The terms “InfuSystem”, the “Company”, “we”, “us” and “our” used herein refer to
InfuSystem Holdings, Inc. and its subsidiaries.

           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this quarterly report on Form 10-Q are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words
"believe," "may," "will," "estimate," "continue," "anticipate," "intend,"
"should," "plan," "expect," "strategy," "future," "likely," variations of such
words, and other similar expressions, as they relate to the Company, are
intended to identify forward-looking statements. However, the absence of these
words or similar expressions does not mean that a statement is not
forward-looking. In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company is identifying certain
factors that could cause actual results to differ, perhaps materially, from
those indicated by these forward-looking statements. Those factors, risks and
uncertainties include, but are not limited to, the effect of the coronavirus
("COVID-19") pandemic or any resurgence thereof on our business, potential
changes in healthcare payer mix and overall healthcare reimbursement, including
the Centers for Medicare and Medicaid Services ("CMS") competitive bidding and
fee schedule reductions, sequestration, concentration of customers, increased
focus on early detection of cancer, competitive treatments, dependency on
Medicare Supplier Number, availability of chemotherapy drugs, global financial
conditions, rising inflation, labor and supply chain disruptions, changes and
enforcement of state and federal laws, natural forces, competition, dependency
on suppliers, risks in acquisitions & joint ventures, U.S. Healthcare Reform,
relationships with healthcare professionals and organizations, technological
changes related to infusion therapy, the Company's ability to implement
information technology improvements and to respond to technological changes, the
ability of the Company to successfully integrate acquired businesses, dependency
on key personnel, dependency on banking relations and the ability to comply with
our credit facility covenants, and other risks associated with our common stock,
as well as any litigation in which the Company may be involved from time to
time; and other risk factors as discussed in the Company's annual report on Form
10-K for the year ended December 31, 2021 filed on March 15, 2022, this
quarterly report on Form 10-Q and in other filings made by the Company from time
to time with the Securities and Exchange Commission ("SEC"). Our annual report
on Form 10-K is available on the SEC's EDGAR website at www.sec.gov, and a copy
may also be obtained by contacting the Company. All forward-looking statements
made in this Form 10-Q speak only as of the date of this report. We do not
intend, and do not undertake any obligation, to update any forward-looking
statements to reflect future events or circumstances after the date of such
statements, except as required by law.

Insight

We are a leading national health care service provider, facilitating outpatient
care for Durable Medical Equipment manufacturers and health care providers. We
provide our products and services to hospitals, oncology practices, ambulatory
surgery centers, and other alternate site health care providers. Our
headquarters is in Rochester Hills, Michigan, and we operate our business from a
total of seven locations in the United States 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, Inc., a wholly-owned subsidiary of the Company, is
accredited by the Community Health Accreditation Partner (CHAP) while First
Biomedical, Inc., a wholly-owned subsidiary of the Company, is ISO 9001
certified at our Kansas, Michigan, Massachusetts, Canada and Santa Fe Springs,
California locations and also ISO 13485 certified at our Bakersfield, California
location.
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InfuSystem competes for and retains its business primarily on the basis of its
long participation and strong reputation in the Durable Medical Equipment space,
its long-standing relationships with Durable Medical Equipment manufacturers and
its health care 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; (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; and (vi) pump repair and
service capabilities at all of these facilities and at our customer's locations.
We do not perform any research and development on pumps, but we have made, and
continue to make investments in our information technology.

Integrated Therapy Services (“ITS”) Segment

Our ITS segment's core purpose is to seek opportunities to leverage our unique
know-how in clinic-to-home health care 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 and/or acquisitions. The leading service within our ITS segment is to
supply electronic ambulatory infusion pumps and associated disposable supply
kits to private oncology clinics, infusion clinics and hospital outpatient
oncology clinics to be utilized in the treatment of a variety of cancers,
including colorectal cancer and other disease states ("Oncology Business").
Colorectal cancer is the third most prevalent form of cancer in the United
States, 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 primary goals for the ITS
segment is to expand into treatment of other types of cancers. 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 U.S. Food and Drug Administration (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.

