INFU 10-K & 10-Q changes, risk factors and insider trading

Our revenues are substantially dependent on third-party reimbursement. We are paid directly by private insurers and, in some cases, governmental agencies, often on a fixed fee basis, for the use of continuous infusion equipment and related disposable supplies provided to patients. If the average fees allowable by private insurers or governmental agencies were reduced, the negative impact on revenues could have a material effect on our business, financial condition, results of operations and cash flows. Also, if amounts owed to us by patients and insurers are reduced or not paid on a timely basis, weour concessions may be required to increase our concessions and/or decreaserevenues ourmay revenues.decrease.

Our contracts for reimbursement with third-party payers are often for a term of one year, with automatic one-year renewals, unless we or the contracted payer elect not to renew. These evergreen contracts are subject to termination upon written notice. We may be unable to renew existing or obtain additional contract positions with third-party payers on favorable terms or at all. One or more terminations could have a material and adverse effect on our business, financial condition, results of operations and cash flows.

The continued consolidation of physician practices, outpatient infusion clinics, oncology clinics, homecare providers and hospitals, increases the concentration of decision makers whomwho either choose to use our ambulatory electronic pumps within our Oncology Business or directly rent, lease or purchase pumps or supplies from us. While we make every effort to benefit from such concentration, it could materially and adversely affect our business, financial condition, results of operations and cash flows.

An increased focus on lowering healthcare spending via improved diagnostic testing (i.e., defensive medicine) and patient monitoring could materially and negatively affect our business. A large portion of our ambulatory infusion pumps are dedicated to a specific form of cancer: (colorectal). cancer. As a result of rising healthcare costs, there may be a demand for more cost-effective approaches to disease management, specifically for colorectal cancer, as well as for emphasis on screening and accurate diagnostic testing to facilitate early detection of potentially costly, severe afflictions. Any change in the approach to treatment of colorectal cancer could have a material and adverse impact on our business, financial condition, results of operations and cash flows.

The impact of realizedactual andor potentialperceived U.S. healthcare reform legislation on us remains uncertain.

The ACA has perpetuated the development of alternative provider payment models by CMS and the major national commercial payers. These payment models do not replace the current fee-for-service models nor replace current payer contracts, but rather provide additional financial incentives to certain “accountable” providers to improve quality and lower cost. The implications for the Companyus will come from the provider networks that are forming in order to integrate and coordinate care under these alternative models with CMS and the commercial payers. These provider networks include ACOs, patient-centered primary care medical homes, specialty medical homes, networks accepting bundled payment programs, and other “performance” networks that contract with CMS and commercial payers under alternative payment models that financially reward improved quality and lower medical cost. The relationship between us and our provider practices and facilities that are participating in these provider networks under alternative payment models will depend on (i) the extent to which these provider networks give priority to the medical cost associated with our Durable Medical Equipment services and (ii) whether our services are seen as part of a care delivery model that delivers higher value – higher quality at a lower cost.

Efforts to control healthcare costs, including limiting access to care, alternative delivery models, and changes in the methods used to determine reimbursement systems and rates, are ongoing at the U.S. federal and state levels. Future changes cannot be predicted with certainty, and may have an adverse effect on our industry and on our our business, financial condition, results of operations and cash flows.

Our infusion pumps and related consumables are obtained from outside vendors. The majority of our new pumps are electronic infusion pumpspumps, which are supplied to us by one major supplier:supplier. ICU Medical, Inc. TheAny loss or disruption of our relationships with outside vendors, including the supply of pumps, parts, or supply recall or pump end-of-life announcements or availability of related proprietary consumable supplies, could subject us to substantial delays in the delivery of pumps or services provided to customers. From time to time, we or our suppliers may experience supply chain disruptions or labor shortages due to circumstances beyond our or our suppliers’ control. Significant delays in the delivery or service of pumps or related proprietary consumable supplies could result in possible cancellation of orders and the loss of customers. Our inability to provide pumps to meet delivery schedules could have a material adverse effect on our reputation in the industry, as well as on our business, financial condition, results of operations and cash flows.

Our failure to maintain controls and processes over billing and collecting could have a significant negative impact on our Consolidated Financial Statements.

The collection of accounts receivable is a significant challenge and requires constant focus and involvement by management and ongoing enhancements to information systems, billing center operating procedures and proper staffing levels. If we are unable to properly bill and collect our accounts receivable, our financial results could be materially and adversely affected. While management believes that our staffing, controls and processes are satisfactory, there can be no assurance that accounts receivable collectability will remain at current levels.

An aspect of our growth strategy is to expand into the treatment of other cancers, such as pancreatic, head, neck and gastric cancers. This population of patients will expand only if clinical trial results for new drugs and new combinations of drugs demonstrate superior outcomes for regimens that include continuous infusion therapy relative to alternatives. No assurances can be given that these new drugs and drug combinations will be approved or will prove superior to oral medication or other treatment alternatives. In addition, no assurances can be given that we will be able to penetrate successfully any new markets that may develop in the future or manage the growth in additional resources that would be required.

Aggressive competitors may not fully comply with rules regarding CMS and other payers’ billing and documentation requirements. Competitors,Competitors who do not meet the same standards of compliance that we do with respect to billing regulations, may put us at a potential competitive disadvantage. We are a participating provider with Medicare and as of December 31, 2024,2025, we were under contract with nearly 835840 third-party payer networks, all of which have very stringent guidelines. If our competitors do not comply with these regulatory guidelines, we could be put at a potential competitive disadvantage and our business, financial condition, results of operations and cash flows could be material and adversely affected.

We finance our operations and capital expenditures with cash generated from operations and borrowings under our 2021 Credit Agreement. On April 26, 2023, the Companywe entered into a First Amendment to the 2021 Credit Agreement (the “First Amendment”) with the Agent and the lenders party thereto, which amended the 2021 Credit Agreement. On July 15, 2025, we entered into a Second Amendment to the 2021 Credit Agreement with the Agent and the lenders party thereto, which further amended the 2021 Credit Agreement. See Note 78 (Debt) in the notes to the accompanying consolidated financial statements for additional information regarding the 2021 Credit Agreement, as amended).amended. Our 2021 Credit Agreement, as amended, contains and the agreements that govern our future indebtedness may contain, covenants that restrict our ability to and the ability of our subsidiaries to, among other things:

These covenants may restrict our ability to operate our business. Our failure to comply with these covenants could result in an event of default that, if not cured or waived, could result in reduced liquidity for the Companyus and could have a material and adverse effect on our ability to operate our business, financial condition, results of operations and cash flows. Additionally, our ability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our business operations, generate sufficient cash flows to service such debt and the other factors discussed in this section. Our 2021 Credit Agreement, as amended, also contains certain financial covenants. As of December 31, 2024,2025, we were in compliance with all the covenants contained in the 2021 Credit Agreement, as amended, however, there can be no assurance that we will be able to manage any of the risks associated with debt agreements successfully.

