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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the quarterly period ended June 30, 2022
or
¨     Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the transition period from _____ to _____
Commission File Number: 001-35020
infu-20220630_g1.jpg
INFUSYSTEM HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware20-3341405
(State or Other Jurisdiction of
 Incorporation or Organization)
(I.R.S. Employer
 Identification No.)
3851 West Hamlin Road
Rochester Hills, Michigan 48309
(Address of Principal Executive Offices)
Registrants Telephone Number, including Area Code: (248) 291-1210
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on which Registered
Common Stock, par value $0.0001 per shareINFUNYSE American LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨Accelerated filer¨Non-accelerated filer xSmaller reporting companyx
Emerging growth company¨   
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of July 28, 2022, 20,694,814 shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.
1

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
Index to Form 10-Q
  
PAGE
 
   
   
 
 
 
 
 
   
   
   
   
 
   
  
  
  
  
  
  
  
2

PART IFINANCIAL INFORMATION
Item 1. Financial Statements
INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
As of
(in thousands, except par value and share data)
June 30, 2022December 31, 2021
ASSETS  
Current assets:  
Cash and cash equivalents$311$186
Accounts receivable, net15,83915,405
Inventories4,8763,939
Other current assets1,9362,535
Total current assets22,96222,065
Medical equipment for sale or rental2,2781,742
Medical equipment in rental service, net of accumulated depreciation39,58139,871
Property & equipment, net of accumulated depreciation4,3104,523
Goodwill3,7103,710
Intangible assets, net9,50910,930
Operating lease right of use assets4,7184,241
Deferred income taxes10,19110,033
Other assets1,558471
Total assets$98,817$97,586
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable$9,434$7,862
Current portion of long-term debt349
Other current liabilities4,9914,685
Total current liabilities14,42512,896
Long-term debt, net of current portion33,68732,748
Operating lease liabilities, net of current portion4,2083,670
Total liabilities52,32049,314
Stockholders’ equity:
Preferred stock, $0.0001 par value: authorized 1,000,000 shares; none issued
Common stock, $0.0001 par value: authorized 200,000,000 shares; 20,694,814 shares issued and outstanding as of June 30, 2022 and 20,699,546 shares issued and outstanding as of December 31, 2021
22
Additional paid-in capital104,146101,905
Accumulated other comprehensive income1,140268
Retained deficit(58,791)(53,903)
Total stockholders’ equity46,49748,272
Total liabilities and stockholders’ equity$98,817$97,586
See accompanying notes to unaudited condensed consolidated financial statements.
3

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(UNAUDITED)
(in thousands, except share and per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Net revenues$27,042$24,834$53,805$49,297
Cost of revenues12,1419,78423,53719,671
Gross profit14,90115,05030,26829,626
Selling, general and administrative expenses:
Provision for doubtful accounts(41)(39)6(109)
Amortization of intangibles7111,0961,4212,139
Selling and marketing3,0832,6806,4025,056
General and administrative10,94110,61722,75720,971
 
Total selling, general and administrative14,69414,35430,58628,057
 
Operating income (loss)207696(318)1,569
Other expense:
Interest expense(314)(317)(591)(639)
Other expense(30)(37)(58)(106)
 
(Loss) Income before income taxes(137)342(967)824
(Provision for) benefit from income taxes(27)478435657
Net (loss) income$(164)$820$(532)$1,481
Net (loss) income per share:
Basic$(0.01)$0.04$(0.03)$0.07
Diluted$(0.01)$0.04$(0.03)$0.07
Weighted average shares outstanding:
Basic20,583,92820,487,84520,596,58020,413,416
Diluted20,583,92822,065,48620,596,58022,017,455
 
Comprehensive income:
Net (loss) income$(164)$820$(532)$1,481
Other comprehensive income:
Unrealized gain (loss) on hedges244(106)1,14952
Provision for income tax on unrealized hedge gain(59)(13)(277)(13)
Net comprehensive income$21$701$340$1,520
See accompanying notes to unaudited condensed consolidated financial statements.
4

