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Good day, welcome to the InfuSystem Holdings, Inc. Reports First Quarter Fiscal Year 2026 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Glenn Akselrod, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today to review InfuSystem's first quarter 2026 financial results ended March 31st, 2026. With us today on the call are Carrie Lachance, Chief Executive Officer, and Barry Steele, Chief Financial Officer. After the conclusion of today's prepared remarks, we will open the call for questions. 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 Private Securities Litigation Reform Act of 1995. Except for statements of historical fact, this conference call may contain forward-looking statements that involve risks and uncertainties, some of which are detailed under the risk factors in the documents filed by the company with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended December 31st, 2025.

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 except as required by law. Now, I'd like to turn the call over to Carrie Lachance, Chief Executive Officer of InfuSystem. Carrie.

Thank you, Glenn. Good morning, everyone. Welcome to InfuSystem's First Quarter Fiscal Year 2026 Earnings Call. Thank you all for joining us today. I will provide a first quarter overview highlighting key initiatives and updating our progress on strategic priorities. Barry will provide a detailed summary of our financial results. I will then come back with some closing comments before opening the line to questions. Today, we reported first quarter of 2026 revenue of $33.7 million. This represented a decline from our prior year of just over $1 million on a GAAP basis, but a 1.7% increase on a pro forma basis.

The GAAP reduction was mainly driven by the restructuring of our biomedical services contract with GE HealthCare, which reduced revenue by $1.6 million during the first quarter and is the basis for the adjustment to providing pro forma revenue. As we reported on our last two earnings calls, this restructuring improves our earnings because it allowed for an even larger reduction in direct contract expenses. Despite the decline in revenue, we generated approximately $6.4 million in adjusted EBITDA this quarter, roughly in line with the prior year, resulting in a modest improvement in adjusted EBITDA margin to 18.9%, up from 18.2% in the first quarter last year. Behind these results are two very important initiatives that warrant a progress update. First, we continue to expand our wound care products category.

During the first quarter, wound care net revenue came in at $2.1 million. While the number is still small, representing only 6% of our total quarterly revenue, we are excited about the growth rate, which was more than double the prior year at just under 112%. About 60% of the growth came from our compression device product line, which we recently added during the third quarter of last year. This product line was expanded with the launch of a second compression device supplier during the first quarter of 2026. The 1st manufacturer relationship brought us pneumatic compression devices or PCDs, which use sequential compression technology to treat patients with lymphedema and similar disease states.

The additional supplier now adds adjustable compression wraps, which feature Velcro closures that are easier for patients with limited mobility as compared to traditional products such as compression stockings. Adjustable compression wraps represent a significant expansion of our addressable market as they serve a diverse patient demographic, ranging from simple post-surgical recovery to lifelong management of chronic disorders that may not qualify for other treatments such as PCDs. The second key initiative I'd like to update you on reached a very important milestone during the first quarter. Sunday, March 1st, 2026, was a very busy day for the team here at InfuSystem. After 20 months of intense meetings, data compilation, and endless process analysis and testing, live transactions started running in our newly installed enterprise resource planning system, our ERP.

As is fairly typical for these type of projects, the first month wasn't entirely seamless, and we continue to work out initial bugs and make the necessary adjustments to stabilize the system. However, I'm happy to report that we successfully cleared the go-live hurdle and are charging forward to secure the benefit of the new system that we have been looking forward to implementing over these many months. This marks a very significant milestone for InfuSystem. After putting this application in place and retiring several legacy systems, much of our data is now integrated. Workflows are connected, and the many processes supporting our various business lines run through a common platform, not multiple disparate systems.

While we continue to make final adjustments, resolve open items on the punch list, and get over the learning curve, we are starting to focus on capturing the benefits that we anticipate will start to pay back our investment. These benefits are expected to come in many forms and include improved ability to complete tasks with greater productivity, better cost and margin analysis to focus on high return cost optimization initiatives, improved visibility to support pricing decisions, improved utilization of our medical device fleet, and optimization of working capital levels. Additionally, we are already working to identify system enhancements and will implement those that provide the fastest payback and highest investment returns. As we look forward to the rest of the year and after adjusting for the expected $7.1 million lower annual revenue related to the GE HealthCare contract restructuring.

On a pro forma basis, we continue to anticipate annual revenue growth in the range of 6%-8%. Additionally, we continue to anticipate that our adjusted EBITDA margin will remain in the low to mid 20% range. This is inclusive of the impact of costs related to our ongoing information technology systems upgrade. We are excited about the opportunities ahead and will look to update you again in future quarters. Now I'll turn it over to Barry for a detailed review of the first quarter financial results. Barry?