The global economy has experienced extreme volatility and disruptions, including, among other things, diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates,rates and uncertainty about economic stability. SinceAlthough Marchinterest 2022,rates tohave combatrecently risingbeen inflation,declining, the Federal Open Market Committee (“FOMC”) of the Federal Reserve has significantly raised the target range for the federal funds rate to a range of 4.25% to 4.50% as of December 31, 2024. The FOMC decreased the target range for the federal funds rate beginning September 2024 and foreshadowed further decreases to the target rates in 2025. However, the FOMC also noted that further decreases to target rates are likely tomay occur at a slower pace than the 2024recent rate cutscuts, and it will continue to assess additional information and implications for monetary policy in determining future actions with respect to target rates. Future decreases in the policy rate will be dependent on trends in employment levels and inflation and financial and international developments.Higherdevelopments. Higher interest rates, coupled with reduced government spending and volatility in financial markets, may increase economic uncertainty and affect consumer spending.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. Changes to tax laws, which changes may have retroactive application, could adversely affect our stockholders or us. We assess the impact of various tax reform proposals and modifications to existing tax treaties in all jurisdictions where we have operations to determine the potential effect on our business and any assumptions we have made about our future taxable income. We cannot predict whether any specific proposals will be enacted, the terms of any such proposals or what effect, if any, such proposals would have on our business if they were to be enacted. For example, the United States enacted the Inflation Reduction Act of 2022, which implements, among other changes, a 1% excise tax on certain stock buybacks. In addition, beginning in 2022, the Tax Cuts and Jobs Act eliminated the previously available option to deduct research and development expenditures and requires taxpayers to amortize them generally over five years for research activities conducted in the U.S. and over 15 years for research activities conducted outside the U.S. Congress is considering and has previously considered legislation that would restore the current deductibility of research and development expenditures; however, we have no assurance that the provision will be repealed or otherwise modified. Such changes, among others, may adversely affect our effective tax rate, results of operation and general business condition. Also, on July 4, 2025, the U.S. One Big Beautiful Bill Act (the "OBBBA") was enacted, which includes permanent extensions of certain expiring provisions of the Tax Cuts and Jobs Act, among other tax and non-tax provisions. The legislation has multiple effective dates, with certain provisions effective beginning in fiscal year ended December 31, 2025 and others becoming effective through the fiscal year ended December 31, 2027. While we continue to evaluate the impact of the OBBBA, these legislative changes did not and are not expected to have a material impact on our results of operations and financial condition.

The Company’sOur U.S. federal net operating loss carryforward for tax purposes was $14.4$5.8 million at December 31, 2024,2025, resulting in a federal deferred tax asset of $3.0$1.2 million.million, Approximately $7.8 millionnone of thewhich Company’sexpire. U.S. federal net operating loss carryforwards will begin to expire in various years beginning in 2037. The Company’sOur realization of itsour deferred tax assets including the loss carryforwards is dependent upon many factors, including,including but not limited to, the Company’sour ability to generate sufficient taxable income in sufficient amounts. There can be no assurance that we will generate the required amounts of taxable income before the expiration dates are reached.

•actual or perceived changes in healthcare policies in the U.S. or globally;

TheWe Company continuescontinue to monitor shifts in past ownership (as defined under Section 382 of the Code). As of December 31, 20242025 our U.S. federal net operating loss carryforwards of approximately $7.8$5.8 million will begin to expire in various years beginning in 2037 and $6.6 million of our U.S. federal net operating loss carryforward hashad an indefinite life. There can be no assurance that we will not experience an ownership change in the future, in which case we may be limited in our ability to use our deferred tax assets.

Material weaknesses in our disclosure controls and procedures and internal control over financial reporting have been discovered in the past and may be discovered in the future. See Item 9A. – “Previously Disclosed Material Weaknesses” for further discussion. We cannot, however, guarantee that additional material weaknesses will not arise in the future. Such material weaknesses could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations, which in turn could have a negative impact on our financial condition, results of operations or cash flows, restrict our ability to access the capital markets, require significant resources to correct the material weaknesses or deficiencies, subject us to fines, penalties or judgments, harm our reputation, or otherwise cause a decline in investor confidence and cause a decline in the market price of our stock.

To remain competitive, we must continue to enhance and improve the functionality and features of our technology solutions and services.services, including through the use of artificial intelligence (“AI”) technologies. We have implemented a service to support EMR technology with some of our outpatient infusion practices that enables billing information to be transferred between us and medical facilities electronically and automatically, thus eliminating the current use of mail, email and/or faxes. We have also implemented a web portal that supports our rental and service customers. We are currently engaged in a multi-year project to replace and upgrade multiple business applications, including our main enterprise resource planning system. If these efforts cease to be successful, our reputation and ability to attract and retain customers and contributors will be adversely affected. Furthermore, we are likely to incur expenses in connection with continually updating and improving our technology infrastructure and services. Without such improvements, our operations might suffer from unanticipated system disruptions, slow application performance or unreliable service levels, any of which could negatively affect our reputation and ability to attract and retain customers and contributors. We may face significant delays in introducing new services, products and enhancements.

We also rely on our technology infrastructure to interact with customers and suppliers, fulfill orders and bill, collect and make payments, ship products, provide support to customers, fulfill contractual obligations and otherwise conduct business. Cyber incidents can result from deliberate attacks or unintentional events. These incidents can include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. The result of these incidents could include, but are not limited to, disrupted operations, misstated financial data, liability for stolen assets or information, increased cybersecurity protection costs, litigation and reputational damage adversely affecting customer or investor confidence. Additionally, following the onset of the COVID-19 pandemic, many employees transitioned to a remote or hybrid work environment, which has increased risks associated with our information technology systems and networks. These increased risks include cyber-attacks, computer viruses, disruptions, or shutdowns that could result in a failure to protect our information technology infrastructure and data integrity. We have implemented systems and processes to focus on identification, prevention, mitigation and resolution. However, these measures cannot provide absolute security, and our systems may be vulnerable to cybersecurity breaches such as viruses, hacking, and similar disruptions from unauthorized intrusions. Cyber-attacks continue to increase in frequency, sophistication and intensity, and are becoming increasingly difficult to detect. Such attacks are often carried out by motivated and highly skilled actors, who are increasingly well-resourced. Geopolitical events have also increased cybersecurity risks on a global basis. Further, use of AI by our employees, third-party service providers, strategic partners or other contractors or consultants, whether authorized or unauthorized, increases the risk that our intellectual property and other proprietary information will be unintentionally disclosed.