Furthermore, our Oncology Business focuses mainly on the continuous infusion of
chemotherapy. Continuous infusion of chemotherapy can be described as the
gradual administration of a drug via a small, lightweight, portable infusion
pump over a prolonged period of time. A cancer patient can receive his or her
medicine anywhere from one to 30 days per month depending on the chemotherapy
regimen that is most appropriate to that individual's health status and disease
state. This may be followed by periods of rest and then repeated cycles with
treatment goals of progression-free disease survival. This drug administration
method has replaced intravenous push or bolus administration in specific
circumstances. The advantages of slow continuous low doses of certain drugs are
well documented. Clinical studies support the use of continuous infusion
chemotherapy for decreased toxicity without loss of anti-tumor efficacy. The
2015 National Comprehensive Cancer Network ("NCCN") Guidelines recommend the use
of continuous infusion for treatment of numerous cancer diagnoses. We believe
that the growth of continuous infusion therapy is driven by three factors:
evidence of improved clinical outcomes; lower toxicity and side effects; and a
favorable reimbursement environment.

We believe that oncology practitioners have a heightened sensitivity to
providing quality service and to their ability to obtain reimbursement for
services they provide. Simultaneously, CMS and private insurers are increasingly
focused on evidence-based medicine to inform their reimbursement decisions -
that is, aligning reimbursement with clinical outcomes and adherence to
standards of care. Continuous infusion therapy is a main component of the
standard of care for certain types of cancers because clinical evidence
demonstrates superior outcomes. Payers' recognition of this benefit is reflected
in their relative reimbursement policies for clinical services related to the
delivery of this care.

Additional areas of focus for our ITS segment include:

•Pain Management - providing our ambulatory pumps, products, and services for
pain management in the area of post-surgical continuous peripheral nerve block.
•Negative Pressure Wound Therapy ("NPWT") - NPWT includes providing the Durable
Medical Equipment and related consumables, overseeing logistics, providing
biomedical services, and managing third-party billing of the U.S. home
healthcare market, which as a subset of the broader NPWT market, has an
estimated addressable home healthcare market of $600 million per year.
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•Lymphedema Therapy - as announced in June 2021, Lymphedema therapy includes
providing patient care and customer service, pneumatic compression devices and
associated garments through our partnership with Bio Compression Systems, Inc.
to outpatients, initially targeting our existing acute care and oncology
customers, estimated to be 20% of the multi-billion-dollar Lymphedema market.
•Acquisitions - we believe there are opportunities to acquire smaller, regional
health care service providers, in whole or 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.
•Information technology-based services - we also plan to continue to capitalize
on key new information technology-based services such as EXPRESS, InfuSystem
Mobile, InfuBus or InfuConnect, Pump Portal and BlockPain Dashboard®.

The payer environment within our ITS segment is in a constant state of change.
We continue to extend our considerable breadth of payer networks under contract
as patients move into different insurance coverage plans, including Medicaid and
Insurance Marketplace products. In some cases, this may slightly reduce our
aggregate billed revenues payment rate but result in an overall increase in
collected revenues, due to a reduction in concessions. Consequently, we are
increasingly focused on net revenues less concessions.

Durable Medical Equipment Services (“DME Services”) segment

Our DME Services segment's core service is to: (i) sell or rent new and
pre-owned pole-mounted and ambulatory infusion pumps and other Durable Medical
Equipment; (ii) sell treatment-related consumables; and (iii) provide biomedical
recertification, maintenance and repair services for oncology practices as well
as other alternate site settings, including, home care and home infusion
providers, skilled nursing facilities, pain centers and others. We also provide
these products and services to customers in the hospital market. We purchase new
and pre-owned pole-mounted and ambulatory infusion pumps from a variety of
sources on a non-exclusive basis. We repair, refurbish and provide biomedical
certification for the devices as needed. The pumps are then available for sale,
rental or to be used within our ambulatory infusion pump management service. Our
recent acquisition of FilAMed, a privately-held biomedical services company, on
January 31, 2021 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. Our recent acquisition of OB Healthcare
Corporation ("OB Healthcare"), a privately-held biomedical services company, on
April 18, 2021 further develops and expands InfuSystem's DME Services segment by
extending our existing biomedical service capability into our customer's
locations. OB Healthcare complements the Company's purchase of FilAMed.