Thank you, Carrie, thank you everyone on the call for joining us today. I'm going to give details of the current quarter's results, provide a few updates on the ERP spend, and update you on our current financial position and how it changed during the quarter. Let me start with our financial results for the period. During the first quarter of 2026, our net revenue totaled $33.7 million, representing a $1 million or 3% decrease from the prior year first quarter. Adjusting for the GE HealthCare contract restructuring, our pro forma net revenue grew by 1.7%. Patient services net revenue increased by $1.3 million or 6.4% and included increased patient treatment volumes in oncology and wound care.

Oncology net revenue increased by approximately $450,000 or 2.4%, and wound care treatment volumes revenue grew by $1.1 million, which represented an increase of nearly 112%, driven by compression devices, as Carrie mentioned. Device solutions net revenue decreased by $2.3 million or 17%. Nearly 70% of the decrease was attributable to the GE HealthCare contract restructuring. The remaining amount of the decrease, which was about $760,000, was due to lower rental revenues and lower equipment sales of $432,000 and $1 million, respectively. Both of these decreases are related to a large customer rental buyout that began in the prior year.

The buyout, which started during the prior year first quarter, elevated the amount of equipment sales in the prior year and reduced quarterly rental revenues during the subsequent quarters, including the current three-month period. These reductions were partially offset by an increase in the non-GE related biomedical services revenue of $340,000 and higher disposal medical supplies revenue, which also increased by $340,000. Breaking down the biomedical services revenue a little further, we see that our field-based services grew by nearly $600,000 after adjusting out the GE HealthCare revenue decline. This underlying increase demonstrates partial success in replacing lost GE revenue. Furthermore, as you will see when I get to discussing gross margin, the benefit to earnings for this trade-off was rewarding.

Despite the decrease in net revenue, gross profit for the first quarter of 2026 was $19.7 million, representing an increase of $515,000 or 3% over the prior year first quarter. The gross margin percentage at just over 58% increased by 3.2% from the prior year amount. At the segment level, Patient Services gross profit increased by $1.3 million and gross margin increased by 1.3% to 64.8%, driven by the higher sales and reduced pump disposal and maintenance expenses. Device Solutions gross profit declined by $623,000, mainly due to the lower amounts of rental and equipment sales revenue. The gross margin increased by 3.4% to 46.3%.

The greatest contributor to this improvement was the aforementioned trade-off between GE HealthCare and smaller field service projects, which, despite resulting in an overall decline in revenue netting to just over $1 million, contributed nearly $400,000 of additional gross margin, resulting in a more than 7% increase in device services gross margin. This benefit was partially offset by unfavorable revenue mix and higher wage and employee healthcare expenses, which reduced the gross margin by nearly 2% and 2.5% respectively. Selling general and administrative expenses for the first quarter of 2026 totaled $17.9 million and was $418,000 or 2.2% lower than the prior year first quarter amount. The prior year amount included a non-recurring expense related to the departure of our former CEO of $1 million.

Additional reductions included a $300,000 reduction in the accrual for management bonuses, lower accounting fees totaling $200,000, and $100,000 in reduced travel expenses. These decreases were partially offset by increases in other expenses, including $400,000 in increased expenses related to information technology and business applications upgrades, including the replacement of the company's ERP that Carrie discussed. Additional personnel directly related to increased patient services net revenue, including revenue cycle personnel totaling $300,000. A $100,000 increase in stock-based compensation expenses and cost inflation impacts from increased employee wage rates and higher healthcare expenses totaling $400,000. The InfuSystem upgrade project expenses were higher during the current period due to the higher intensity of activities related to the go-live phase of the project, which, as Carrie mentioned, occurred on March 1st, 2026.

While additional costs are expected to be incurred during the post-go live phase to support system stabilization and enhancement activities, project expenses are expected to begin to taper down during the future quarterly periods. Similar to impacts to gross margin and selling and marketing expenses, higher wages were the result of typical annual merit and cost of living increases. However, the increase in cost of healthcare benefits, which in total increased by $374,000 during the quarter, were significantly higher than the increases experienced in the prior years. Adjusted EBITDA during the 2026 first quarter was $6.3 million, which despite the lower net revenue, was about the same amount as the prior year first quarter. This represented 18.9% of net revenue for 2026, which was slightly above the prior year rate of 18.2%.

