5 ry ‘Sharps Complance Corp. (NasdacCM:SMED) NasdagCM:SMED $ = 56 $ 1 BS 43 13x 6 Exes Hamiton Thome Lid. (TSXV:HTL) TSXV:HTL S$ ats 6 14ix $29 28x § 3 30.1x Electomed, Inc. (AMEX:ELMD) AMEXELMD —$ 33 s ) Profound Medical Corp. (TSXV:PRN
Slide 17: April 2012: activist group wins control of INFU
April 2012: activist group wins control of INFU...dog catches car...now what? Hired Houlihan Lokey to sell company; found no buyers - small, niche-company, concern over reimbursement risk Morris made very short-lived offer $1.85 - $2.05; special committee formed, never met financial partner Led to M
Slide 18: Long-Simmering Governance Issues Finally Resolved
Long-Simmering Governance Issues Finally Resolved * 2012 shareholder support crucial to activist takeover * 2013 many large holders alienated by push to sell and especially Morris’ low-ball offer * 2013 Morris’ partners Climaco, Gilman and Singh departed (Singh paid $987K for 11 months) * — Morris (
Slide 19: Morris Believes He Deserves Another Try?
Morris Believes He Deserves Another Try? * Two-time INFU activist, yet seems clear he has never appreciated company’s business * — Start and end of board tenure, fixated on selling company, seemingly indifferent to price * Aschairman in 2013, with secret partner, offered $1.85 * When not renominated
Slide 20: Morris' Proxy filing tries to justify $3.75 offer price
Morris’ Proxy filing tries to justify $3.75 offer price: InfuSystem Valuation History: Enterprise Value / Adj. EBITDA ‘See the note presentedon the final page ofthis presentation concerning this ‘and certain other charts reproduced in this presentation. By taking advantage of this: Morris gets to th
Slide 21: Morris' EV/Adjusted EBITDA valuation history
~ AlnfuSystem - ysoy20n2 [ | wpyzon_oysipo2__oysip2013 oysyror oysinas | oysyro6 oysynov7 3/20/2018 Morris asks that his offer be Despite his careful manipulation of the data, Morris exposes that the period with the lowest valuated ‘See the note presentedon the final page of his presentation concern
Slide 22: Morris Plays Other Games with the Historical Record
Morris Plays Other Games with the Historical Record Morris’s Proxy filing includes this graphic: InfuSystem LTM Adjusted EBITDA under Meson Leadership vs Current Leadershi (Sin millions) 180 INFU's operating performance under current ta $160 leadership of Gregg Lehman has been poor $15.4 $15.4 s140
Slide 23: Morris' Actual Tenure is Quite Different Than Suggested
Morris’ Actual Tenure is Quite Different Than Suggested by His Graphic Medicare Change (Sim mations) igo INFU's operating performance under current $160 _ leadership of Gregg Lehman has been poor sis $140 $120 $100 seo $60 40 $20 soo 2019 2014 2015 2018 or Paw a a Cae ee aSactts J Io. _ Seethe note
Slide 24: Company Never Had a Problem with Cash-Generation
Important, Company Never Had a Problem with Cash-Generation Fiscal Year ($ in thousands) Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $1,669 $3,367 $2,785 ($222) ($20,707) Depreciation Amortization 8,653 6,765 8,370 10,75 12,551 Income taxes - deferred 4,180 2,5
Slide 25: Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA AETINCOME (2055 TO ADIUSTED Forecasted ‘EBITDA: ‘Thee Month Ended ‘Teele Mouths Fading es] nls Sis Decls ‘Mari? ems Sept Dect esd Decls Deco (GAAP ser ncane is) S73 5 ise § See Sa § ERED § ARDS aR § CRED ses | SEBS 5 URES Adios Iae
Slide 26: Note on Reproduced Charts
Note on Reproduced Charts The following charts in this presentation: * Chart on the top of Slide 20 * Chart on the top of Slide 21 * Chart on Slide 22 * Chart on the top of Slide 23 have been reproduced from the definitive proxy statement filed by Morris and his affiliates with the SEC on July 2, 20