Good morning everyone and welcome to the InfuSystem Holdings First Quarter 2014 conference call. This is your operator, Christine. On the call today is Mr. Eric Steen, Chief Executive Officer, and Mr. Jonathan Foster, Chief Financial Officer. Janet Skonieczny, Chief Operating Officer, and Mike McReynolds, Chief Information Officer are online today. Let me first give you to Mr. Jonathan P. Foster, Chief Financial Officer.

Thank you, Christine. Good morning everyone. First of all, let me get some administrative matters out of the way. The company issued a press release this morning. The release is available on most financial websites. Additionally, a web replay will be available on the company’s website for 30 days. Both the press release on Form 8-K and the company’s Form 10-Q for the first quarter of 2014 have been filed with the SEC this morning. Except for the historical information contained herein, the matters discussed in this conference call are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those predicted by such forward-looking statements. These risks and uncertainties include general economic conditions as well as other risks detailed from time to time in InfuSystem’s publicly filed documents. Specifically, information about risks and uncertainties that could cause the company’s actual results and financial condition to differ from those predicted by forward-looking statements are disclosed in the company’s annual report on Form 10-K for the year ended December 31, 2013 under the heading, Risk Factors, and elsewhere in the report and may also be updated from time to time in the company’s quarterly Form 10-Q. The company has no obligation to update the forward-looking information contained in this conference call. While discussing the company’s performance, the company will refer to certain non-GAAP metrics such as adjusted EBITDA, which is not considered a measure of financial performance under generally accepted accounting principles. A reconciliation of the difference between non-GAAP financial measures such as adjusted EBITDA and the most comparable GAAP measures is contained in the company’s press release previously mentioned. Now with that out of the way, I’d like to turn the call over to Mr. Eric Steen, our Chief Executive Officer.

Good morning everyone and thanks for joining the InfuSystem Holdings first quarter of 2014 earnings call. For Q1, I’m pleased with the strong numbers from both the provider and supplier core business operations. I’m happy about our expansion efforts that are further diversifying our revenue streams, and I like the way the IT enhancements are beginning to drive the business through connecting electronically with our customers. As for the numbers, for the quarter ended March 31, 2014, the company’s net income was $0.6 million or $0.03 per diluted share versus $0.1 million in 2013. We grew revenue for the quarter to $17.2 million, an increase of 17% over the same prior year period, while gross profit was up 16% versus prior year. In the first quarter, we had a fairly large opportunistic pump sale to one of our broker customers, and excluding that sale we still increased revenue in the double digits. We added over 1 million to our pump fleet in Q1 and continued to focus on controlling G&A spending, although there were a couple of one-time events like severance payments that increased G&A over prior year. These are expected to normalize over the course of the year. Our competitive bid success with CMS has created opportunities for us with new partners to provide ambulatory pump and supply services for an expanding breadth of home infusion therapies. Our efforts in the post-surgical pain management continue. We have now helped hundreds of patients after surgery and we have received excellent patient satisfaction pain scores from them. In the first quarter, we launched our Block Pain dashboard that lets our hospital and outpatient surgery customers have a scoreboard of their success for pain management metrics with their surgical patients. We have also implemented an internal asset management system for our own pumps. We will now roll out to the marketplace for our customers to benefit from this investment as well. Going forward, organic growth of pump rentals and infusion product sales, both capital and disposables, will generate the cash necessary to pay down debt while we invest in the new IT systems that will accelerate the current business and in new therapy areas like pain management that will diversify our revenue stream. Additionally in the quarters ahead, we will have an increased focus on patient collections and reducing AR. In summary, I’m pleased with our ongoing efforts and our significant momentum in connecting electronically with our customers and our expansion efforts into new segments and products. I will now turn it over to John for specific discussions on our financial results.

Thank you, Eric. Prior to getting deep into the numbers, let me point out a few takeaways from this quarter’s results as viewed from a financial perspective. First, seasonality – we updated seasonality in the 10-K just recently. With the Affordable Healthcare Act, more so than in the past, the first quarter is impacted with higher bad debt and later billings due to the increased need for precertification of insurance. Higher patient deductibles and co-pays, collection of patient receivables, as Eric just mentioned, is a focus of our third party operations. Second, focused spending in information technology and new product services like pain management are key to adding to our revenue growth. Such spending will increase our competitive edge and will add to our revenue stream in the future. We did have some severance in the quarter, as Eric mentioned, and this is because Eric’s continuing to hone his management team and sales force. Spending on comparable G&A from Q1 ’13 to Q1 ’14 actually decreased. Third, management and our board are focused on organic growth and paying down debt. This quarter, we needed to increase our rental fleet to support future revenue demands by a sizeable amount. Pump purchases totaled $1.3 million since the end of 2013 and $3.5 million since the prior year quarter. In the second quarter, we disclosed in the recently filed 10-Q a pay-down on one of our bank term loans via an excess cash flow suite to the tune of $1.6 million. Most importantly, we have experienced strong revenue growth in the quarter in both rentals and product sales, reflecting the results of the company’s execution on our strategic plan. All this combined is supporting our efforts to reduce our cost of capital, especially bank debt. I look forward to sharing more on this…

Thank you. We will now begin the question and answer session. [Operator instructions] Thank you. Our first question comes from Doug Weiss from ASW Investments. Please go ahead. Doug Weiss – ASW Investments: Hey, good morning.

