Infusystems Holdings, Inc. · AMEX:INFU
Infusystems — InfuSystem Holdings — Proxy Contest (July 2018)
22 slides from Infusystems's proxy contest presentation, Jul 5, 2018
Slide 1: Unlock InfuSystem: A Case for Change and Nominee Information
UNLOCK INFUSYSTEM A CASE FOR CHANGE AND NOMINEE INFORMATION ALL-CASH OFFER OF $3.75 PER SHARE JULY 19 ANNUAL MEETING MESON (InfuSystem Cc A P A |ON MADE EASY.
Slide 2: Meson owns 9.8% of InfuSystem and has been a significant shareholder since 2011
❖ Meson owns 9.8% of InfuSystem and has been a significant shareholder since Nov. 2011 ❖ Meson has extensive experience with InfuSystem and the only time the Company has created shareholder value in the past was during Meson’s leadership tenure (2011 - 2015) ❖ Meson believes that InfuSystem will des
Slide 3: InfuSystem is too small to be a public company
❖ InfuSystem has $66mm TTM Revenue, $13.1mm TTM AEBITDA, GAAP Net Loss of $20mm (Loss of $3mm excluding the $17mm Our nominees, if elected, would tax change write off) consider all available strategic options ❖ → This is too small to be a public company: estimated $1.5-2mm to maximize value, consist
Slide 4: Fundamentally Different Philosophy Towards Business
FUNDAMENTALLY DIFFERENT PHILOSOPHY TOWARDS BUSINESS MESON APPROACH CURRENT INFUSYSTEM BOARD APPROACH Create Value For Customers Financial Results First + Focus-on & Invest in Competitive Advantages “#1 Refocus Priority = Reducing Debt” CONSEQUENCE: CONSEQUENCE: Attractive Financial Performance over
Slide 5: Reducing Debt Means Liquidating Assets
#1 Refocus Priority = Reducing Debt (Financial Goal) Easiest Way to Accomplish Financial Goal = Liquidate Assets Long Term Consequence = Reduced Future Financial Performance EFFECT CAUSE INFUSYSTEM: NET PROPERTY, PLANT & EQUIPMENT ASSETS ($MM) 34.0 32.0 30.0 28.0 26.0 24.0 22.0
Slide 6: Understanding InfuSystem Business Model
Understanding InfuSystem Business Model: Illustration: INFU Assets vs Revenue & Cash Collection Timeline Time = 0: “Sell” new Clinic (i.e. persuade them to use INFU service): Time=0 $120 ❖ T = 1 mos: Buy Equipment (Pumps) for Clinic = PP&E Asset increases $100 on balance sheet and Cash used $80 ❖ T
Slide 7: CMS/Medicare ceased reimbursing InfuSystem in June 2016
CMS/Medicare (previously ~25% of revenue) ceased reimbursing InfuSystem in June 2016. InfuSystem, under former CEO Eric Steen, adapted with a new clinic pay program but at lower pricing: we estimate this change permanently lowered InfuSystem’s AEBITDA by ~$2.5mm/year vs. pre-2016). THERE HAVE NOW BE
Slide 8: Best Case: No Growth / Stasis; Worst Case: Disaster on Next Market Shift
BEST CASE: WORST CASE: NO GROWTH / STASIS DISASTER ON NEXT MARKET SHIFT InfuSystem is effectively in the equipment Shallower senior mgmt team + Narrower Focus = Brittle, (infusion pumps) rental business: EBITDA Less-Adaptable Organization (still with debt) More Growth Requires either: financial rest
Slide 9: Current Board Has Behaved Illogically by Its Own Standards
While we disagree with the fundamental business premise of having financials drive your #1 priorities, the current Lehman InfuSystem Board has behaved illogically even by their own stated standards. ❖ They prioritized debt repayment while InfuSystem’s interest rates were only 3-4%/year ➢ Is the retu
Slide 10: Relative Stock Price Performance: Financials First Strategy 2007-2011
$7.00 30% Financials First Strategy: 2007-2011 20% $6.00 Meson buys stock and Relative Stock Price Performance engages shareholders 10% $5.00 to save INFU and 0% replace the Board $4.00 (10%) SPAC team acquires $3.00 (20%) INFU, carving it out of iFlow (30%) $2.00 (40%) $1.00 INFU violates debt cove
Slide 11: Meson Approach: Focus on Customer Value and Invest in Competitive Advantage
Morris goes from Morris steps down as Hires Eric Steen as CEO; INFU Executive Chairman; Gregg Meson runs proxy contest and replaces stabilizes IT; begins investing in Chairman to 5 of 7 board members; stock rises as Debt Lehman is appointed growth and value-add customer Non-Executive; shareholders a