These amounts included the spending on our ERP project, which again is expected to start to decrease by the end of the second quarter here in 2026. A few comments on our financial position and capital reserves. During the first quarter, we generated operating cash flow of $970,000, which was $817,000 less than the prior year first quarter, mainly due to higher increases in working capital in 2026. Our net capital expenditures were $1.3 million during the 2026 first quarter, which represented a decrease from $2.6 million spent during 2025. This decrease was attributable to our overall capital spending requirements being lower as compared to amounts in prior years as the sources of our revenue growth have been more weighted towards less capital-intensive revenue sources, including additional wound care revenues.

We expect moderate amounts of capital expenditures to continue in 2026, similar to 2025. We remain well positioned to fund continued net revenue growth with the 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 net debt increased slightly by $1.1 million during the quarter, and we repurchased just over $800,000 of our common stock during the quarter through our stock repurchase authorization. Our available liquidity continues to be strong and totaled just over $57 million as of March 31st, 2026. At that time, our ratio of net debt to adjusted EBITDA was a modest 0.56x.

Our debt consists of $20 million in borrowings on our $75 million revolving line of credit, with no term payment requirements and maturity, and a maturity date of July 2030. We continue to benefit from an outstanding interest rate swap, which fixes our interest rate on the $20 million of our outstanding borrowings at a below-market rate of 3.8% until April of 2028. I will now turn the call back over to Carrie.

Thanks, Barry. As I reflect on the progress we have made during the first quarter, the updates shared with you today, and what we are focused on as we move through the rest of 2026, I hope you will agree that we continue to be diligent in pursuing the strategic priorities previously laid out for our shareholders. Those priorities are to execute with discipline, deliver profitable growth, and drive long-term value creation for shareholders. Operator, we are ready for the Q&A portion of the call.

Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question will be from Anderson Schock from B. Riley. Please go ahead.

Hi. Good morning. Thank you for taking our questions, and congrats on all the progress. First, the ERP went live at the start of March. Can you talk about how the conversion is going? Have you seen any billing or collections disruption or impact on the working capital? When do you expect the cost step down to begin showing in the P&L? Is it more second or third quarter weighted?

I'll take that one, Carrie. As any ERP implementation, we definitely had our glitches that we dealt with that affected a number of different areas. We do not think that anything is going to cause any error, any disruptions in our cash flow or billings or anything like that. We think we're pretty good. It's more kind of working out some of our processes and making them as efficient as they are expected to be. As far as the long-term outlook for the impact of the system, Carrie mentioned a lot of the benefits that we can see sort of from a summary perspective. We believe that, you know, still going through the learning curve, still fixing a few glitches.

By the end of the year, we'll be able to, I think, articulate very well and have plans in place for, you know, going and getting the cost savings that the system should be able to provide to us. I believe that next year we'll see some of that actually pay off, and we'll start seeing the expenses that we have today reverse to the actual, proceeds from the reduced reduction in costs.

Okay. Got it. Thank you. On the last call, you indicated oncology would begin migrating to the Apollo-based RCM platform in the back half of the year. Now that the ERP is live, has the timeline for oncology RCM migration shifted?

No, it should still be. Thanks for the question, Anderson. it should still be kind of second half of the year. That is some of the progress and why we decided to be second half of the year, and delay that just a little bit to get the ERP behind us and some of those, you know, continued kind of processes through the ERP, improvements in the system. it is on track to, you know, hopefully finish up by the end of the year, but we've started to begin that process.

I would just add, we use a lot of internal resources for the ERP. They're a lot of the same resources that this other conversion will require. That's why we had to stagger them.

Okay. Got it. That's helpful. On the new oncology customers signed in the back half of last year, could you give us a sense of the typical ramp curve for a new hospital system? Specifically, how much of the contract volume signed in the back half of 2025 has shown up in the first quarter versus what's still to come?

We can see sometimes in a new oncology account, they could have several hundred patients. A lot of times that process will, the newer patients will start to come on board, but the older patients that are on their older device, say in elastomeric, for instance, they'll finish out their continued therapy and the rest of their cycles on that same device. It can take from, you know, a month or two, depending on how many new patients they have, through a few months. We are pretty well on board with that newer customer from last year.

Okay, got it. Thank you for taking the questions.

Yeah.

And the next question-

Thanks, Anderson.

The next question will be from Jim Sidoti with Sidoti & Company. Please go ahead.

Hi, good morning, and thanks again for taking questions. With regards to lymphedema, you know, this isn't the first time you've been in that market. You know, why do you think you're doing better this time than in previous attempts?