Good morning. Doug Weiss – ASW Investments: Could you talk a little bit about the deprecation and disposal line item and why that rose as a percent of rental revenue?

I’m sorry – you kind of broke up there. Doug Weiss – ASW Investments: Could you speak a little bit to depreciation and disposal and why that was up relative to rental revenue?

Well, we’ve added to our pump fleet during the year, and so if you look at it, we’ve added to our pump fleet $3.5 million from Q1 of last year. At the same time, we did increase our depreciable life from five to seven years, so on a comparable basis if we’d kept it at five years, depreciation would have been roughly $500,000 more in the quarter. But due to the way that we’re managing our pump fleet and servicing it here in our Kansas facility, we drastically have reduced our disposals. Doug Weiss – ASW Investments: Okay. I mean, I guess—now I’m just talking within the gross profit section, and I guess that line item—just looking on a percentage of rental revenue, I guess it moves around quite a bit but on a year-over-year basis, that’s one of the big deltas in your total cost base.

Again, what’s happened—if you look at last year for the total year, if you’re looking on a comparable basis, since this time last year we’ve added $3.5 million of medical equipment and service. We’ve really, over the past two years, have added a significant amount after a period of time when we really didn’t add to our pump fleet – very little, I mean, compared to today, so you’re seeing that impact. It’s just a pure math play of the addition of pumps over this period of time and how much of our pump fleet in the past has been fully depreciated. Doug Weiss – ASW Investments: So I’m speaking specifically to the $2,276,000. Does that include a loss on disposal?

I’m sorry, where are you looking—on--? Doug Weiss – ASW Investments: So within the—right above the gross profit, the 2.276—

Yeah, that does include loss on disposals. Doug Weiss – ASW Investments: Is it possible to say what the loss was, or--?

From the standpoint of—that would also include—in that section, that would also include the cost of the pumps of the Alaris sale. Doug Weiss – ASW Investments: Okay.

Because that’s disposable pumps, so it’s roughly $596,000 of that number as well. So a large part of that is due to the pumps, so going forward you would see that number come down from Q1. Doug Weiss – ASW Investments: Okay.

So again, let me be clear – of that 2.276, you have a lot of things in play. Let me summarize it. We have—we have increased pumps over the last year, significantly more than we have so in the past. Going the opposite direction, you have depreciable lives going higher, so you have pumps—so that has brought pump down, then also the Alaris pump sale for $0.9 million, roughly $600,000 of cost ran through that, but you also have some service and supply costs that were associated with that in the line item above. So the gross margin altogether on that $900,000 sale was a very, very low margin.

So as we talked earlier about the one-time opportunistic sale to a broker customer, we had the opportunity to buy a large amount of used pumps and then sell them to one of our broker customers, and the cost of that one-time sale, which is at a lower margin than our usual margins, is usual reflected in that number. Doug Weiss – ASW Investments: Okay.

And Doug, if I could point out that our cost to revenues, because of the way we transact our business, the cost of revenues is not aligned with the revenue line items above. Doug Weiss – ASW Investments: Okay, all right. Then on the provision for doubtful expense, I know you guys are transitioning to contracting more on a regional basis with insurers as opposed to previously being paid by a single national payor. Where are you in that process, and when do you think the improvement in reimbursement will be reflected more meaningfully from a margin standpoint?

Well I guess to start with, I don’t accept the premise that we’re doing more regional insurance contracting. Actually, we’ve gone—with one group, we’ve gone to a larger national account, so we aren’t going—we have a new strategy where we’re specifically trying to do regional payors. This one situation has happened because we’ve signed an agreement with a national payor that we used to have regional payor contracts with, so it’s going to the other way.

Yeah, and after I answer, we’ll let Jan chime in as well. One of the things is if you look at the growth in the AR reserve, and as I’ve mentioned third party payor is a focus of our third party operations, if you charge it off, you’re not going to collect it – you know, out of sight, out of mind. So as we gear up, you should see as we move forward a reduction in total accounts receivables and the reserves as we move forward in the year, and by the time we get to this time at the end of the year. Jan, you want to chime in on the contract situation?