The SEC has recently adopted new rules that require us to provide greater disclosure regarding cybersecurity risk management, strategy and governance, as well as disclosure of material cybersecurity incidents. We cannot predict or estimate the amount of additional costs we will incur in order to comply with these rules or the timing of such costs. These rules may also require us to report a cybersecurity incident before we have been able to fully assess its impact or remediate the underlying issue. Efforts to comply with such reporting requirements could divert management's attention from our incident response and could potentially reveal system vulnerabilities to threat actors. Failure to timely report incidents under these or other similar rules could also result in monetary fines, sanctions or subject us to other forms of liability.

Our business, like that of most businesses in the healthcare and medical device industry, involves the receipt, storage, and transmission of customer information and payment and reimbursement information, as well as confidential information about third-party payers, our employees, our suppliers,suppliers and our Company.us. State, federal and foreign laws, such as HIPAA, Section 5 of the FTC Act, or the California Consumer Privacy Act, as amended, and other similar state laws regulate the confidentiality of personal information, including sensitive information and the circumstances under which such information may be released. These measures may govern the disclosure and use of personal and patient medical record information and may require users of such information to implement specified security measures. Unauthorized access may trigger notification requirements, encourage actions by regulatory bodies, result in adverse publicity and lead to litigation. If we fail to monitor, maintain or protect our information technology systems and data integrity or fail to anticipate, plan for or manage significant disruptions to these systems, we could lose customers, be subject to fraud, breach our agreements with or duties toward customers, physicians, other parties, be subjected to regulatory sanctions or penalties, incur expenses or lose revenues, sustain damage to our reputation, or suffer other adverse consequences. Unauthorized tampering, adulteration or interference with our products may also create issues with product functionality that could result in a loss of data, risk to patient safety, and product recalls or field actions. Any of these events could have a material adverse effect on our business, reputation or financial condition.

We rely on information technology systems (including technology from third-party providers) to process, transmit, and store electronic information in our operations, including sensitive personal information and proprietary or confidential information. Our information systems are vulnerable to an increasing threat of continually evolving cybersecurity risks. Unauthorized parties may attempt to gain access to our systems or information through fraud or other means of deceiving our employees or third-party service providers. Hardware, software, or applications we develop or obtain from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information and device security. The methods used to obtain unauthorized access, disable or degrade service, or sabotage systems are also constantly changing and evolving, and may be difficult to anticipate or detect for long periods of time. We have implemented and regularly review and update processes and procedures to protect against unauthorized access to or use of secured data and to prevent data loss. However, the ever-evolving threats mean we must continually evaluate and adapt our systems and processes, and our efforts may not be adequate to safeguard against all data security breaches, misuse of data, or sabotage of our systems. Any future significant compromise or breach of our data security, whether external or internal, or misuse of customer, third-party payer, employee, supplier,supplier or Company data, could result in significant costs, lost sales, fines, lawsuits,lawsuits and damage to our reputation. In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements applicable to our business, compliance with those requirements could also result in additional costs. Specifically, as a result of the broad scale release and availability of emerging digital technologies, including AI technologies suchmachine aslearning generative AI,capabilities, there is a global trend towards more regulation to ensure the ethical use, privacy, and security of AI and the data that it processes. Compliance with such laws will likely be an increasing and substantial cost in the future.

We are a leading national healthcare service provider, facilitating outpatient care for Durable Medical Equipment (DME) manufacturers and healthcare providers. We provide our products and services to hospitals, oncology practices, ambulatory surgery centers, and other alternate site healthcare providers. Our headquarters is in Rochester Hills, Michigan, and we operate our business from a total of seven locations in the U.S. and Canada. We deliver local, field-based customer support as well as operate pump service and repair Centers of Excellence in Michigan, Kansas, California, Massachusetts, Texas and Ontario, Canada. InfuSystem is accredited in Michigan by the Community Health Accreditation Partner (CHAP) and is ISO 9001 certified at our Kansas, Michigan, Massachusetts, Canada and Santa Fe Springs, California locations as well as ISO 13485 certified at our Bakersfield, California location.

InfuSystem competes for and retains its business primarily on the basis of its long participation and strong reputation in the Durable Medical EquipmentDME space, its long-standing relationships with Durable Medical EquipmentDME manufacturers and its healthcare provider customers, and the high levels of service it provides. Current barriers to entry for potential competitors are created by our: (i) growing number of third-party payer networks under contract, which included nearly 835840 third-party payer networks as of December 31, 2024, an increase of 2% over the prior year period2025; (ii) economies of scale, which allow for predictable reimbursement and less costly purchase and management of the pumps, respectively; (iii) established, long-standing relationships as a provider of pumps to outpatient oncology practices in the U.S. and Canada; (iv) pump fleet of ambulatory and large volume infusion pumps for rent and for sale, which may allow us to be more responsive to the needs of physicians, outpatient oncology practices, hospitals, outpatient surgery centers, homecare practices, patient rehabilitation centers and patients than a new market entrant; (v) seven geographic locations in the U.S. and Canada that allow for same day or next day delivery of pumps; (vi) growing team of field-based and traveling biomedical technicians; and (vii) a wide array of pump repair and service capabilities. We do not perform any research and development on pumps, but we have made, and continue to make investments in our information technology.

Our Patient Services segment’s core purpose is to seek opportunities to leverage our unique know-how in clinic-to-home healthcare involving Durable Medical Equipment, our logistics and billing capabilities, our growing network of third-party payers under contract, and our clinical and biomedical capabilities. This leverage may take the form of new products and/or services, strategic alliances, joint ventures or acquisitions. The leading service within our Patient Services segment is our Oncology Business. Colorectal cancer is the third most prevalent form of cancer in the U.S., according to the American Cancer Society, and the standard of care for the treatment of colorectal cancer relies upon continuous chemotherapy infusions delivered via ambulatory infusion pumps. One of the goals for the Patient Services segment is to expand into treatment of other types of cancers. In 2024,2025, our Oncology Business approximatedgenerated 90%approximately 87% of our total Patient Services segment revenues. In 2024,2025, we generated approximately 45%43% of our total Patient Services segment revenues from treatments for colorectal cancer and 45%44% of our Patient Services segment revenues from treatments for non-colorectal disease states. There are a number of approved treatment protocols for pancreatic, head and neck, esophageal and other types of cancers, as well as other disease states which present opportunities for growth. There are also a number of other drugs currently approved by the FDA, as well as agents in the pharmaceutical development pipeline, which we believe could potentially be used with continuous infusion protocols for the treatment of diseases other than colorectal cancer. Additional drugs or protocols currently in clinical trials may also obtain regulatory approval over the next several years. If these new drugs or protocols obtain regulatory approval for use with continuous infusion protocols, we expect the pharmaceutical companies to focus their sales and marketing efforts on promoting the new drugs and protocols to physicians.