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
STOCKHOLDERS EQUITY
(UNAUDITED)
 Common Stock
Additional Paid in Capital
Retained Deficit
Accumulated Other Comprehensive Income
Treasury Stock
Total StockholdersEquity
(in thousands)
Shares
Par Value Amount
Shares
Par Value Amount
Balances at March 31, 202123,915$2$86,163$(43,374)$158(3,518)$$42,949
Stock-based shares issued upon vesting - gross180254254
Stock-based compensation expense1,3721,372
Employee stock purchase plan16
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation(27)(576)(576)
Other comprehensive loss(119)(119)
Net income820820
Balances at June 30, 202124,084$2$87,213$(42,554)$39(3,518)$$44,700
 
Balances at March 31, 202220,540$2$103,373$(58,277)$955$$46,053
Stock-based shares issued upon vesting - gross263234234
Stock-based compensation expense1,1231,123
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation(69)(584)(584)
Common stock repurchased as part of share repurchase program(39)(350)(350)
Other comprehensive income185185
Net loss(164)(164)
Balances at June 30, 202220,695$2$104,146$(58,791)$1,140$$46,497
 
Balances at December 31, 202023,816$2$84,785$(44,035)$(3,518)$$40,752
Stock-based shares issued upon vesting - gross309393393
Stock-based compensation expense3,0073,007
Employee stock purchase plan16169169
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation(57)(1,141)(1,141)
Other comprehensive income3939
Net income1,4811,481
Balances at June 30, 202124,084$2$87,213$(42,554)$39(3,518)$$44,700
 
Balances at December 31, 202120,700$2$101,905$(53,903)$268$$48,272
Stock-based shares issued upon vesting - gross388473473
Stock-based compensation expense2,1702,170
Employee stock purchase plan28236236
Common stock repurchased to satisfy minimum statutory withholding on stock-based compensation(72)(638)(638)
Common stock repurchased as part of share repurchase program(349)(4,356)(4,356)
Other comprehensive income872872
Net loss(532)(532)
Balances at June 30, 202220,695$2$104,146$(58,791)$1,140$$46,497
See accompanying notes to unaudited condensed consolidated financial statements.
5

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30,
(in thousands)20222021
OPERATING ACTIVITIES
Net (loss) income$(532)$1,481
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Provision for doubtful accounts6(109)
Depreciation5,3955,090
Loss on disposal of and reserve adjustments for medical equipment1,101640
Gain on sale of medical equipment(883)(375)
Amortization of intangible assets1,4212,139
Amortization of deferred debt issuance costs37114
Stock-based compensation2,1703,007
Deferred income taxes(435)(658)
Changes in assets - (increase)/decrease:
Accounts receivable(924)(329)
Inventories(937)(647)
Other current assets599138
Other assets(19)(70)
Changes in liabilities - (decrease)/increase:
Accounts payable and other liabilities2,496(1,607)
NET CASH PROVIDED BY OPERATING ACTIVITIES9,4958,814
INVESTING ACTIVITIES
Acquisition of business(7,490)
Purchase of medical equipment(6,669)(4,943)
Purchase of property and equipment(336)(334)
Proceeds from sale of medical equipment, property and equipment2,0811,503
NET CASH USED IN INVESTING ACTIVITIES(4,924)(11,264)
 