Yeah, it's a great question, Jim. Good morning. You know, the difference today is really our partnerships. We have a new partner that came aboard as we mentioned, third quarter, fourth quarter, excuse me, of last year. Really strong partnership with them. They bring us the PCDs. The partnership that we had a few years ago when we tried this, you know, we need the paperwork, we need clean referrals, we need all of the ability to bill those claims, and we weren't receiving that during that prior start of our PCD and compression go live.

The new partner that we received or that we onboarded in Q4 of last year has been very strong. We continue to grow and stabilize and even improve that relationship. As well as Q1 this year, we have another compression opportunity there and very strong relationship there. We're looking forward to growing them for the rest of the year.

All right. Can you talk a little bit about pain management? I know there's some reimbursement changes. Have you seen any impact from that? Where do you think pain goes in 2026?

We haven't yet seen. There's definitely been some changes in that market. We're pretty excited about that. We do work with our current manufacturers that are in that space to continue to grow. We're working closely with one of our partners on one of the pumps. They're growing their pain team and including some of our third-party payer opportunities as part of their bag and what they're offering for their customers. We're excited for the year. We haven't seen a lift as of yet. We did add a decent sized customer over the past couple of months in Q1 of this year. We continue to be excited for pain management and see what the changes in the market will hold this year.

All right. I know you don't like to give quantitative guidance on cash flow, but just qualitatively, I mean, can you just give us some direction? Do you think it'll be up materially from last year? About the same?

I would say about the same. I think that the operating cash flow and how we spend it'd probably be similar.

Okay. All right. Thank you.

The next question will come from Matt Hewitt with Craig-Hallum Capital Group. Please go ahead.

Hello, and thanks for taking the question. This is [Tal] calling on for Matt Hewitt. Apologies if you already stated it. I've been going through different calls here this morning. Can you provide an update on Chemo Mouthpiece, please? Thanks.

I sure can. Chemo Mouthpiece did not receive their current application for coding that was submitted in 2025, was due out in early of 2026. They did not receive approval for that code. As we mentioned, as you may remember last year, we did take that out of our pipeline moving forward. It was not in our guidance for this year. We do still have clinics that do love the program. CMP continues to work on reimbursement opportunities for them. We are still providing that device to patients. We're working with them currently and some of the patients, but, you know, I wouldn't expect it in our guidance. They are looking. We may look to slow down on some of the referrals for that just until they get some coding.

Thank you very much.

Again. Oh, no problem.

Again, if you'd like to ask a question, please press star then one. The next question will be from Benjamin Haner with Lake Street Capital Markets. Please go ahead.

Good morning. Thanks for taking the questions. First off for me, you know, just with wound care, nice to see the trajectory you guys are on there. You know, with it being 6% of revenue now, it looks like that's on its way to double digits. You know, how should we think about that? You know, how quickly does it get there? What could this ultimately be? Any sort of color that you could provide there would be very helpful.

Yeah, that's a tough question, Ben. You know, we're really excited for the growth and the opportunities that we're seeing ahead. Again, a few new partnerships in compression have been really beneficial for that product line there. You know, I would say with the Lymphedema Patient Treatment Act that came out in reimbursement, we are seeing and, you know, the market is seeing some growth in that compression space, and, you know, a good CAGR for that market. We are looking forward to continuing into that as far as Barry.

I would only add that when we gave our guidance, like, obviously, wound care was a very important element to the growth that we're expecting for this year. As we look at where we would fall into our range, if we fall into the higher end of the range, it's probably gonna be PCDs or the compression devices that help us get there. Very important for us.

Okay. Got it. That's helpful. Then just with the CMS putting the prior auth requirement in or policy in, I think it kicked in April thirteenth for these PCDs, is that something that has impacted you guys in any way, collecting the paperwork? I know that was an issue historically with prior partners, but any issues on that front?

No, I think that's what's so great about our current partnerships that we do have in that space. We are receiving the appropriate paperwork that we need to bill. The nice part is it's not a change for our current customers that we have. Again, we're a little bit newer to this space, so it's not a change if we're going to ask for something that's abnormal for us to ask for. It's just part of the process that we're really kind of growing with. No hesitations from us there.

Excellent. Well, that's it for me. Thanks for taking the questions.

Thanks, Ben.

Ladies and gentlemen, this concludes today's question and answer session. I would like to turn the conference back to Carrie Lachance for any closing remarks.

Thank you. Thank you everyone for joining today's call. We look forward to speaking with you again on our second quarter call, where we will provide an update on our results and progress.

Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to InfuSystem Holdings, Inc. Reports Fourth Quarter Fiscal Year 2025 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Glenn Axelrod with [ Bristol IR. ] Please go ahead.

Good morning, and thank you for joining us today to review InfuSystem Fourth Quarter 2025 Financial Results ended December 31, 2025. With us today on the call are Carrie Lachance, Chief Executive Officer; and Barry Steele, Chief Financial Officer. After the conclusion of today's prepared remarks, we will open the call for questions. 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 the Risk Factors in the 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, 2024. 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, except as required by law. Now I'd like to turn the call over to Carrie Lachance, Chief Executive Officer of InfuSystem. Carrie?

Thank you, Glenn, and good morning, everyone. Welcome to InfuSystem's Fourth Quarter Fiscal Year 2025 Earnings Call. Thank you all for joining us today. I will provide a fourth quarter overview, highlighting key initiatives, outlining our strategic priorities and providing our outlook for 2026. Then Barry will provide a detailed summary of our financial results. I will then come back for some closing comments before opening the line to questions. During the fourth quarter, we closed out the 2025 reporting period by delivering solid top line growth of 7% with full year adjusted EBITDA expanding 24% to $31.5 million and strong operating cash flow of $7.1 million. We further strengthened our balance sheet with net debt declining 30% year-over-year, while returning capital to our shareholders through our share repurchase program, retiring 137,000 shares in the fourth quarter and 1.3 million shares for the full year. We continue to make advances on key initiatives that are expected to help us accelerate our growth rate of net revenue, adjusted EBITDA and operating cash flows during 2026. We completed the migration of our Wound Care business to the new revenue cycle application that we obtained in conjunction with the acquisition of Apollo Medical during the second quarter of 2025. This includes advanced wound care, negative pressure wound therapy devices and our latest product category, pneumatic compression devices. This important initiative allows us to reduce processing costs and expand our volume capacity, thereby opening the door to increase revenue volume. This leaves our Oncology business, by far the largest in our Patient Services segment as the final therapy left to migrate. In addition, we obtained new accreditations for additional home healthcare DME products that we plan to add to our patient services product portfolio. We are currently working with the manufacturers of some of these products with the goal of repeating the speed and success of our latest PCD product launch. We feel positive on the current progress and look forward to providing more details on these products in the near future. We also restructured our field-based biomedical services team of technicians to better align with our reduced volume expectations for 2026 and to better position our capabilities to bring on smaller, more profitable client engagements. Finally, we made significant progress on our project to replace and upgrade our main information technology business application, which we plan to complete during the first quarter of 2026. At project completion, we will reduce the current spending rate for the project and begin focusing on capturing productivity improvements that the new application enables within several departments. As we announced during our review of the 2025 third quarter, we are focused on driving value creation through profitable growth, which led us to restructure our largest biomedical services contract. And consequently, we are starting 2026 at a reduced revenue volume by $7.1 million or 5.5% annually. This was a necessary change that will have an immediate favorable impact on our reporting earnings and cash flow since we expect an even larger reduction in our expenses. After adjusting for this decrease on a pro forma basis, we are expecting annual revenue growth in a range of 6% to 8%. Additionally, we anticipate that our adjusted EBITDA margin will continue in the mid- to low 20% range. This is inclusive of the impact of costs related to our ongoing information technology system upgrade, which are expected to decrease after the first quarter. We are excited about the opportunities ahead and look to update and refine our guidance as we move throughout the year. Now I'll turn it over to Barry for a detailed review of the fourth quarter financial results. Barry?