Slide 12: Relative Stock Price Performance: Financials First Attempt #2
$0.40 CEO Eric Steen Scott Shuda Rich DiLorio, VP $0.30 Medicare terminated; Office (Meridian) joins Sales, promoted Gregg Lehman of the President Relative Stock Price Performance $0.20 reimbursement INFU Board to CEO becomes chairman changes formed $0.10 Int. CFO resigns, $0.00 COO Financial resign
Slide 13: Meson Board Nominees
MOHAMED ALKADY ❖ Co-founder and President of Hart, Inc., a health technology company founded in 2012, to improve the ways in which people inside and outside of the healthcare industry access and engage with health data. ❖ Advisor to K5 Ventures, a venture capital firm specializing in early stage gro
Slide 14: What Meson's Nominees Will Do
Meson & Argonne are offering an all cash $3.75 offer, a higher price than we believe InfuSystem could achieve as a public company, because we create value through creative entrepreneurial effort. Meson’s nominees intend to focus on long-term value creation, not short term financial maneuvers to impr
Slide 15: The $3.75 Offer Is Higher Than InfuSystem Would Ever See as a Public Company
THE $3.75 OFFER IS HIGHER THAN INFUSYSTEM WOULD EVER SEE AS A PUBLIC COMPANY UNDER CURRENT LEADERSHIP $3.75 BUYOUT MULTIPLE VS EV/EBITDA InfuSystem traded at $2.40 before our 3/20 13D announced we were pursuing a 12.00 10.00 buyout transaction 8.00 6.00 Q: How could InfuSystem trade higher than $3.7
Slide 16: EBITDA Growth Drivers and Adjusted EBITDA Under Meson vs Current Leadership
❖ EBITDA can be broken down to: Revenue - Costs C) LOWER COST OF A) MORE ASSETS $ B) HIGHER $ INCOME PER $ ASSET ❖ Revenue = Assets * Revenue per Asset CAPITAL % ❖ Costs = Capital Cost + Operating Costs Slight improvement (~5-10% via: Better ❖ *Note: We are giving INFU full credit for Add-Back max)
Slide 17: InfuSystem Stock Has Never Exceeded $3.75 Except Briefly in November 2014
❖ Except for a very brief period in November 2014, InfuSystem stock has never exceeded $3.75/share ❖ In Nov. 2014, during a global ebola-virus scare, certain stocks were accidentally hyped by internet message boards that appeared to have implications for curing the disease (INFU has nothing to do wi
Slide 18: Meson Has Repeatedly Tried to Engage the Board in Good Faith
❖ Since January, Meson has repeatedly attempted to engage the Board in good faith, friendly negotiations to sell the Company, including raising its initial bid from $3.00-$3.25 to $3.75. ❖ Each time the Company has slammed the door: “Not For Sale” and further unprofessionally engaged in ad-hominem a
Slide 19: Meridian / Scott Shuda Owns 14% of INFU and Backs Financials-First Strategy
Meridian / Scott Shuda owns 14% of INFU and as a board member has March 8, 2017: William M. Moore, IRIX President and CEO (and Meridian been a key proponent of the current “financials first” strategy Partner/Advisor). "The Cyclo G6 is rapidly transforming our business and continues to outperform our
Slide 20: Meridian's Ownership of INFU via an SPV
❖ Meridian / Scott Shuda owns 14% of INFU primarily via an SPV (“Single Purpose Vehicle”): TSV Investment Partners LLC / Meridian TSV II, LP ❖ Based on lawsuits* filed against Cyanotech, a key affiliate of Meridian (and thus InfuSystem beneficial owner) appears to be Larry Sapanski, formerly of SAC
Slide 21: Meson and Argonne's $3.75 All-Cash Proposal
Together with Argonne, we have devoted a substantial amount of time and resources preparing a proposal that delivers fair and compelling value to Company shareholders. Our offer price for the Company would be $3.75 per share and we believe this offer presents an excellent opportunity for Company sha
Slide 22: Disclaimer
THIS PRESENTATION IS FOR DISCUSSION AND GENERAL INFORMATIONAL PURPOSES ONLY. IT DOES NOT HAVE REGARD TO THE SPECIFIC INVESTMENT OBJECTIVE, FINANCIAL SITUATION, SUITABILITY, OR THE PARTICULAR NEED OF ANY SPECIFIC PERSON WHO MAY RECEIVE THIS PRESENTATION, AND SHOULD NOT BE TAKEN AS ADVICE ON THE MERIT