Sure. So a couple of things – number one, with the implementation of the Affordable Care Act, what that has done is caused a lot of chaos, if you will, with respect to the patient population in that many patients’ plans are changing and their out-of-pocket expenses are increasing. As John mentioned, because of all these changes, we implemented a process for going back and re-verifying patients insurance because we’ve found that many patients’ plans have changed and therefore we don’t want to be dealing with these issues on the back end. So with all that said, these plans that have higher patient deductibles and co-insurance also increase our patient receivables. Number two, with respect to the payors, that’s an ongoing process where we continue to focus on contracting with all payors that affect our business, so as we gain new business we review the insurance carriers that these patients have and we make sure that we begin the process of contracting if those contracts aren’t in place, and that includes that national payor group that Eric was referring to. We’ve made a lot of progress, but it is a process and that too has been slowed down slightly as these plans are all scrambling to get their plans on the healthcare exchange available for patients due to the Affordable Care Act. Doug Weiss – ASW Investments: Mm-hmm. So I mean, I don’t know if you can put any numbers around it in terms of how much you think that can decline on a percentage basis this year and next year, or is that too tough to say?

I think that’s pretty difficult to say at this point. All I can tell you is it is a major focus for our operations group, and we continue as we always have to emphasize the need for payor contracts. That’s always been an area of strength for us, and I see no reason to think that that would be anything other than a strength going forward. Doug Weiss – ASW Investments: Okay. Then just one last point on the allowance, and that’s that—you know, at this point, I assume that’s really more of an accounting estimate based on the growth in your receivable balance. Your collection rates may actually prove better than your estimate there – is that true, or--?

Yes, that definitely is true, and we believe that—we account for it as best as we can, but we can always do better than we have estimated. We reserve almost all of patient receivables right up front as soon as we bill it. Doug Weiss – ASW Investments: All right, thanks. Talk to you next quarter.

Thank you, Doug. And Doug, one last thing on the depreciation, if you go to the press release that’s either out on the web or at the SEC on the 8-K, you’ll see that the depreciation has declined significantly, so the majority of that increase is the Alaris pumps, and that should give you an idea of how to adjust the numbers going forward. Doug Weiss – ASW Investments: Okay. All right, thank you.

Thank you.

Thank you, and once again if you would like to ask a question, please press star then one on your touchtone phone. We have no further questions at this time. Oh, a question has just chimed up from David Cohen from Minerva Advisors. Please go ahead, sir. David Cohen – Minerva Advisors: Thanks. Morning, guys. Could you talk a little about your outlook—

David, could you speak up? We can barely hear you – I’m sorry. David Cohen – Minerva Advisors: Well, I really can’t. I’ll do what I can.

Okay, there you go. That’s better. David Cohen – Minerva Advisors: I’m just interested in the full-year revenue growth guidance relative to the first quarter revenue growth, even backing out the pump sale. It’s obviously significantly lower despite the fact that we’ve made meaningful pump investment, and I’d just be interested in hearing the rationale behind that divergence. Thank you.

Yeah, thanks very much – great question. The first quarter, big revenue – we hit a lot of product sales as opposed to our recurring rentals, and one thing that I know about being in the IV pump business for most of my life, when you are selling capital equipment, you can get—you know, it takes you a long time to get the sale, and then when it hits, you’ve got a big revenue bump. I would say one thing that’s probably different from prior management in my first year was when the salespeople had deals at the end of the year – hey, I can get this deal but I need a little bit off and I need a little bit off – I don’t like discounting pricing at the end of years or end of quarters to make the numbers look good at the end of that period. Probably I’m indelibly etched of working for larger, publicly-held companies and didn’t like having to discount prices to make a number, so by letting things happen when they may without discounting, we happen to get a number of large capital sales in the first quarter, and again our product sales were way up, not our (audio interference) rentals. So with such a good first quarter, do we (audio interference) to ramp up and do better? Yeah, we do; but the guidance was based on really taking a good look at our strategic plan, our markets, what we’re trying to do, and after issuing that guidance just such a short time ago, I’m not going to let one big quarter of capital sales have me promise to all of you that this is going to continue in this vein.

Yeah, and let me add to that – on the rental side, we did add to our pump fleet and that traditionally takes about a quarter for that to take hold as you get the pumps out and distributed to the new customer base. But if you look at it on a quarter-over-quarter basis, taking the seasonality into account, if you compare to Q1 of ’13, rental revenue still went up 10%. So the rental revenue is growing on a prior year basis compared to basis maybe not on a previous quarter basis, but from a standpoint of how long it takes those pumps to start generating revenue, generally it’s one quarter. David Cohen – Minerva Advisors: Got it. Thank you.

Thank you.

Thanks for your question.

Thank you. We have no further questions at this time.

Okay, thank you Operator, and thanks everyone for your interest in InfuSystem and for participating in the call this morning.