I just read an interesting article referencing INFU in Bloomberg Businessweek. Looking over the specs, it appears that Infusystem has rather low margins for a medical device business. Can anyone tell me why this is?
The article appeared to be saying that a self serving board had been gotten rid of, and that the new board's interests were much more highly in line with stockholders. This sounds good.
However, long term debt appears to be a concern, with about 26 million in debt. Looking at the profits, it appears that if all the profits were applied to the debt, the company could be completely debt free in about 7 years. Is this assessment accurate?
Infusystem bills insurance companies, Medicare and other providers for pump rental and supplies. The gross margins are not what they once were and their acquisition of First Biomedical was excessively expensive and is not bearing the fruits that is needed now. INFU must also invest in CapX (maybe $2-3M per year) for pumps - it is a drag on their ability to reduce their debt.. IMO, margins will continue to erode due to Medicare (35% of INFU revenues) reimbursement cuts due to competitive bidding awards that are coming very soon! The replacement board is a drastic improvement over the past BOD, however they will find it very difficult to ever sell this company or make it very profitable