•Acquisitions: we believe there are opportunities to acquire smaller, regional healthcare service providers, in whole or in part that perform similar services to us but do not have the national market access, network of third-party payer contracts or operating economies of scale that we currently enjoy. We may also pursue acquisition opportunities of companies that perform similar services, but offer different therapies or utilize different devices. In May 2025, we acquired the assets of Apollo Medical Supply (“Apollo”), a privately-held wound care service company based in Florida. As part of the Company’s Patient Services segment, this acquisition supplements the Company’s existing wound care business by providing access to an advanced patient service fulfillment know-how and software platform that the Company plans to integrate into its existing operations.

•Information technology-based services: we also plan to continue to capitalize on key new information technology-based services such as EXPRESS, InfuBus or InfuConnect, Pump Portal, DeviceHub andDeviceHub, BlockPain Dashboard® and Tracking Inhouse Management ("TIM").

Patient Services net revenue of $80.4$86.5 million increased $3.8$6.2 million, or 5.0%,7.7%, during the year ended December 31, 20242025 as compared to the prior year. This increase was primarily attributable to additional treatment volume totaling $6.4$6.5 million offset partially by $2.6$0.3 million lower revenue from sales-type leases of NPWT pumps. The improved volume benefited Oncology revenue by $4.1$3.6 million or 6.1%,5.0% and Wound Care revenue by $3.2 million, or 148.7%. Pain Management revenue decreased by $0.7$0.3 million, or 14.7%, and6.2%. Wound Care treatmentnet revenuerevenues byincluded $1.6first million,time or 293.4%. The decrease in Sales-Type Lease revenuesales of NPWTPCDs pumpsstemming wasfrom mainlya duenew tosupplier an unusually strong prior year comparison.relationship.

Gross profit for the year ended December 31, 20242025 totaling $70.4$80.3 million increased $7.3$9.9 million, or 11.6%,14.1%, from $63.1$70.4 million during the year ended December 31, 2023.2024. The increase was driven by the increase in net revenues partially offsetand by a higher gross profit as a percentage of net revenue (“gross margin”). Gross margin increased to 52.2%56.0% during 2024,2025, as compared to 50.2%52.2% during the prior year period, an increase of 2.0%.3.8%. Both operating segments contributed to the increase in gross profit and the increase in gross margin during 20242025 as compared to 2023.2024. Gross margin was lower for the Patient Services segment and was higher for the Devices Solutions segment.

Patient Services gross profit was $52.8$55.4 million, during 2024,2025, representing an increase of $5.0$2.5 million, or 10.5%,4.8%, compared to the prior year. The improvement reflected increased net revenue andoffset higherpartially by a lower gross margin, which increaseddecreased from the prior year by 3.3%1.8% to 65.7%.64.0%. The increasedecrease in gross margin reflected favorablea change in product mix favoring lower gross margin mix,revenues, offset partially by lower pump disposal expenses and improved coverage of fixed costs from higher net revenue.expenses. The favorableunfavorable gross margin mix was mainly related to the decreaseincrease in revenue related to NPWTwound equipmentcare leases,treatments, which hadis a lower average gross margin but less capital intensive business than other Patient Services revenue categories. Pump disposal expenses, which include retirements of damaged pumps and reserves for missing pumps, decreased by $0.9$0.2 million during the 20242025 compared to the prior year period.

Device Solutions gross profit during 20242025 was $17.6$24.9 million, representing an increase of $2.3$7.4 million, or 14.7%,41.9%, over the prior year. The increase was partially due to the aforementioned non-recurring $0.6 million price increase adjustment agreed to by a large customer and to a $0.6 million error correction during the prior year which did not repeat in the current year. The remaining $6.2 million improvement reflected increased net revenue. The Device Solutions gross margin was 43.8% during 2025, which was 11.6% higher than the prior year. This increase was partially due to athe higherprice netincrease revenueadjustment andwhich higher gross margin. The Device Solutionsincreased gross margin wasby 32.2%1.0% duringin 2024,the whichcurrent wasyear 1.1%and higherthe thanerror correction in the prior year.year, Thiswhich improvementreduced gross margin during that period by 1.5%. The remaining 9.1% increase was primarily dueattributable to improved salesprocurement costs for materials, increased biomedical productivity and favorable product mix favoring higher gross margin productsrevenues, includingsuch as rental revenue and sales of used medical equipment.

Amortization of intangible assets for the year ended December 31, 20242025 was $1.0$0.9 million which was unchangeda decrease of $0.1 million, or 7% from the year ended December 31, 2023.2024 due to some intangible assets reaching the end of their amortization life. Based on the current amortization schedule and definite lived intangible assets existing as of December 31, 2024,2025, amortization expense is expected to decrease in 20252026 and beyond.

Selling and marketing expenses for the year ended December 31, 20242025 were $11.3$10.5 million, a decrease of $1.3$0.8 million, compared to 2023.2024. Selling and marketing expenses as a percentage of net revenues decreased to 8.4%7.3% compared to 10.1%8.4% in 2023.2024. This decrease was mainly attributable to a reduction in sales commissions andreflected a reduction in sales team members.members, Lowera shift in the mix of sales favoring revenue with lower commission rates reflectedand theimproved slowercoverage salesof growthfixed incosts 2024from ashigher comparednet to 2023.revenues. Selling and marketing expenses during these periods consistedconsist of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, overall travel and entertainment and other miscellaneous expenses.

G&A expenses for the year ended December 31, 20242025 were $51.2$57.0 million, an increase of $5.8 million, or 12.9%,11.2%, from $45.4$51.2 million for the year ended December 31, 2023.2024. G&A expenses during these periods consisted primarily of accounting, administrative, third-party payer billing and contract services, customer service, nurses on staff, new product services, service center personnel salaries, fringe benefits and other payroll-related items, professional fees, legal fees, stock-based compensation, annual management incentive bonuses, insurance and other miscellaneous items. Additionally, the amount for 20242025 included a one-time accrued severance expense of $1.0 million for the Company's outgoing CEO, which was substantially in accordance with his employment agreement. This amount was higher than the total of one-time expenses in 2024 which included a $0.6 million payment to a former member of the board of directors related to a Cooperation Agreement and a one-time payment to the Company's former audit firm for services related to their consent to include their prior year audit report in our 2023 annual report totaling $0.3 million. The remaining increaseincrease, net of $4.9these millionamounts of $5.7 million, included increased stock-based compensation expenses of $0.4 million, increased short-term incentive compensation totaling $0.5 million, and $0.7$1.8 million of increased expenses not incurred in 2023 related to a project to upgrade the Company's information technology and business applications.applications Otherupgrades in 2025 as part of a project that began in the second half of 2024. Additional expenses above 2024 levels included personnel directly related to the increased expenses totaling $3.3 million were associated withnet revenue volume growth including therevenue costcycle of additional personnel, information technologypersonnel and general business expenses totaling $3.5 million and included$0.4 inflationarymillion increases.increase in the company's bad debt reserve accrual which was a benefit in the prior year but an expense amount during 2025. G&A expenses as a percentage of net revenues for 20242025 increased to 38.0%39.7% compared to 36.1%38.0% for the prior year mainly reflecting the year-over-year increases offset partially by improved net revenue leverage of fixed costs.