Thank you, Carrie, and thank you, everyone, on the call for joining us today. I'm going to give details for the current quarter's results, provide a few insights on the 2026 outlook, and I'll update you on our current financial position and how it changed during the quarter. Now let me start with our financial results for the period. During the fourth quarter of 2025, our net revenue totaled $36.2 million, representing a $2.4 million or 7% increase from the prior year fourth quarter. Both the Patient Services and the Device Solutions segments contributed to the improvement. Patient Services net revenue increased by $1.1 million or 5.4% and included increased patient treatment volumes in Oncology and Wound Care. Oncology net revenue increased by approximately $500,000 or 2.8% and wound care treatment volume revenue grew by nearly $900,000, which represented an increase of over 160%, driven largely by pneumatic compression devices, which launched in the previous quarter. Device Solutions net revenue increased by $1.3 million or 9.7%. This increase was primarily attributable to $1 million in higher sales of medical equipment and just over $600,000 in higher revenue volume in biomedical services revenue. The equipment sales included some rental buyouts from a large customer and the biomedical services increase came from a more diverse group of smaller customers. Partially offsetting these increases for Device Solutions was a $400,000 reduction in equipment rental revenue. Gross profit for the fourth quarter of 2025 was $20.4 million, which was a $2.2 million or 12% increase over the prior year fourth quarter. Our gross margin percentage at just over 56% increased by 2.6% from the prior year amount, demonstrating our focus on profitable growth. This increase was mainly driven by improved labor efficiency and pricing in biomedical services, improved revenue mix favoring higher-margin revenue such as oncology, lower procurement costs and lower pump maintenance and disposable expenses. Selling, general and administrative expenses for the fourth quarter of 2025 totaled $14 million and was $865,000 or 6.5% higher than the prior year fourth quarter amount. Part of this increase was attributable to $689,000 in expenses associated with our project to upgrade our main enterprise resources planning software, which was $196,000 higher than the spend for the prior year fourth quarter. This project is now in the final phase with a go-live launch expected during the current quarter, after which quarterly implementation costs are expected to decrease significantly. Other increases for the fourth quarter were related to additional headcount and revenue cycle and other personnel needed to support the higher revenue volume, offset partially by a lower accrual for short-term incentive compensation, portions of which were already capped and fully accrued due to performance metrics being already met at the end of the third quarter. Adjusted EBITDA during the 2025 fourth quarter was $8.8 million, which represented an increase of just over $1.3 million or 17% from the prior year fourth quarter adjusted EBITDA. This represented a 24.3% of net revenue for 2025, which was above the prior year rate of 22.2%. It also was an all-time record -- quarterly record. These amounts included the spending on the ERP project, which again is expected to start to decrease by the second quarter here in 2026. For the full year of 2025, adjusted EBITDA totaled $31.5 million, representing a margin of 21.9%, an increase of 3.1% from 18.8% in 2024. This reflects a significant year-over-year improvement of $6.2 million or 24.3% despite a $1.8 million increase in ERP project expenses. The improvements are another example showing that our focus on profitable revenue growth and operational efficiency is yielding meaningful results. Turning now to our outlook for 2026. As Carrie mentioned, we are forecasting an increase in our net revenues of 6.8% for 2026 on a pro forma basis after adjusting for the GE Healthcare contract restructuring. The low end of this range is achievable through initiatives we have put in place or have high visibility to such as new customers that have already started in our Oncology business, and new products such as PCDs that have already been launched. The high end of the range will be possible when we are successful launching just a few of the new opportunities we are currently focusing on but have not yet started. These included new customers and products whose impact for 2026 will depend on our success rate and launch timing. Now a few points on our financial position and capital reserves. For 2025, we generated operating cash flow totaling over $24.4 million. This amount was nearly $4 million or 19% higher than the amount realized during 2024. This increase was due to the higher adjusted EBITDA offset partially by a use of cash for working capital. Our net capital expenditures were $6.8 million in 2025, which represented a significant decrease from $13.2 million spent during 2024. This decrease was attributable to overall capital spending requirements being lower as compared to amounts in prior years as the sources of our revenue growth have been more weighted towards less capital-intensive revenue sources. We expect these lower requirements to continue in 2026. We remain well positioned to fund continued net revenue growth with the growing cash flow from operations backed by significant liquidity reserves available from our revolving line of credit and manageable leverage and debt service requirements. Our net debt decreased by $6.9 million during 2025. We were able to do this despite purchasing $9.9 million of our common stock during the year through our stock repurchase authorization. Our available liquidity continues to be strong and totaled nearly $58 million as of December 31, 2025. At that time, our ratio of net debt to adjusted EBITDA was a modest 0.52x. Our debt consists of $20 million in borrowings on our revolving line of credit with no term payment requirements. During the third quarter of 2025, we amended our credit agreement, extending the facility for 2 additional years. The facility now expires in July 2030. We continue to benefit from an outstanding interest rate swap, which fixes our interest rate on the $20 million of our outstanding borrowings at a below market rate of 3.8% until April of 2028. I will now turn the call back over to Carrie.

Thanks, Barry. As I reflect back on efforts made during fiscal year 2025, the updates that we've shared with you today and what we are currently focused on as we head into 2026, I hope that you will agree that we have been diligent in pursuing the strategic priorities we laid out for you during 2025. Those priorities are to execute with discipline, deliver profitable growth and drive long-term value creation for our shareholders. Operator, we are ready for the Q&A portion of the call.