FINANCING ACTIVITIES
Principal payments on long-term debt(20,665)(53,982)
Cash proceeds from long-term debt21,21847,913
Debt issuance costs(386)
Cash payment of contingent consideration(750)
Common stock repurchased to satisfy statutory withholding on employee stock-based compensation plans(639)(1,141)
Common stock repurchased as part of share repurchase program(4,356)
Cash proceeds from stock plans746562
NET CASH USED IN FINANCING ACTIVITIES(4,446)(7,034)
Net change in cash and cash equivalents125(9,484)
Cash and cash equivalents, beginning of period1869,648
Cash and cash equivalents, end of period$311$164
See accompanying notes to unaudited condensed consolidated financial statements.
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INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.Basis of Presentation, Nature of Operations and Summary of Significant Accounting Policies
The terms “InfuSystem”, the “Company”, “we”, “our” and “us” are used herein to refer to InfuSystem Holdings, Inc. and its subsidiaries. InfuSystem is a leading provider of infusion pumps and related products and services for patients in the home, oncology clinics, ambulatory surgery centers, and other sites of care. The Company provides products and services to hospitals, oncology practices and facilities and other alternative site health care providers. Headquartered in Rochester Hills, Michigan, the Company delivers local, field-based customer support, and also operates pump service and repair Centers of Excellence in Michigan, Kansas, California, Massachusetts, Texas and Ontario, Canada.
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and notes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The accompanying unaudited condensed consolidated financial statements include all adjustments, composed of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position and cash flows. The operating results for the interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on March 15, 2022.
The unaudited condensed consolidated financial statements are prepared in conformity with GAAP, which requires the use of estimates, judgments and assumptions that affect the amounts of assets and liabilities at the reporting date and the amounts of revenue and expenses in the periods presented. The Company believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods.
2.Recent Accounting Pronouncements and Developments
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-13, “Financial Instruments (Topic 326) Credit Losses”. Topic 326 changes the impairment model for most financial assets and certain other instruments. Under the new standard, entities holding financial assets and net investment in leases that are not accounted for at fair value through net income are to be presented at the net amount expected to be collected. An allowance for credit losses will be a valuation account that will be deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. Topic 326 was originally effective as of January 1, 2020, although in November 2019, the FASB delayed the effective date until fiscal years beginning after December 15, 2022 for SEC filers eligible as of the FASB's deferral date to be smaller reporting companies under the SEC’s definition. The Company qualified as a smaller reporting company in November 2019 when the FASB delayed the effective date of Topic 326. Early adoption is permitted. The Company is currently evaluating the impact of Topic 326 on its consolidated balance sheets, statements of operations, statements of cash flows and related disclosures.
3.Business Combinations
Acquisitions Accounted for Using the Purchase Method
On January 31, 2021, the Company acquired the business and the majority of the assets of FilAMed, a privately-held biomedical services company based in Bakersfield, California. In becoming part of the Company's Durable Medical Equipment Services ("DME Services") segment, this acquisition supplements the Company’s existing biomedical recertification, maintenance and repair services for acute care facilities and other alternate site settings including home care and home infusion providers, skilled nursing facilities, pain centers and others.
On April 18, 2021, the Company acquired the business and substantially all of the assets of OB Healthcare Corporation (“OB Healthcare”), a privately-held biomedical services company based in Mesquite, Texas. OB Healthcare specializes in on-site repair, preventative maintenance, and device physical inventory management to hospitals and healthcare systems nationwide. The acquisition further develops and expands InfuSystem’s DME Services segment and complements the Company’s purchase of FilAMed.
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The results of operations for FilAMed and OB Healthcare are included in the Company’s consolidated statements of operations from the respective closing dates.
Purchase Price Allocation
Pursuant to FASB Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations,” the purchase price for each of the acquisitions was allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the respective acquisition dates. The purchase price allocations were primarily based upon a valuation using management’s estimates and assumptions. The purchase price allocation was completed for FilAMed and OB Healthcare as of December 31, 2021. The following table summarizes the consideration paid and the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed as of the respective acquisition dates for both FilAMed and OB Healthcare (in thousands):
 FilAMed
OB
Healthcare
Total
Consideration
Cash$1,400 $6,250 $7,650 
Working capital, paid in cash 325 325 
Contingent consideration, paid in cash 750 750 
Total - consideration$1,400 $7,325 $8,725 
 