COVID-19 Update

On March 11, 2020, the World Health Organization declared the outbreak of
coronavirus ("COVID-19") as a pandemic, which has spread globally and throughout
the United States. During the period of the pandemic, we took a number of
precautionary and preemptive steps to protect the safety and well-being of our
employees while ensuring continuity of service to our clients, including,
transitioning our employees to a remote work environment, suspending employee
travel, canceling participation in industry events and in-person group meetings,
promoting social distancing and enhanced cleaning and sanitization efforts
across office locations, and implementing protocols to quarantine employees who
may have been exposed to COVID-19, or showed relevant symptoms. We also
undertook preparedness plans at our facilities to maintain continuity of
operations, which provide for flexible work arrangements without any significant
disruptions to our business or control processes. Our management team continues
to actively monitor the situation and is in constant communication with our
workforce, customers and vendors. Since the pandemic started, outbreaks of
COVID-19, including the Delta and Omicron variants, unfavorably impacted our
revenue growth initiatives in certain product lines including Pain Management
and NPWT. The impacts included scattered restrictions on elective surgeries,
delayed ramp-up in treatment volumes for new customers and, mainly during 2022,
reduced availability of disposable medical supplies, all of which unfavorably
impacted the Pain Management business. Additionally, restricted physical access
to our customers facilities, unfavorably impacted revenue growth initiatives for
both the Pain Management and NPWT businesses. While the COVID-19 pandemic has
not had any material unfavorable effects in our financial results for the three
and six months ended June 30, 2022, beyond these delays to our revenue growth
plans, the extent of any future impact will depend on future developments, which
are highly uncertain, cannot be predicted and could have a material adverse
impact on our financial position, operating results and cash flows.
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InfuSystem Holdings, Inc. Results of operations for the three months ended June 30, 2022 Compared to the three months ended June 30, 2021

The following represents the operating results of the Company for the three months ended June 30, 2022 and 2021:

Three months completed June 30th,

                                                                                                                       Better
(in thousands, except share and per share data)                            2022                   2021                 (Worse)

Net revenues:
  ITS                                                                $       17,244          $     16,334          $        910
  DME Services (inclusive of inter-segment revenues)                         11,560                10,098                 1,462
    Less: elimination of inter-segment revenues                              (1,762)               (1,598)                 (164)
   Total                                                                     27,042                24,834                 2,208
Gross profit (inclusive of certain inter-segment allocations)
(a):
  ITS                                                                        10,113                10,451                  (338)
  DME Services                                                                4,788                 4,599                   189
   Total                                                                     14,901                15,050                  (149)

Selling, general and administrative expenses

  Provision for doubtful accounts                                               (41)                  (39)                    2
  Amortization of intangibles                                                   711                 1,096                   385
  Selling and marketing                                                       3,083                 2,680                  (403)
  General and administrative                                                 10,941                10,617                  (324)
   Total selling, general and administrative expenses                        14,694                14,354                  (340)

Operating income                                                                207                   696                  (489)

Other expense                                                                  (344)                 (354)                   10

(Loss) income before income taxes                                              (137)                  342                  (479)
(Provision for) benefit from income taxes                                       (27)                  478                  (505)

Net (loss) income                                                    $         (164)         $        820          $       (984)

Net (loss) income per share:
Basic                                                                $        (0.01)         $       0.04          $      (0.05)
Diluted                                                              $        (0.01)         $       0.04          $      (0.05)
Weighted average shares outstanding:
Basic                                                                    20,583,928            20,487,845                96,083
Diluted                                                                  20,583,928            22,065,486            (1,481,558)

(a) Inter-segment allocations relate to cleaning and repair services performed on medical equipment.

Net income

Net revenues for the quarter ended June 30, 2022 ("second quarter of 2022") were
$27.0 million, an increase of $2.2 million, or 8.9%, compared to $24.8 million
for the quarter ended June 30, 2021 ("second quarter of 2021"). The increase
included higher net revenues for both the ITS and DME Services segments.
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HIS

ITS net revenue of $17.2 million increased $0.9 million, or 5.6%, during the
second quarter of 2022 as compared to the prior year period. This increase was
primarily attributable to additional treatment volume in Oncology and Pain
Management and improved third party payer collections on billings. Pain
Management net revenue increased by $0.2 million for the second quarter of 2022
as compared to the prior year second quarter due to additional sites of care
added over the last year. The higher amount represented an increase of 25%.

EMR Services

DME Services net revenue of $9.8 million (exclusive of inter-segment revenues)
increased $1.3 million, or 15.3%, during the second quarter of 2022 as compared
to the prior year period. This increase included an increase in revenues from
equipment rentals totaling $0.6 million, or 15%, higher biomedical services
revenue which increased by $0.4 million, or 36%, and an increase in sales of
disposable medical supplies which increased by $0.2 million, or 10%. Increased
rental revenue reflected increased market demand as customers looked to
supplement their infusion pump fleets in the face of supply chain disruptions of
disposable medical supplies used with certain model infusion pumps. The
biomedical services revenue included initial amounts of revenue from a new
master services agreement with a leading global healthcare technology and
diagnostic company that was launched in April 2022. Revenue under the agreement,
which was not significant during the second quarter of 2022, is expected to grow
to approximately $10.0 to $12.0 million annually after an initial ramp-up period
of approximately 15 months.