During the year ended December 31, 2024,2025, we incurred interest expense of $1.8$1.3 million, which was $0.4$0.5 million lower than interest expense during the year ended December 31, 2023.2024. This decrease was due to a decrease in outstanding borrowings on the 2021 Credit Agreement, as amended,amended (defined below), revolving line of credit and lower average interest rates.

We finance our operations and capital expenditures with cash generated from operations and borrowings under our existing credit agreements.agreement. On February 5, 2021, we and certain of our subsidiaries, as borrowers, entered into a Credit Agreement (the “2021 Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, sole bookrunner and sole lead arranger,arranger (the "Agent"), and the lenders party thereto, which replaced our then existing credit facility, dated March 23, 2015 (the “2015 Credit Agreement”).thereto. On April 26, 2023, the Company entered into a First Amendment to the 2021 Credit Agreement (the “First Amendment”) with the Agent and the lenders party thereto, which amended the 2021 Credit Agreement. On July 15, 2025, the Company entered into a Second Amendment to the 2021 Credit Agreement (the “Second Amendment”) with the Agent and the lenders party thereto, which amended the 2021 Credit Agreement. See Note 78 (Debt) in the notes to the accompanying consolidated financial statements for additional information regarding the 2021 Credit Agreement, as amended and 2015 Credit Agreement.amended.

Our liquidity and borrowing plans are established to align with our financial and strategic planning processes and ensure we have the necessary funding to meet our operating commitments, which primarily include the purchase of pumps,medical equipment, inventory, payroll and general expenses. We also take into consideration our overall capital allocation strategy which includes investment for future organic growth, potential acquisitions and repurchases of our common equity. We believe we have adequate sources of liquidity and funding available for at least the next year from the filing date of this report, as well as for our currently anticipated long-term needs. However, any projections of future earnings and cash flows are subject to substantial uncertainty, including factors such as the successful execution of our business plan and general economic conditions. We may need to access debt and equity markets in the future if unforeseen costs or opportunities arise, to meet working capital requirements, fund acquisitions or investments or repay indebtedness under the 2021 Credit Agreement. If we need to obtain new debt or equity financing in the future, the terms and availability of such financing may be impacted by economic and financial market conditions as well as our financial condition and results of operations at the time we seek additional financing.

The 2021 Credit Agreement provides for a revolving credit facility (the “Revolving Facility”) of $75.0 million, maturing on FebruaryJuly 5,15, 2026.2030. The Revolving Facility may be increased by $35 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 2015credit Credit Agreement.agreement.

On April 26, 2023, the Company entered into athe First Amendment to the 2021 Credit Agreement (the “First Amendment”) with the Agent and the lenders party thereto, which amended the 2021 Credit Agreement, to provide for, among other things: (i) an extension of the maturity date for the 2021 Credit Agreement to April 26, 2028, (ii) the replacement of London Interbank Offered Rate (“LIBOR”) with Adjusted Term Secured Overnight Financing Rate (“SOFR”) as a benchmark interest rate, and (iii) an increase of the maximum dollar amount of incremental revolving loans from $25 million to $35 million. Incremental revolving loans continue to be subject to certain conditions, including the consent of the Agent and obtaining necessary commitments.

The 2021 Credit AgreementAgreement, First Amendment and FirstSecond Amendment were accounted for as debt modifications that resulted in a small increaseincreases to deferred debt issuance costs. As of December 31, 2024,2025, the Company was in compliance with all debt-related covenants under the 2021 Credit Agreement, as amended. Considering our current liquidity position and short-term financial forecasts, we expect to continue to be in compliance with our financial covenants at the end of our fiscal year ending December 31, 2025.2026.

As of December 31, 2024,2025, amounts outstanding under the Revolving Facility provided under the 2021 Credit AgreementAgreement, as amended, bear interest at a variable rate equal to, at the Company’s election, Adjusted Term SOFR for Term Benchmark loans or an Alternative Base Rate for ABR loans, as defined by the FirstSecond AmendmentAmendment, plus a spread that will vary depending upon the Company’s leverage ratio. The spread ranges from 2.00%2.05% to 3.00%3.05% for Term Benchmark Loans and 1.00%1.05% to 2.00%2.05% for base rate loans. The weighted-average Term Benchmark loan rate at December 31, 20242025 was 6.57%5.83% (Adjusted Term SOFR of 4.57%3.78% plus 2.00%2.05%). The actual ABR loan rate at December 31, 20242025 was 8.50%7.80% (lender’s prime rate of 7.50%6.75% plus 1.00%1.05%).

Investing Cash Flow. Net cash used in investing activities was $6.8 million for the year ended December 31, 2025 compared to $13.2 million for the year ended December 31, 20242024. comparedThis to $6.7$6.4 million for the year ended December 31, 2023. This $6.5 million increasedecrease in net cash used was primarily due to a $6.6$8.6 million increasedecrease in purchases of medical equipment. The higher purchase volumePurchases of medical equipment was higher in 2024 due to increased volume in our rental businessbusiness, during that period, which required us to purchase additional pumpspumps. to supportOur revenue growth offsetin partially2025 bywas amore reductionweighted to service lines that do not require the purchase of capital equipment such as the Wound Care category in the numberPatient Services segment. This decrease was partially offset by cash used in 2025 to acquire certain assets of missingApollo pumps,Medical duringSupply 2024(“Apollo”), asa comparedprivately-held towound 2023.care service company totaling $1.4 million.

The Company generates a significant amount of its revenues that are accounted for under ASC 606 from the rental service of infusion pumps to its customers with the remainder of this revenue being derived from product sales and services. For the rental service performance obligationobligation, revenue is based on its estimated standalone price, determined using reimbursement rates established by third-party payer or other contracts. Revenue is recognized over the contract term in which the related performance obligation is satisfied. The Company’s revenues related to product sales are recognized at the time that control of the product has been transferred to the customer; either at the time the product is shipped or the time the product has been received by the customer, depending on the delivery terms, or when the customer uses the products in the case of when our products are stored at a customer's location. The Company does not commit to long-term contracts to sell customers a certain minimum quantity of products. The Company's revenues related to services are recognized as the service work is completed.