[Operator Instructions] The first question comes from Kyle Bauser with ROTH Capital Partners.

Maybe starting with the top line guidance, 6% to 8% for the year. Can you talk a little bit about how we should anticipate the growth rates within each segment, Patient Services and Device Solutions to trend? Would we anticipate a continuation of maybe higher percent growth in Device Solutions like you saw in Q4 versus Patient Services? Any color here would be appreciated.

Yes. I'll throw a couple of thoughts out there, Kyle. Definitely, the patient services is where we see our growth mainly coming from. Even Oncology, we see some success there but Wound Care is our main focus right now for driving further volume through the PCDs that we launched last year and other products we might bring online. That's not to say that we don't see growth in Device Solutions, we definitely do. We're going to give some revenue back because we restructured the GE contract but we see lots of opportunities for us to take that team and grow the base at much better returns for the company.

Got it. Appreciate that. And on the adjusted EBITDA margin guidance of mid- to low 20s, of course, it includes the planned reduction of the expenses from the ERP program. Any sense as to kind of the go-forward adjusted EBITDA rate for, call it, like Q2 through Q4, just since we'll be kind of working off of the new base of expenses after Q1?

Yes. Let me make a few high-level comments about our margins. There's definitely -- we've worked hard in this past year to bring our margins up from historical lower rates. And so we're going to be able to carry that forward for sure. So we're feeling very good about that. The restructuring in the biomed actually is helpful to our margins. And there's a couple of other things to mention is that we do see headwinds in margins that we're going to overcome things like our increases in our healthcare costs, other sort of inflationary impacts. We think those will be headwinds that we will overcome through the growth in new products. So we're not seeing a lot of additional increase in margins generally as we go forward but we feel like we're going to stay at this much higher level very strongly going forward. Okay, if that makes sense to you?

Yes. No, it does. I appreciate that. And then maybe just one more. On the revenue cycle application that has been successfully integrated. It sounds like that's been very helpful in driving reduction in lead times, et cetera. Wound Care delivered 160% revenue growth in the last quarter, albeit off of a lower base. Anything to call out here in Wound Care going forward and kind of how you anticipate the revenue cycle application to really help drive volume?

Yes, I'll take that, Barry. The revenue cycle system that we have implemented obviously took a little bit of time to get going. We've entered most of our business, all of the Wound Care business, PCD into that. We are looking forward to in probably the second half of the year, really starting our Oncology business into that as well but it does allow us to take on some more volume and ramp in a more productive way and manner, both from a PCD and then any new product that will be going through that system. So it's been helpful.

Your next question comes from Anderson Schock with B. Riley.

So the ERP is expected to go live this quarter. I guess what's the remaining spend to completion? And when should we expect to see the net maintenance cost savings to fully materialize?

Yes. So we'll see the number to be slightly higher in this coming quarter as we're in that final launch phase. A lot of activity is currently happening to get us ready, and we have extra help from our consultants on that as we bring actual real live transactions and convert over. So that will be a little bit higher in the first quarter but then it should taper down. It won't go to 0, though. As we look at the full benefit on a sort of annualized basis, if we compare the periods where we're doing the ERP to the future when we're not doing the actual implementation, it about $2 million savings annually. So that's the spend that should come out where we do have some ongoing spend, higher maintenance costs, if you will, for the new system. So the net difference between when we've been doing the implementation to the future is about $2 million in savings. What we expect sometime later in the year 2026 or beyond 2027 is to start seeing some benefits as the new application starts to -- we get good at it and we start to consolidate and see efficiencies for all the rest of the teams that are impacted by it. You may recall that we did the ERP because we -- our old system was going to go away. It was being discontinued by Microsoft. So we had to do it. But we do see that there will be a payback and improvement in overall efficiencies and productivity to pay for the system, the investment that we made.

Okay. Got it. And then are there any other costs associated with the transition of the RCM platform from Apollo to expand it into the oncology business?

No, no, no additional costs. Again, that system is up and running. We're just -- we're defining those processes to get oncology over there. We use several systems today for the oncology work. So we're excited to get it moved into that new system but no additional cost.

Yes. Okay. Got it. And then finally, do you have any updates on the ChemoMouthpiece billing code approval or timing there?

I do. Unfortunately, I don't have any updates, meaning it was approved or not approved. What I would say is that we're in touch with them very frequently. We have weekly calls regarding kind of the momentum that we see and the interest in the product. We are seeing devices that are shipped out on a weekly basis. They don't have any new information based on their December 17 meeting with CMS but they continue to be encouraged. And again, there's product interest, and we're looking forward to. They were looking forward to maybe a February information back with approval or whatnot but we haven't heard an update yet.