Gross profit (including certain inter-segment allocations)

Gross profit for the second quarter of 2022 of $14.9 million decreased $0.1
million, or 1.0%, from $15.1 million for the second quarter of 2021. The
decrease was driven by a lower gross profit percentage of net revenue ("gross
margin") partially offset by the increase in net revenue. Gross margin was 55.1%
during the second quarter of 2022 as compared to 60.6% during the prior year, a
decrease of 5.5%. Gross margin decreased in both the DME Services and ITS
segments.

HIS

ITS gross profit was $10.1 million during the second quarter of 2022,
representing a decrease of $0.3 million compared to the prior year. The decrease
reflected a lower gross margin, which decreased from the prior year by 5.3% to
58.6%, offset partially by an increase in net revenues. The lower gross margin
was the result of a $0.8 million increase in the adjustment recorded for pump
disposal expenses and $0.2 million higher pump maintenance expenses as compared
to the prior year. Pump disposal expenses include retirements of damaged pumps
and reserves for missing pumps. The increase was mainly related to an updated
estimate of the volume of pumps considered missing based on pump return data and
physical inventories. Pump maintenance expenses, which include preventative
maintenance, cleaning and repair services mainly performed by the DME Services
segment, were unusually high during the second quarter of 2022 due to the timing
of when the services were performed.

EMR Services

DME Services gross profit during the second quarter of 2022 was $4.8 million,
representing an increase of $0.2 million, or 4.1%, compared to the prior year.
This increase was due to an increase in net revenues partially offset by a lower
gross margin. The DME gross margin was 48.9% during the current quarter, which
was 5.2% lower than the prior year. This decrease was the result of gross margin
mix associated with higher biomedical revenue, which has a lower gross margin
percentage than other business lines in the DME Services segment, and an
increase in labor costs related to an increase in the number of biomedical
technicians. The increase in biomedical technician labor resulted from an
increase in team members who were hired in order to increase the capacity in
biomedical services in anticipation of increased biomedical services demand.
Higher biomedical services revenue during the second quarter of 2022 has begun
to absorb a portion of the increased labor and further increases are expected in
future quarters which will further absorb these costs.

Sales and marketing expenses

Selling and marketing expenses for the second quarter of 2022 were $3.1 million,
representing an increase of $0.4 million, or 15.0%, as compared to the second
quarter of 2021. Selling and marketing expenses as a percentage of net revenues
increased to 11.4% compared to the prior year period at 10.8%. This increase
reflected $0.2 million in higher expenses for NPWT and Pain Management dedicated
sales personnel and $0.2 million in increased marketing expenses. The additional
sales team members were hired during the second quarter of 2021 but did not have
a full quarter impact, represent a strategic investment to accelerate revenue
growth for these therapies. The related expense included in selling and
marketing, for these
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strategic investments, is a portion of an overall expense increase of $0.4
million, for the second quarter of 2022 associated with this initiative, the
remainder of which is included in general and administrative expense. The
selling and marketing expenses during 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 expenses

General and administrative ("G&A") expenses for the second quarter of 2022 were
$10.9 million, an increase of 3.1% from $10.6 million for the second quarter of
2021. 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.
The increase of $0.3 million was due to $0.2 million in additional expenses
related to the investments in NPWT and Pain Management, $0.2 million in
additional audit expenses associated with additional requirements to comply with
the Sarbanes-Oxley Act of 2002 and higher travel expenses and other increases
including higher personnel, healthcare, information technology and general
business expenses. These increases were partially offset by a decrease in
stock-based compensation expense of $0.2 million and lower accrued expense for
our short-term incentive compensation plan. G&A expenses as a percentage of net
revenues for the second quarter of 2022, decreased to 40.5% compared to 42.8%
for the prior year mainly reflecting improved net revenue leverage over fixed
costs.