•Wound Care: in 2020, we added Negative Pressure Wound Therapy ("NPWT") to our portfolio of DME devices offered to patients for home healthcare. Similar to our capabilities surrounding infusion pumps, we offer these devices to patients for third party payer reimbursement and sales, rentals and leases of the equipment and related disposable supplies directly to other healthcare providers. Our fleet off NPWT devices include devices manufactured by Smith and Nephew, Cork Medical LLC (“Cork”) and Genadyne Biotechnologies Inc. In 2024, we added Advanced Wound Care dressings to our wound care product portfolio. We take patient referrals for wound care disposable supplies directly and indirectly from wound care clinics and other sites of care. The products are generally shipped directly from our suppliers to the patients and we receive reimbursement from the patient's health care plan carrier. In 2025, we added Pneumatic Compression Devices ("PCD") to our portfolio of DME devices offered to patients.patients and added Other Compression Devices (“OCD”) supplied by a second manufacture in early 2026.

•Acquisitions: we believe there are opportunities to acquire smaller, regional healthcare service providers, in whole or in part that perform similar services to us but do not have the national market access, network of third-party payer contracts or operating economies of scale that we currently enjoy. We may also pursue acquisition opportunities of companies that perform similar services, but offer different therapies or utilize different devices. In May 2025, we acquired the assets of Apollo Medical Supply (“Apollo”), a privately-held wound care service company based in Florida. As part of the Company’s Patient Services segment, this acquisition supplements the Company’s existing wound care business by providing access to an advanced patient service fulfillment know-how and software platform that the Company planshas to integrateintegrated into its existing operations.

•Partnerships and Manufacturer Distribution Arrangements: we look to foster commercial relationships with various DME equipment manufacturesmanufacturers and other health care providers where our services and capabilities create value in the healthcare supply chain. In particular, our large portfolio of third-party payer contracts makes us an attractive distribution partner.

InfuSystem Holdings, Inc. Results of Operations for the Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

The following represents the Company’s results of operations for the three months ended MarchJune 31,30, 2026 and 2025:

Net revenues for the three-month periodquarter ended MarchJune 31,30, 2026 (“three-monthsecond periodquarter of 2026”) were $33.7$36.9 million, aan decreaseincrease of $1.0$0.9 million, or 3.0%,2.6%, compared to $34.7$36.0 million for the three-month periodquarter ended MarchJune 31,30, 2025 (“three-monthsecond periodquarter of 2025”). The decreaseincrease included higher net revenues for the Patient Services segment partially offset by lower net revenues for the Device Solutions segment partially offset by higher net revenues for the Patient Services segment.

Patient Services net revenue of $22.1$24.8 million increased $1.3$3.3 million, or 6.4%,15.2%, during the three-monthsecond periodquarter of 2026 compared to the same prior year period. This increase was primarily attributable to additional treatment volume and increased third-party payer collections in Oncology and Wound Care which were partially offset by a lower amount in Pain Management.Care. The improved volume and collections benefited Oncology revenue by $0.4$1.2 millionmillion, or 2.4%,6.4% and Wound Care treatment revenue by $1.1$2.1 million, or 116.0%. Pain Management revenue decreased by $0.2 million, or 15.1%.154%. The Wound Care net revenues included sales of compressionPneumatic therapyCompression devicesDevices (PCDs) and Adjustable Compression Wraps (ACW’s) stemming from two new supplier relationshipsrelationships. whichThere werewas addedno afterPCD or ACW revenue in the endsecond quarter of the2025 three-month period of 2025. Sales forbecause the first of these new supplierproducts relationships, which include Pneumatic Compression Devices (PCD’s), startedlaunched during the third quarter of 20252025, with the first manufacturer, and during the first quarter of 2026, with the second supplier relationship, which is a manufacturer of Adjustable Compression Wraps (ACW’s), began during the current period. On a combined basis, compression therapy devices represented over 60% of the growth in Wound Care.manufacturer.

Device Solutions net revenue of $11.6$12.1 million decreased $2.4$2.3 million, or 16.9%,16.1%, during the three-monthsecond periodquarter of 2026 compared to the same prior year period. This decrease included decreasesa $1.8 million, or 39.4%, decrease in biomedical services of $1.3 million, equipment rentals of $0.4 millionrevenue and decreased medical equipment sales of $1.0 million.million, or 49.0%. These decreases were partially offset by an increase in disposable medical supplies of $0.3 million and an increase in equipment rental revenue of $0.1 million. A portion of the decrease in biomedical services revenue totaling $1.6 million reflected a reduction in the volume and service level of devices on contract with GE Healthcare which was restructured during the third quarter of 2025. These decreases were partially offset by additional volume with other customers. The decrease in rental revenue and the decrease in equipment sales are bothis related to a large customer rental buyout that began in the prior year period. The buyout, which started during the prior year’s 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. Rental revenues increased during the quarter despite the unfavorable impact from the rental buyout.

Gross profit of $19.7 million for the three-monthsecond periodquarter of 2026 of $21.4 million increased $0.5by $1.5 million, or 2.7%,7.7%, fromcompared $19.2 million forto the three-monthsecond periodquarter of 2025. This increase was due to the increase in net revenues and by a higher gross profit percentage of net revenue (“gross margin partially offset by the lower net revenues.”). Gross margin increasedwas to 58.4%58.0% during the three-monthsecond periodquarter of 2026 compared to 55.2% during the same prior year period.period, an increase of 2.8%. Gross profit was higher in both the Patient Services segment and lower in the DevicesDevice Solutions segments. Gross margin was higher for boththe segments.Device Solutions segment and was lower for the Patient Services segment.

Patient Services gross profit was $14.3$15.3 million during the three-monthsecond periodquarter of 2026, representing an increase of $1.1$1.5 million, or 8.6%,10.9%, compared to the same prior year period. The improvementincrease reflected increasedthe higher net revenue andoffset apartially higherby lower gross margin, which increaseddecreased from the prior year by 1.3%2.4% to 64.8%.61.8%. The increasedecrease in gross margin reflected lower pump disposal and maintenance expenses offset partially byan unfavorable product mix favoringchange toward lower gross margin revenue categories.categories Pumpand disposalhigher expensespump includemaintenance retirementsexpenses. These impacts were offset partially by improved coverage of damagedfixed pumpscosts andfrom reserveshigher fornet missingrevenue. pumps.The unfavorable revenue mix impacting gross margin was mainly related to the increase in revenue related to the higher Wound Care net revenue, which has a lower average gross margin than other Patient Services revenue categories. Pump maintenance expenses include annual preventative maintenance certification and repairs and are performed by the Device Solutions segment. On a combined basis pump disposal and maintenance expenses decreased by $0.3 million during the three-month period of 2026 compared to the prior year period. The unfavorable gross margin mix was mainly related to the increase in revenue related to wound care treatments, which have lower average gross margin than other Patient Services revenue categories.