FilAMed
OB
Healthcare
Total
Acquisition Date
Fair Value
Accounts receivable$ $725 $725 
Inventories74  74 
Medical equipment held for sale or rental40  40 
Property and equipment102 59 161 
Intangible assets1,015 3,000 4,015 
Goodwill169 3,541 3,710 
Operating lease right of use assets281 7 288 
Operating lease liabilities(281)(7)(288)
Total - purchase price$1,400 $7,325 $8,725 

The amount of acquisition costs for both transactions was $0.1 million for the six months ended June 30, 2021 and was included in general and administrative expenses.
The Company fully paid all consideration for FilAMed as of December 31, 2021. On the OB Healthcare acquisition date, the Company made an initial cash payment of $6.1 million with subsequent cash payments of $0.4 million during the year ended December 31, 2021 and had an additional estimated amount due to the seller for contingent consideration of $0.8 million, which was recorded in the balance sheet under the heading for other current liabilities. The contingent consideration arrangement, as amended, required the Company to pay OB Healthcare $0.8 million if certain written contracts were executed. As of June 30, 2022, the requirement under the contingent consideration arrangement had been satisfied and the Company had made the required payment.
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The following table shows the breakdown of the identified intangible assets acquired into major intangible asset classes for both acquisitions:
 
Acquisition Date
Fair Value
(Thousands)
Weighted-Average
Amortization Period
(Years)
Customer relationships$2,300 15
Unpatented technology943 7
Non-competition agreements472 5
Internal-use software300 5
 
Total intangible assets (a)$4,015 11.2
(a) There was no residual value, renewal terms or extensions associated with any intangible assets acquired.
The goodwill acquired consists of expected synergies from combining operations of FilAMed and OB Healthcare with the DME Services segment as well as their respective assembled workforce who have specialized knowledge and experience. All of the goodwill is deductible for tax purposes.
Unaudited Pro Forma Financial Information
The unaudited pro forma financial information in the table below summarizes the combined results of operations of the Company, FilAMed and OB Healthcare as though the companies’ businesses had been combined as of January 1, 2021. The pro forma financial information for the three and six months ended June 30, 2021 has been adjusted by $0.1 million for the tax effected amount of acquisition costs and non-recurring expenses directly attributable to the FilAMed and OB Healthcare acquisitions. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of each period presented nor is it indicative of future results. The following pro forma financial information presented also includes the pro forma depreciation and amortization charges from acquired tangible and intangible assets for the three and six months ended June 30, 2021 (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 20212021
Revenue$25,388 $50,067 
Net income$1,001 $1,641 
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4.Revenue Recognition
The following tables present the Company’s disaggregated revenue by offering type (in thousands):
 Three Months Ended
June 30,
 20222021
 
Total Net
Revenues
Percentage of
Total Net
Revenues
Total Net
Revenues
Percentage of
Total Net
Revenues
Third-Party Payer Rentals$13,896 51.4 %$13,130 52.9 %
Direct Payer Rentals7,982 29.5 %7,253 29.2 %
Product Sales3,662 13.5 %3,350 13.5 %
Services1,502 5.6 %1,101 4.4 %
 
Total$27,042 100.0 %$24,834100.0 %
Six Months Ended
June 30,
 20222021
 
Total Net
Revenues
Percentage of Total Net Revenues
Total Net
Revenues
Percentage of Total Net Revenues
 
Third-Party Payer Rentals$27,264 50.7 %$25,924 52.6 %
Direct Payer Rentals15,944 29.6 %14,651 29.7 %
Product Sales7,406 13.8 %6,933 14.1 %
Services3,191 5.9 %1,789 3.6 %
 