Other Expenses

During the second quarter of 2022, other expense included interest expense of
$0.3 million which was slightly lower than interest expense for the second
quarter of 2021. Interest expense includes interest and other fees paid in
relation to borrowings under the 2021 Credit Agreement, interest payment on our
other financing and amounts either paid or received on two interest rate swap
derivatives. The decrease resulted from lower weighted average interest rates
and lower commitment fees on a higher unused revolving line availability
partially offset by higher average outstanding debt balances during the second
quarter of 2022 as compared to 2021. The lower average interest rate reflects a
lower amount of outstanding prime-based borrowings under the 2021 Credit
Agreement during 2022 and a lower average outstanding balance on our other
financing which has a higher rate than loans under the 2021 Credit Agreement.

(Provision for) benefiting from income taxes

During the second quarter of 2022, the Company recorded a provision for income
taxes totaling less than $0.1 million despite having a pre-tax loss of $0.1
million. This amount included $0.1 million in discrete adjustments, including an
excess tax provision associated with a lower amount of equity compensation
expense deductible for tax purposes as compared to amounts historically
recognized for book purposes on exercises of stock options and vesting of
restricted stock during the quarter. This benefit was partially offset by an
estimated tax provision totaling $0.1 million representing an effective tax rate
of 39.4% on pre-tax income. During the second quarter of 2021, we recorded a
benefit from income taxes of $0.5 million. This amount included a benefit of
$0.6 million in discrete adjustments including an excess tax benefit associated
with a higher amount of equity compensation expense deductible for tax purposes
as compared to amounts historically recognized for book purposes on exercises of
stock options and vesting of restricted stock during the quarter. This benefit
was partially offset by an estimated tax provision totaling $0.1 million
representing an effective tax rate of 37.4% on pre-tax income totaling $0.3
million. The effective tax rates for these periods differed from the U.S.
statutory rate mainly due to the effects of local, state and foreign
jurisdiction income taxes.
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InfuSystem Holdings, Inc. Results of operations for the six months ended June 30, 2022 Compared to the half-year ended June 30, 2021

The following represents the Company's results of operations for the six months
ended June 30, 2022 and 2021:


                                                                               Six Months Ended
                                                                                   June 30,
                                                                                                                     Better/
(in thousands, except share and per share data)                           2022                  2021                 (Worse)

Net revenues:
  ITS                                                                $     33,885          $     32,245          $      1,640
  DME Services (inclusive of inter-segment revenues)                       23,170                20,096                 3,074
    Less: elimination of inter-segment revenues                            (3,250)               (3,044)                 (206)
   Total                                                                   53,805                49,297                 4,508
Gross profit (inclusive of certain inter-segment allocations)
(a):
  ITS                                                                      20,851                20,454                   397
  DME Services                                                              9,417                 9,172                   245
   Total                                                                   30,268                29,626                   642

Selling, general and administrative expenses

  Provision for doubtful accounts                                               6                  (109)                 (115)
  Amortization of intangibles                                               1,421                 2,139                   718
  Selling and marketing                                                     6,402                 5,056                (1,346)
  General and administrative                                               22,757                20,971                (1,786)
   Total selling, general and administrative expenses                      30,586                28,057                (2,529)

Operating (loss) income                                                      (318)                1,569                (1,887)

Other expense                                                                (649)                 (745)                   96

(Loss) income before income taxes                                            (967)                  824                (1,791)
Benefit from income taxes                                                     435                   657                  (222)

Net (loss) income                                                    $       (532)         $      1,481          $     (2,013)

Net (loss) income per share:
Basic                                                                $      (0.03)         $       0.07          $      (0.10)
Diluted                                                              $      (0.03)         $       0.07          $      (0.10)
Weighted average shares outstanding:
Basic                                                                  20,596,580            20,413,416               183,164
Diluted                                                                20,596,580            22,017,455            (1,420,875)

(a) Inter-segment allocations relate to cleaning and repair services performed on medical equipment.

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Net income

Net revenues for the six-month period ended June 30, 2022 ("first half of 2022")
were $53.8 million, an increase of $4.5 million, or 9.1%, compared to $49.3
million for the six-month period ended June 30, 2021 ("first half of 2021"). The
increase included higher net revenues for both the ITS and DME Services
segments.

HIS

ITS net revenue of $33.9 million increased $1.6 million, or 5.1%, during the
first half of 2022 as compared to the prior year period. This increase was
primarily attributable to additional treatment volume in all three therapies
including Oncology, Pain Management and NPWT, and improved third party payer
collections on billings. Pain Management net revenue for the first half of 2022
increased by $0.3 million as compared to the same period in 2021, which
represented an increase of 17% as compared to the first half of 2021. This
increase occurred despite treatment volumes being unfavorably impacted by
decreased elective surgeries during the first few months of 2022 related to
COVID-19. This unfavorable impact was more than offset due to additional sites
of care added over the last year.