I would just like to add to that, Carrie, the ChemoMouthpiece piece, we kept that any revenue out of the low end of our guidance range. So it will be definitely -- we do believe that we'll see some revenue. It will be one of the things that will help us get higher in the guidance range.

Your next question comes from Jim Sidoti with Sidoti & Company.

You mentioned that the expense reduction related to the renegotiated GE contract will be greater than the $7.1 million in revenue reduction. Where will that show up on the income statement? Will we see that mostly in the gross margin?

Yes, it's gross margin. It's -- we restructured the team, so we had to take some team members out of the program and things like we'd have to pay for the parts for repairs, at least not in the field. So there's a lot of costs that come out of the cost of sales line as we see the revenue come down.

All right. And in addition to -- I think you said expenses should come down about $2 million because of the change in -- or because of the ERP completion. You said on an annual basis, they should come down about $2 million. In 2025, you had some expenses related to the CEO transition. Those should go away as well in 2026, right?

That's correct. Yes. Those are added back for EBITDA, but obviously not added back for our operating income or net income. Correct.

Okay. And so your cash flow generation has been getting stronger over the past couple of quarters, and it seems like it's going to continue to improve. You've been paying down debt so far. Is that really the plan for cash? Or do you have any other options that you think you might use your cash for in 2026 and 2027?

Yes. I would say that our capital allocation priorities have not changed, right? And we have a share buyback program, which is opportunistic in nature. We want to buy back shares in periods where we have strong free cash flow or we see -- and when we see that the trading price is below what we view as intrinsic value. So that will continue. Obviously, the paying down debt is very flexible for us because we have a revolving facility, which means that we can borrow it right back, so we don't give up commitments. And then there's obviously we want to invest in the business, right? We see -- we want to be a top line grower. And M&A, we've done some M&A in the past and could be in the future. I don't care if you want to expand on that. But yes, we -- I think our sort of our priorities are about the same as they have been.

Your next question comes from Matt Hewitt with Craig-Hallum.

This is Tollef Kohrman on for Matt Hewitt. So kind of just general here, are there any other low-margin businesses you're considering exiting or just opportunities to drive more efficiency?

I don't think there's any other really low-margin areas that we're looking at today. We will continue to look at -- from a biomed perspective, if there's -- we have a much smaller team today from a nationwide aspect of the number of technicians. So we will try to keep it to a regional kind of the work that we're doing in the biomed space to a regional area unless we see good pricing that we can kind of afford to fly people all over the place. So I think otherwise, we don't have any low-margin areas that we're looking to kind of exit from.

Your next question comes from Benjamin Haynor with Lake Street Capital Markets.

First off for me, I know the subject has been already touched on a bit but I was just curious on the Wound Care cost efficiency and maybe how you see that tracking throughout the year.

I would say from the new system, it's allowing us to ramp, bring in volume. It's a much more efficient system. We're using multiple systems before. So it's allowing us to bring in more products. Again, we saw some really good benefit from -- with PCDs. We were able to ramp that relatively quickly. We expect that to continue to grow over the course of the year as well as adding new products. So...

Yes. I would add to that, Carrie, by just saying that the wound care hasn't been a lot of cost actually in our P&L. The cost that we see in order to grow it has been a barrier, and we've been able to move that barrier out of the way. So you won't see necessarily a decrease in our cost because we didn't go and incur them but now we'll be able to grow the wound care at a more efficient pace, if that makes sense.

Okay. That's helpful. And then just lastly for me on the DME new products. Can you share what categories those are in at all? Or is that something we should be staying tuned for?

I would say from an accreditation standpoint, I'm happy to share we were accredited for a few new products. One is called the Defender Boot, one is called HidraWear in the ostomy category. So we got accredited for some of those codes. We see some interest in some of those products. We've been approached by some folks with some of those products. I would say as a whole, we -- I would typically not love to share. We want to prove out what we're doing before we set expectations on that. We really want to prove out that it's working for us. Reimbursement is working. So we are working with some companies here to take a look at this, see if it's going to be a good opportunity for us. And as we are successful in those areas, we'll continue to share more information.

Congrats on the quarter and progress.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Carrie Lachance for any closing remarks.

Thank you, everyone, for joining today's call. We look forward to speaking with you again on our first quarter call, where we will provide an update on our results and progress.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.