Total$53,805 100.0 %$49,297 100.0 %
Third-Party Payer Rentals are entirely attributed to revenues of the Integrated Therapy Services (“ITS”) segment. Services revenues are entirely attributed to the DME Services segment. For the three months ended June 30, 2022, $3.4 million and $4.6 million of Direct Payer Rentals were attributed to the ITS and DME Services segments, respectively. For the three months ended June 30, 2021, $3.2 million and $4.1 million of Direct Payer Rentals were attributed to the ITS and DME Services segments, respectively. For the three months ended June 30, 2022, less than $0.1 million and $3.7 million of Product Sales were attributed to the ITS and DME Services segments, respectively. For the three months ended June 30, 2021, all Product Sales were entirely attributed to the DME Services segment.
For the six months ended June 30, 2022, $6.5 million and $9.4 million of Direct Payer Rentals were attributed to the ITS and DME Services segments, respectively. For the six months ended June 30, 2021, $6.3 million and $8.4 million of Direct Payer Rentals were attributed to the ITS and DME Services segments, respectively. For the six months ended June 30, 2022, $0.1 million and $7.3 million of Product Sales were attributed to the ITS and DME Services segments, respectively. For the six months ended June 30, 2021, all Product Sales were entirely attributed to the DME Services segment.
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5.Medical Equipment
Medical equipment consisted of the following (in thousands):
 June 30,
2022
December 31, 2021
Medical equipment for sale or rental$2,322$1,788
Medical equipment for sale or rental - pump reserve(44)(46)
Medical equipment for sale or rental - net2,2781,742
 
Medical equipment in rental service95,58091,891
Medical equipment in rental service - pump reserve(1,968)(1,074)
Accumulated depreciation(54,031)(50,946)
Medical equipment in rental service - net39,58139,871
 
Total$41,859$41,613
Depreciation expense for medical equipment for the three and six months ended June 30, 2022 was $2.5 million and $4.9 million, respectively, compared to $2.3 million and $4.6 million for the same prior year periods, respectively. This expense was recorded in “cost of revenues” for each period. The pump reserve for medical equipment in rental service represents an estimate for medical equipment that is considered to be missing. The reserve calculated is equal to the net book value of assets that have not returned from the field within a certain timeframe. During the current period, the Company changed its estimate for missing pumps by shortening the time estimate of when a pump is considered missing. As a result of this change in estimate, the Company increased the pump reserve as of June 30, 2022 and increased its cost of sales for the three and six months ended June 30, 2022, respectively, by $0.5 million.
6.Property and Equipment
Property and equipment consisted of the following (in thousands):
 June 30, 2022December 31, 2021
 Gross Assets
Accumulated
Depreciation
TotalGross Assets
Accumulated Depreciation
Total
Furniture, fixtures, and equipment$5,130$(2,883)$2,247$4,812$(2,528)$2,284
Automobiles110(105)5110(103)7
Leasehold improvements3,449(1,391)2,0583,444(1,212)2,232
 
Total$8,689$(4,379)$4,310$8,366$(3,843)$4,523
Depreciation expense for property and equipment for the three and six months ended June 30, 2022 was $0.2 million and $0.5 million, respectively, compared to $0.3 million and $0.5 million for the same prior year periods, respectively. This expense was recorded in “general and administrative expenses” for each period.
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7.Goodwill & Intangible Assets
The changes in the carrying value of goodwill by segment for the six months ended June 30, 2022 are as follows (in thousands):
 DME Services (a)
Balance as of December 31, 2021$3,710
Goodwill acquired
Balance as of June 30, 2022$3,710
(a) The ITS segment has no recorded goodwill.
The carrying amount and accumulated amortization of intangible assets consisted of the following (in thousands):
 June 30, 2022December 31, 2021
 
Gross
Assets
Accumulated
Amortization
Net
Gross
Assets
Accumulated
Amortization
Net
Nonamortizable intangible assets      
Trade names$2,000$$2,000$2,000$$2,000
Amortizable intangible assets:
Trade names23(23)23(23)
Physician and customer relationships38,834(32,665)6,16938,834(31,401)7,433
Non-competition agreements472(114)358472(67)405
Unpatented technology943(191)752943(123)820
Software11,530(11,300)23011,530(11,258)272
 