EMR Services

DME Services net revenue of $19.9 million (exclusive of inter-segment revenues),
increased $2.9 million, or 16.8%, during the first half of 2022 as compared to
the prior year period. This increase included higher biomedical services revenue
which increased by $1.4 million, or 78%, increased equipment rentals totaling
$1.1 million, or 13%, and higher sales of disposable medical supplies which
increased by $0.4 million, or 11%. The increased biomedical revenue included
approximately $0.5 million related to the full period effect from the
acquisition of the FilAMed and OB Healthcare businesses, which we acquired
during the first and second quarters of 2021, respectively. Increased rental
revenue and disposable sales reflected increased market demand as customers
looked to supplement their infusion pump fleets in the face of supply chain
disruptions of disposable medical supplies used with certain model infusion
pumps. The biomedical services revenue included initial amounts of revenue from
a new master services agreement with a leading global healthcare technology and
diagnostic company that was launched in April 2022. Revenue under the agreement,
which was not significant during the second quarter of 2022, is expected to grow
to approximately $10.0 to $12.0 million annually after an initial ramp-up period
of approximately 15 months.

Gross profit (including certain inter-segment allocations)

Gross profit for the first half of 2022 of $30.3 million increased $0.6 million,
or 2.2%, from $29.6 million for the first half of 2021. This increase was due to
the increase in net revenues offset by a lower gross margin. Gross margin
decreased to 56.3% during the first half of 2022 as compared to 60.1% during the
prior year. This decrease was due to a decrease in the gross margin for both the
DME Services and ITS segments.

HIS

ITS gross profit was $20.9 million during the first half of 2022, representing
an increase of $0.4 million, or 1.9%, compared to the prior year. The
improvement reflected an increase in net revenues offset partially by a lower
gross margin, which decreased from the prior year by 1.9% to 61.5%. The lower
gross margin was the result of a $0.5 million increase in the adjustment
recorded for pump disposal expenses and $0.2 million higher pump maintenance
expenses as compared to the prior year. Pump disposal expenses include
retirements of damaged pumps and reserves for missing pumps. The increase was
mainly related to an updated estimate of the volume of pumps considered missing
based on pump return data and physical inventories. Pump maintenance expenses,
which include preventative maintenance, cleaning and repair services mainly
performed by the DME Services segment, were unusually high during the second
quarter of 2022 due to the timing of when the services were performed.

EMR Services

DME Services gross profit during the first half of 2022 was $9.4 million,
representing a increase of $0.2 million, or 2.7%, over the prior year. This
increase was due to the increase in net revenues, which was partially offset by
a decrease in gross margin. The DME gross margin was 47.3% during the current
period, which was 6.5% lower than the prior year. This decrease was the result
of gross margin mix associated with higher biomedical revenue, which has a lower
gross margin percentage than other business lines in the DME Services segment,
and an increase in labor costs related to an increase in the number of
biomedical technicians. The increase in biomedical technician labor resulted
from an increase in team members who were hired in order to increase the
capacity in biomedical services in anticipation of increased biomedical services
demand.
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Higher biomedical services revenue during the second quarter of 2022 has begun
to absorb a portion of the increased labor and further increases are expected in
future quarters which will further absorb these costs.

Sales and marketing expenses

Selling and marketing expenses for the first half of 2022 were $6.4 million,
representing an increase of $1.3 million or 26.6% as compared to selling and
marketing expenses for the first half of 2021. Selling and marketing expenses
consist of sales personnel salaries, commissions and associated fringe benefit
and payroll-related items, marketing, travel and entertainment and other
miscellaneous expenses. Selling and marketing expenses as a percentage of net
revenues increased to 11.9% compared to the prior year period at 10.3%. This
increase reflected $0.8 million in higher expenses for NPWT and Pain Management
dedicated sales personnel and $0.5 million in increased marketing expenses. The
additional sales team members represent a strategic investment to accelerate
revenue growth for these therapies and were hired during the second quarter of
2021 and therefore did not have a full impact in that period. The related
expense included in selling and marketing, for these strategic investments, is a
portion of an overall expense increase of $1.4 million, for the first half of
2022 associated with this initiative, the remainder of which is included in
general and administrative expense. The higher marketing expenses related to our
national sales meeting, which was held in-person for the first time since the
outbreak of COVID-19, increased participation in trade shows and other increased
expenses.