Device Solutions gross profit during the three-monthsecond periodquarter of 2026 was $5.4$6.1 million, representingwhich a decrease of $0.6 million, or 10.4%, compared towas the same as the prior year period. The decrease was due todespite the decrease in net revenue offsetdue partially byto an increase in the gross margin. The Device Solutions gross margin was 46.3%50.2% during the current period, which was 3.4%8.3% higher than the same prior year period. This increase in gross margin was primarily due to the aforementioned restructuring of the biomedical services contract with GE Healthcare which resulted in reduced expenses greater than the related reduction in net revenue. Reduced contract expenses included a reduction in biomedical personnel, a reduced amount of medical device replacement parts and lower travel expenses. These impacts improved the gross margin for the device solutions segment by 7.2%.4.8%. AdditionalAdditionally, improved product mix impacts favoring higher gross margin revenues, such as rental revenue, increased gross margin by 1.7%. The increased gross margin also included improvements totaling 0.6%2.7% wereattributable achieved thoughto ongoing initiatives focused on improved procurement costs of materials and increased biomedical productivity. These benefits in gross margin were partially offset by cost inflation impacts from increased employee wage rates and higher healthcare expenses, which on a combined basis, reduced the Device Solutions segment gross margin by 2.5%, and unfavorable product mix impacts disfavoring higher gross margin revenues, such as rental revenue and sales of used equipment, which reduced gross margin by 1.9%.1.0%. Higher wages were the result of typical annual merit and cost of living increases, however, the increase in the cost of health care benefits were significantly higher than amounts experienced in prior years.

Selling and marketing expenses were $3.0 million for the three-monthsecond periodquarter of 2026 were $3.1 million,2026, representing an increase of $0.1$0.3 million, or 3.2%,10.5%, compared to selling and marketing expenses for the three-monthprior period of 2025.year. Selling and marketing expenses as a percentage of net revenues wasincreased 9.1%to representing8.1% ancompared increaseto from7.5% in the prior year period amount of 8.6%.period. This increase reflected an increase in sales team headcount, increased travel expenses and inflationary impacts including an increase in employee healthcare expenses. TheseThe amounts were partially offset by a reduction in commissions expenses. Sellingselling and marketing expenses consistduring these periods consisted of sales personnel salaries, commissions and associated fringe benefit and payroll-related items, marketing, travel and entertainment and other miscellaneous expenses.

General and administrative (“G&A”) expenses for the three-monthsecond periodquarter of 2026 were $14.8$14.1 million, aan decreaseincrease of $0.5$1.0 million, or 3.3%,7.2%, from the three-monthsecond periodquarter of 2025. G&A expenses during these periods consisted primarily of accounting, administrative, third-party payer billing and contract services, customer service, nurses on staff, new product services, service center personnel salaries, fringe benefits and other payroll-related items, professional fees, legal fees, stock-based compensation, insurance and other miscellaneous items. Additionally,The increase over the amountprior foryear included $0.1 million in additional personnel directly related to the three-monthincreased periodPatient ofServices 2025net includedrevenue including revenue cycle personnel, a one-time$0.6 accruedmillion severanceincrease in stock-based compensation expenses, cost inflation impacts from increased employee wage rates and higher healthcare expenses totaling $0.5 million and a $0.2 million increase in the company's bad debt accrual which was a benefit in the prior year but an expense ofamount $1.0during million2026. forThese theincreases Company'swere outgoingpartially CEO.offset Additional reductions includedby a $0.3 million reduction in the accrual for management bonuses,bonuses lowerand accountinga fees totaling $0.2$0.3 million and $0.1 milliondecrease in reduced travel expenses. These decreases were partially offset by increases in other expenses including: $0.4 million in increased expenses related to information technology and business applications upgrades including the replacement of the Company’s enterprise resource planning system (“ERP”), additional personnel directly related to the increased Patient Services net revenue including revenue cycle personnel totaling $0.3 million, a $0.1 million increase in stock-based compensation expenses and cost inflation impacts from increased employee wage rates and higher healthcare expenses totaling $0.4 million.. The ERP system upgrade project expenses were higherlower during the current period due to a higherlower intensity of activities related toafter the system go-live phase of the project which occurredevent on March 1, 2026. While additional costs are expected to be incurred during the ongoing post go-live phase to support system stabilization and enhancement activities, project expenses are expected to begincontinue to taper down during 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 the cost of health care benefits were significantly higher than amounts experienced in prior years. General and Administrative expenses as a percentage of net revenues for the three-month period of 2026 decreased to 43.9% compared to 44.1% for the same prior year period.

During the three-monthsecond periodquarter of 2026, other income and expense included interest expense of $0.3 million, which was $0.1 million lower than interest expense for the three-monthsecond periodquarter of 2025. ThisInterest decreaseexpense wasincludes dueinterest and other fees paid in relation to a decrease in average outstanding borrowings onunder the 2021 Credit Agreement revolvingpartially lineoffset by amounts received on interest rate swap derivatives. The decrease resulted from lower average outstanding debt balances during the second quarter of credit2026 compared to the second quarter of 2025, partially offset by higher commitment fees on a higher unused revolving line availability.

During the three-monthsecond periodquarter of 2026, the Company recorded a provision for income taxes totaling $0.4$0.6 million on pre-tax income of $1.4$3.9 millionmillion, representing an effective tax rate of 28%.17%. During the three-monthsecond periodquarter of 2025, the Company recorded a provision for income taxes totalingof $0.5$0.8 million on a pre-tax income of $0.3$3.4 million, representing an effective tax rate of 206%.25%. The pre-taxeffective incometax amountrates for 2025 included significant non-deductible expenses including the severance expense for the outgoing CEO which exceeded the annual deduction limitation for officer compensation. Non-deductible expenses also included a shortfall in the amount of stock compensation expense recognizable for tax purposes verses the amount recognized for book purposes. Together, these items impacted tax expense by $0.6 million, or 9% of pre-tax income. Other factors causing the effective rate during both periods to differdiffered from the U.S. statutory amountsrate includedmainly due to the effects of local, state and foreign jurisdiction income taxes,taxes limitations on the deductions ofand certain permanent differences in expenses includingrecognized for tax purposes, such as non-deductible meals and entertainmententertainment, management compensation and differences between expense recognized for book purposes versus tax purposes associated with equity compensation expense.