Total nonamortizable and amortizable intangible assets$53,802$(44,293)$9,509$53,802$(42,872)$10,930
Amortization expense for the three and six months ended June 30, 2022 was $0.7 million and $1.4 million, respectively, compared to $1.1 million and $2.1 million for the same prior year periods, respectively. This expense was recorded in “amortization of intangibles expenses” for each period. Expected remaining annual amortization expense for the next five years for intangible assets recorded as of June 30, 2022 is as follows (in thousands):
 20222023202420252026
2027 and thereafter
Total
        
Amortization expense$1,073$990$990$810$524$3,122$7,509
8.Debt
On February 5, 2021, the Company entered into a Credit Agreement (the 2021 Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Agent”), sole bookrunner and sole lead arranger, and the lenders party thereto. The borrowers under the 2021 Credit Agreement are the Company, InfuSystem Holdings USA, Inc. (“Holdings”), InfuSystem,
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Inc. (“ISI”), First Biomedical, Inc. (“First Biomedical”), and IFC LLC (“IFC” and, collectively with the Company, Holdings, ISI and First Biomedical, the “Borrowers”).
The 2021 Credit Agreement provides for a revolving credit facility (the “Revolving Facility”) of $75.0 million, that matures on February 5, 2026. The Revolving Facility may be increased by $25.0 million, subject to certain conditions, including the consent of the Agent and obtaining necessary commitments. The lenders under the 2021 Credit Agreement may issue up to $7.0 million in letters of credit subject to the satisfaction of certain conditions. On February 5, 2021, the Borrowers made an initial borrowing of $30.0 million under the Revolving Facility. Proceeds from the loan, along with approximately $8.2 million in cash, were used to repay all amounts due under the Company’s then existing credit facility dated March 23, 2015 (the “2015 Credit Agreement”).
The 2021 Credit Agreement has customary representations and warranties. The ability to borrow under the facility is subject to ongoing compliance with a number of customary affirmative and negative covenants, including limitations on indebtedness, liens, mergers, acquisitions, investments, asset sales, affiliate transactions and restricted payments, as well as financial covenants, including the following:
a minimum fixed charge coverage ratio (defined as the ratio of consolidated EBITDA (as defined in the 2021 Credit Agreement) less 50% of depreciation expense), to consolidated fixed charges (as defined in the 2021 Credit Agreement)) for the prior four most recently ended calendar quarters of 1.20 to 1.00; and
a maximum leverage ratio (defined as total indebtedness to EBITDA for the prior four most recently ended calendar quarters) of 3.50 to 1.00.
The 2021 Credit Agreement includes customary events of default. The occurrence of an event of default will permit the lenders to terminate commitments to lend under the Revolving Facility and accelerate payment of all amounts outstanding thereunder.
Simultaneous with the execution of the 2021 Credit Agreement, the Company entered into a Pledge and Security Agreement to secure repayment of the obligations of the Borrowers. Under the Pledge and Security Agreement, each Borrower has granted to the Agent, for the benefit of various secured parties, a first priority security interest in substantially all of the personal property assets of each of the Borrowers, including the shares of each of Holdings, ISI and First Biomedical and the equity interests of IFC.
On February 5, 2021, in connection with the execution and closing of the 2021 Credit Agreement, the Company, along with its wholly owned subsidiaries as borrowers, terminated the 2015 Credit Agreement. All outstanding loans under the 2015 Credit Agreement were repaid and all liens under the 2015 Credit Agreement were released, except that a letter of credit originally issued under the 2015 Credit Agreement in the amount of approximately $0.8 million was transferred to the 2021 Credit Agreement.
The 2021 Credit Agreement was accounted for as a debt modification. As of June 30, 2022, the Company was in compliance with all debt-related covenants under the 2021 Credit Agreement.
On April 15, 2019, the Company sold for $2.0 million and immediately leased back certain medical equipment in rental service to a third party specializing in such transactions. The leaseback term is 36 months. Because the arrangement contains a purchase option that the Company is reasonably certain to exercise, this transaction did not qualify for the sale-leaseback accounting under ASC 842. The medical equipment remains recorded on the accompanying condensed consolidated balance sheet and the proceeds received had been classified as an other financing liability. As of June 30, 2022, all amounts owed under this arrangement had been paid.
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As referenced above, the Company executed and closed the 2021 Credit Agreement during the first quarter of 2021, and in connection with entering into that agreement, terminated the 2015 Credit Agreement. The following table illustrates the net availability under the Revolving Facility as of the applicable balance sheet date (in thousands):
 June 30,
2022
December 31,
2021
Revolving Facility:
Gross availability$75,000$75,000
Outstanding draws(33,950)(32,974)
Letter of credit(600)(600)
Availability on Revolving Facility$40,450$41,426
The Company had future maturities of its long-term debt as of June 30, 2022 as follows (in thousands):
 2022202320242025
2026 and
thereafter
Total
Revolving Facility$$$$$33,950$33,950
Total$$$$$33,950$33,950
The following is a breakdown of the Company’s current and long-term debt (in thousands):
 June 30, 2022December 31, 2021
 