General and administrative expenses

G&A expenses for the first half of 2022 were $22.8 million, an increase of $1.8
million or 8.5% from the first half of 2021. 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. The increase of $1.8 million was due to $0.6 million
in additional expenses related to the investments in NPWT and Pain Management,
$0.2 million in additional audit expenses associated with additional
requirements to comply with the Sarbanes-Oxley Act of 2002, $0.1 million of
additional G&A expenses for the FilAMed and OB Healthcare businesses and higher
travel expenses and other increases including higher personnel, healthcare,
information technology and general business expenses. These increases were
partially offset by a decrease in stock-based compensation expense of $0.8
million and a lower accrued expense for our short-term incentive compensation
plan. G&A expenses as a percentage of net revenues for the first half of 2022,
decreased to 42.3% compared to 42.5% for the prior year mainly reflecting
improved net revenue leverage over fixed costs.

Other income and expenses

During the first half of 2022, other income and expenses included interest expense of $0.6 million which was equal to the interest charges for the first half of 2021.

Benefit From Income Taxes

During the first half of 2022 and 2021, the Company recorded a benefit from
income taxes totaling $0.4 million and $0.7 million, respectively. These amounts
included a benefit from discrete adjustments including excess tax benefits
associated with higher amounts of equity compensation expense deductible for tax
purposes as compared to amounts historically recognized for book purposes on
exercises of stock options and vesting of restricted stock. The amount of the
discrete adjustments were $0.1 million during the first half of 2022 and $0.9
million for the first half of 2021. Not including these discrete adjustments,
the company recorded an estimated tax benefit totaling $0.3 million during 2022
on a pre-tax loss totaling $1.0 million and a tax provision of $0.3 million
during 2021 on pre-tax income of $0.8 million. These amounts represented an
effective tax rate of 30.8% and 33.4% during first half of 2022 and 2021,
respectively, which differed from the U.S. statutory rate mainly due to the
effects of local, state and foreign jurisdiction income taxes.


Cash and capital resources

Insight:

We finance our operations and capital expenditures with cash generated from
operations and borrowings under our existing credit 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, and the lenders
party thereto, which replaced our then existing credit facility, dated March 23,
2015 (the "2015
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See Note 8 (Debt) of the Notes to the accompanying unaudited condensed consolidated financial statements for additional information regarding the 2021 Credit Agreement and the 2015 Credit Agreement.

The following table summarizes our available liquidity (in millions):
Liquidity
                               June 30, 2022       December 31, 2021
Cash and cash equivalents     $          0.3                    0.2
Revolving line of credit                40.5                   41.4
Available liquidity           $         40.8                   41.6


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,
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 share repurchases. We believe we have
adequate sources of liquidity and funding available to meet our liquidity
requirements for at least the next year from the filing date of this report, as
well as for our currently anticipated long-term needs, including our long-term
lease obligations discussed above in   Note 13 (Leases)   in the notes to the
accompanying unaudited condensed consolidated financial statements. 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.

Long-term debt activities:

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 credit facility ("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)
Letters of credit                                       (600)                        (600)
Availability on Revolving Facility      $              40,450    $          

41,426


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 2022 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%). As of June 30, 2022, the Company was in compliance
with all debt-related covenants under the 2021 Credit Agreement.

Share buyback program

On June 30, 2021, 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 through June 30, 2024.
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 Company's existing 2021 Credit
Agreement. 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.
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As of June 30, 2022, the Company had repurchased and retired approximately $4.9
million, or 382,139 shares, of the Company's outstanding common stock under the
Share Repurchase Program.

Cash Flows:

The following table summarizes our cash flows (in millions):

                                                                 Six Months Ended June 30,
In millions                                                       2022                 2021             2022 vs. 2021
Net cash provided by operating activities                    $        9.5          $     8.8          $          0.7
Net cash used in investing activities                        $       (4.9)         $   (11.3)         $          6.3
Net cash used in financing activities                        $       (4.4)  