As of MarchJune 31,30, 2026, amounts outstanding under the Revolving Facility bear interest at a variable rate equal to, at the Company’s election, Adjusted Term SOFR for Term Benchmark loans or an Alternative Base Rate for ABR loans, as defined by the Second Amendment, plus a spread that will vary depending upon the Company’s leverage ratio. The spread ranges from 2.05% to 3.05% for Term Benchmark Loans and 1.05% to 2.05% for base rate loans. The weighted-average Term Benchmark loan rate at MarchJune 31,30, 2026 was 5.72%5.66% (Adjusted Term SOFR of 3.67%3.61% plus 2.05%). The actual ABR loan rate at MarchJune 31,30, 2026 was 7.80% (lender’s prime rate of 6.75% plus 1.05%). As of MarchJune 31,30, 2026, the Company was in compliance with all debt-related covenants under the 2021 Credit Agreement, as amended.

On May 16,12, 2024,2026, our Board of Directors approved a stock repurchase program (the “Share Repurchase Program”) that authorizes the Company to repurchase up to $20.0 million of the Company’s outstanding common stock starting on July 1, 2026 and running through June 30, 2026.2028. The Share Repurchase Program superseded the previous authorization, which expired on June 30, 2024.2026. Repurchases under the Share Repurchase Program are subject to market conditions, the periodic capital needs of the Company’s operating activities, and the continued satisfaction of all covenants under the 2021 Credit Agreement, as amended. Repurchases under the Share Repurchase Program may take place in the open market or in privately negotiated transactions and may be made under a Rule 10b5-1 plan. The Share Repurchase Program does not obligate the Company to repurchase shares and may be suspended, terminated, or modified at any time at the discretion of the Board. As of MarchJune 31,30, 2026, the Company had not repurchased or retired any shares of the Company’s outstanding stock under the recently approved Share Repurchase Program. The Company had repurchased and retired approximately $11.8$15.3 million, or 1,587,6261,998,735 shares,shares of the Company's outstanding common stock under the Shareprevious Repurchase Program.authorization.

Operating Cash Flow. Operating cash flows provided $1.0$7.7 million in cash during the three-monthfirst periodhalf of 2026 and $1.8$8.8 million of cash during the three-monthfirst periodhalf of 2025. This $0.8$1.0 million reduction was attributable to an increase in cash used to fund working capital items offset partially by an increase in net income adjusted for non-cash items. During the three-monthfirst periodhalf of 2026 net income adjusted for non-cash items was $6.3$14.9 million, an increase of $2.2$4.0 million compared to net income (loss) adjusted for non-cash items of $4.2$10.9 million during the three-monthfirst periodhalf of 2025. Also during the three-monthfirst periodhalf of 2026 cash used to fund working capital items was $5.3$7.1 million, an increase of $3.0$5.0 million compared to $2.4$2.1 million during three-monthfirst periodhalf of 2025. The increase in net income adjusted for non-cash items, was primarily attributable to higher gross profit,profit lowerpartially sellingoffset expensesby andhigher lowerselling, general and administrative expenses in 2026, as described above. The use of cash for working capital items during the three-monthfirst periodhalf of 2026 included a $3.3$5.7 million increase in accounts receivable and a $2.6 million decrease in accounts payable and other liabilities, net of capital items, a $2.3 million increase in accounts receivable, a $0.1 million increase in other current assets, and a $0.2 million increase in inventories.items. These cash flow uses were partially offset by a $0.6 million decrease in inventories and a $0.6 million decrease in other assets. The cash used for working capital items during the three-monthfirst periodhalf of 2025 included a $2.1 million increase in accounts receivable and a $1.6$2.0 million decrease in accounts payable and other liabilities, net of capital items. These uses of cash were partially offset by a $0.7$1.1 million decrease in other assets,assets and a $0.4$0.9 million decrease in inventories and a $0.1 million decrease in other current assets.inventories.

The increase in accounts receivable during 2026 was attributable to a change in mix of revenue favoring Patient Services which has a longer average revenue collection time as compared with Device solutions.Solutions. The increase in accounts receivable during 2025 was mainly due to the sequential increase in quarterly revenue during the three-monthfirst periodhalf of 2025 as compared to the three-monthfirst periodhalf of ended December 31, 2024. Accounts payable and other liabilities net of capital items decreased by $3.3$2.6 million during the three-monthfirst periodhalf of 2026 and decreased $1.6$2.0 million during the three-monthfirst periodhalf of 2025, representing a $1.8$0.6 million unfavorable cash flow swing, mainly due to a $1.0lower millionmanagement bonus accrual recordedfor in 2025 related to the severance of the former CEO which was subsequently paid after the end of the period.2026. Additional differences are related to variations in timing of payments to suppliers and other timing differences. The increasedecrease in inventories during 2026 reflected higher sales levels for disposablewound medicalcare suppliesproducts forthat theare period.drop shipped to patients and not carried in inventory. The decrease in inventories during 2025 reflected better management of inventory levels held to support recurring revenues and reflected the fact that much of the increase in net revenues during 2025 was in business lines that do not require inventory stock, such as equipment rentals, or where products are drop-shipped directly to the customer such as wound care.

Investing Cash Flow. Net cash used in investing activities was $1.3$5.8 million for the three-monthfirst periodhalf of 2026 compared to $2.7$4.3 million for the three-monthfirst periodhalf of 2025, aan decreaseincrease of $1.4 million. The decreaseincrease was partially due to aan decreaseincrease totaling $1.6$2.2 million in cash used to purchase medical equipment during the three-monthfirst periodhalf of 2026 compared to the three-monthfirst periodhalf of 2025. Purchases of medical equipment were higher during 20252026 compared to 20262025 mainly due to normal variations in the timing of purchase of medical equipment used to replace devices taken out of service or to support new customer growth. ThisThe decreaseincrease in cash used for investing activities was partiallyalso offsetdue byto a $0.2$0.7 million decrease in proceeds from sale of medical equipment, property and equipment. The decrease in proceeds from sale of medical equipment, property and equipment reflects the lower amount of sales of medical equipment and a lower allocation of equipment sales taken from the Company’s existing fleet versus purchased for sale in 2026 as compared to 2025.

Financing Cash Flow. Cash flow used in financing activities during three-monththe periodfirst half of 2026 totaled $0.8$4.2 million, included $0.8$4.4 million in cash used to repurchase the Company's common stock,stock and cash used to satisfy statutory withholding on employee stock-based compensation plans totaling $0.2$0.8 million. These amounts were partially offset by net borrowings on the revolving line of credit under the 2021 Credit Agreement totaling $0.8 million and proceeds from employee stock option exercises and employee stock purchase plan proceeds totaling $0.2 million. Cash used in financing activities during the three-monthfirst periodhalf of 2025 was $1.9$4.3 million and primarily related to $6.4 million in cash used to repurchase the Company's common stock and cash used to satisfy statutory withholding on employee stock-based compensation plans totaling $0.5 million. These uses were partially offset by net revolving line of credit borrowings under the 2021 Credit Agreement totaling $4.8$2.5 million offset partially by $2.9 million in cash used to repurchase the Company's common stock.million.