Current
Portion
Long-Term
Portion
Total
Current
Portion
Long-Term
Portion
Total
Revolving Facility$$33,950$33,950$$32,974$32,974
Other financing423423
 33,95033,95042332,97433,397
Unamortized value of debt issuance costs(263)(263)(74)(226)(300)
Total$$33,687$33,687$349$32,748$33,097
As of June 30, 2022, amounts outstanding under the Revolving Facility provided under the 2021 Credit Agreement bear interest at a variable rate equal to, at the Company’s election, a LIBO Rate for Eurodollar loans or an Alternative Base Rate for ABR loans, as defined by the 2021 Credit Agreement, plus a spread that will vary depending upon the Company’s leverage ratio. The spread ranges from 2.25% to 3.00% for Eurodollar Loans and 1.25% to 2.00% for base rate loans. The weighted-average Eurodollar loan rate at June 30, 2022 was 3.62% (LIBO of 1.37% plus 2.25%). The actual ABR loan rate at June 30, 2022 was 4.75% (lender’s prime rate of 3.50% plus 1.25%).
9.Derivative Financial Instruments and Hedging Activities
In February 2021, the Company adopted a derivative investment policy which provides guidelines and objectives related to managing financial and operational exposures arising from market changes in short term interest rates. In accordance with this policy, the Company can enter into interest rate swaps or similar instruments, will endeavor to evaluate all the risks inherent in a transaction before entering into a derivative financial instrument and will not enter into derivative financial instruments for speculative or trading purposes. Hedging relationships are formally documented at the inception of the hedge and hedges must be highly effective in offsetting changes to future cash flows on hedged transactions at the inception of a hedge and on an ongoing basis to be designated for hedge accounting treatment.
The Company is exposed to interest rate risk related to its variable rate debt obligations under the 2021 Credit Agreement. In order to manage the volatility in interest rate markets, in February 2021, the Company entered into two interest rate swap agreements to manage exposure arising from this risk. On a combined basis, the agreements have a constant notional amount over a five-year term that ends on February 5, 2026. The agreements both pay the Company 30-day LIBOR on the
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notional amount and the Company pays a fixed rate of interest equal to 0.73%. These derivative instruments are considered cash flow hedges. The Company does not have any other derivative financial instruments.
The tables below present the location and gross fair value amounts of the Company's derivative financial instruments and the associated notional amounts designated as cash flow hedges as of the applicable balance sheet date (in thousands):
 
June 30, 2022
 Balance Sheet LocationNotionalFair Value Derivative Assets
Derivatives designated as hedges:
Cash flow hedges
Interest rate swapsOther assets$20,000$1,504

 
December 31, 2021
 Balance Sheet LocationNotionalFair Value Derivative Assets
Derivatives designated as hedges:
Cash flow hedges
Interest rate swapsOther assets