$(7.0) $2.6


Operating Cash Flow. Net cash provided by operating activities for the first
half of 2022 was $9.5 million compared to $8.8 million for the first half of
2021. This $0.7 million, or 7.7%, increase was attributable to the positive cash
flow effect of a swing from $2.5 million in cash being used to fund increased
working capital amounts during first half of 2021 to cash being provided by
reduced working capital amounts during the first half of 2022 of $1.2 million
for a net improvement in cash flow totaling $3.7 million. This amount was
partially offset by a decrease in net income adjusted for non-cash items, which
was $8.3 million during the first half of 2022 as compared to $11.3 million
during the first half of 2021, a decrease of $3.0 million. During the six month
period ended 2022, cash provided by reduced working capital balances totaled
$1.2 million. This included a $2.5 million increase in accounts payable and
other liabilities net of capital items and a $0.6 million decrease in other
current assets offset partially by a $0.9 million increase in inventories and a
$0.9 million increase in accounts receivable. The higher increase in accounts
receivable during the first half of 2022 as compared to the prior year was
mainly due to a higher increase in revenue during the second quarter of 2022 as
compared to the fourth quarter of 2021 than the comparable prior year periods.
Accounts payable and other liabilities net of capital items, increased by $2.5
million during the first half of 2022, and decreased $1.6 million during the
first half of 2021, representing a $4.1 million favorable cash flow swing,
mainly due to a reduction in the amount paid in 2022 for the 2021 short-term
incentive bonus plan as compared to the amount paid in 2021 for the 2020
short-term incentive bonus plan.

Investing Cash Flow. Net cash used in investing activities was $4.9 million for
the first half of 2022 compared to $11.3 million for the first half of 2021, a
decrease of $6.3 million. The decrease was due to the acquisitions of FilAMed
and OB Healthcare totaling $7.5 million during the first half of 2021. We did
not acquire any companies in first half of 2022. This amount was partially
offset by an increase totaling $1.7 million in cash used to purchase medical
equipment and other property and equipment first half of 2022 as compared to
first half of 2021. Purchases of medical equipment were higher during 2022 due
to an increase in expected future growth during the current year as compared to
2021.

Financing Cash Flow. Net cash used in financing activities for the first half of
2022 was $4.4 million compared to $7.0 million for the first half of 2021.
Amounts of cash used in financing activities during the first half of 2022
included $0.4 million in principal payments on our other financing, a $0.8
million payment of contingent consideration related to the acquisition of OB
Healthcare, $4.4 million to buy back the Company's common stock and $0.6 million
used to repurchase stock associated with statutory withholding requirements
under the Company's stock based compensation plans. These amounts were partially
offset by net revolving line of credit borrowings under the 2021 Credit
Agreement totaling $1.0 million and cash proceeds from employee stock option
exercises totaling $0.7 million. The use of cash during 2021 was mainly related
to the refinancing of our bank debt on February 5, 2021. Prior to that date, we
operated under the 2015 Credit Agreement which included three term notes and a
revolving line of credit. At the beginning of 2021, we had $9.6 million in cash
on hand and no outstanding borrowings under the revolving line of credit. The
2015 Credit Agreement was completely repaid and replaced by the 2021 Credit
Agreement, which has a new $75 million revolving line of credit and no term
notes. This structure allowed the Company to use a portion of its available
cash, totaling $7.9 million, to reduce its overall outstanding debt on the
closing date of the financing.

Significant Accounting Policies and Estimates

The unaudited condensed consolidated financial statements are prepared in
conformity with GAAP, which require the use of estimates, judgments and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses in the periods
presented. We believe that the accounting estimates employed are appropriate and
resulting balances are reasonable; however, due to inherent uncertainties in
making estimates, actual results could differ from the original estimates,
requiring adjustments to these balances in future periods. With one exception
discussed below, the critical accounting estimates that affect the unaudited
condensed consolidated financial statements and the judgments and assumptions
used are consistent with those described in the notes to the audited
consolidated financial statements in our annual report on Form 10-K for the year
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ended December 31, 2021 filed with the SEC on March 15, 2022. Our 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. There have been
no material changes to our critical accounting policies described in the notes
to the audited consolidated financial statements in our annual report on Form
10-K for the year ended December 31, 2021.

As of the date of the unaudited condensed consolidated financial statements
presented in this Form 10-Q, there have been no material negative financial
impacts on our operations resulting from the COVID-19 pandemic other than delays
in our revenue growth initiatives. However, the future effects of this pandemic
or any resurgence thereof on economic and market conditions is uncertain and
increases the subjectivity that will be involved in evaluating our estimates and
assumptions underlying our critical accounting policies. Any events and changes
in circumstances arising after June 30, 2022, including those resulting from the
impacts of the COVID-19 pandemic, will be reflected in management's estimates
for future periods.

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