INFU - AMEX

Good morning, ladies and gentlemen, and welcome to the InfuSystem First Quarter 2024 Financial Results Conference Call. I will now turn the program over to Joe Dorame.

Good morning, and thank you for joining us today to review InfuSystem's First Quarter 2024 financial results ended March 31, 2024. With us today on the call are Rich Dilorio, Chief Executive Officer; Barry Steele, Chief Financial Officer; and Carrie Lachance, President and Chief Operating Officer. After the conclusion of today's prepared remarks, we will open the call for questions. Before we begin with prepared remarks, I would like to remind everyone certain statements made by the management team of InfuSystem during this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except for the statements of historical fact, this conference call may contain forward-looking statements that involve risks and uncertainties and some of which are detailed under risk factors and documents filed by the company with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended December 31, 2023. Forward-looking statements speak only as of the date the times were made. The company can give no assurance except forward-looking statements prove to be correct. InfuSystem does not undertake and specifically disclaims any obligation to update any forward-looking statements, except as required by law. Now I'd like to turn the call over to Rich Dilorio, Chief Executive Officer of InfuSystem. Rich?

Thank you, Joe, and good morning, everyone. Welcome to InfuSystem's First Quarter 2021 Earnings Call. Thank you all for joining us today. I'll get things started this morning with a quick overview of how we started the year. Barry will go into detail on our financial results for the first quarter, and then Carrie will provide updates on our Biomed Wound Care programs. I'll conclude our prepared remarks with a discussion of how our growth strategy has evolved over the last couple of years, and the types of opportunities we are seeing and intend to pursue in the future. First quarter revenue was $32 million and represented the ninth quarter out of the last 11 that delivered a sequential increase in revenue. Our results were driven by continuing strength in our Device Solutions business unit, which was up 16% year-over-year with both biomedical services and equipment sales being strong contributors. One of the themes, I'll be developing on today's call is the increasing diversification of our business. Carrie discussed last quarter how the nature of our service business creates a cycle where we first have to invest to enable new growth opportunities. Then second, we onboard the new business, followed by a third stage focused on constant process improvements driving long-term profitability. We have said that 2024 is going to be an accretion year. This because 2023 delivered a lot of growth in our biomedical business and maximizing the profitability of that new revenue center is 1 of our top priorities for this year. But while our operating teams are heads down delivering on their efficiencies mandate, our sales teams are readying the next layer of biomedical contracts that we expect to close this year. And while that is happening, we have closed a large rental deal in an oncology customer that will start showing up in our second half numbers, and our Wound Care initiatives are ramping with material contributions expected by early next year. The reason it is [indiscernible] for most quarterly press releases to announce a new revenue record is the presence of more and more diverse revenue sources. When 1 part of our business is in investment mode, it is likely another part is in a growth phase. Our first quarter operating results came in on plan. There are diverse growth initiatives working their way forward all across our business, and we are confident in our revenue target for the year. Moving to profitability. We are seeing the operating improvements that are a big part of the plan for this year. Gross margins came in at 51.5%, with this driving a 10% increase in gross profit compared to the prior year. Unfortunately, the first quarter's strong operating performance was impacted by nonrecurring expenses of approximately $1.2 million, approximately $400,000 of which impacted our adjusted EBITDA. Stepping back and looking at the long-term picture, I believe it is clear that our new and more diversified business initiatives are gaining operating momentum that they are targeting and executing on improved efficiencies and as I will discuss in a few minutes, our strategic outlook and our pipeline of new business opportunities have never been better. But before that, I'll turn it over to Barry, who will provide detail on the first quarter results.

Thank you, Rich and thank you, everyone, on the call for joining us today. I'm going to focus on 3 topics, including the main drivers for our current quarter's results, our current financial position and how it changed during the quarter. And finally, I'll give you a preview on our plans to invest in our information systems. Now let me start with our financial results for the period. First quarter 2024 net revenue totaling $32 million was another all-time record. As Rich pointed out, that makes 9 record-breaking quarters out of the last 11 reported. The amount represented a $1.6 million or a 5% increase from the prior year. The growth came from the Device Solutions segment and included higher revenue from the GE Healthcare contract totaling $1.2 million strong equipment sales and higher rental revenue. The Patient Services segment revenue was slightly lower, mainly due to a tough comparison to the prior year for Oncology and Wound Care. For Oncology, higher billing volumes were offset by lower per billing net revenue. The lower net billings amount, which is usually lower during the first quarter due to higher amounts of patient co-pays and deductibles followed a more normal quarterly pattern in the current year after having been particularly strong during the first quarter of 2023. We anticipate sequential improvement in the per billing net revenue in the coming quarterly period following the normal seasonal pattern. Net revenue for Wound Care showed a small increase. This despite a very strong prior year amount of negative pressure wound therapy equipment sales on lease. Higher wound care treatment revenue in 2024 offset the lower equipment sales. Gross profit for the first quarter of 2024 was $16.5 million, which was $1.5 million or 10% higher than the prior year first quarter. That was partly due to higher sales, but mainly driven by higher gross margin percentage which was 51.5% during the first quarter of 2024, up 2.3% from the prior year. The year-over-year increase was mainly due to reduced start-up costs for the GE Healthcare contract and a reduction in estimated expenses for missing equipment. These were partly offset by the lower per billing net revenue previously mentioned. Start-up costs for the GE Healthcare Biomedical Services contract were particularly high during the 2023 first quarter when the contract ramp-up pace was accelerated. These expenses have abated, resulting in the current year improvement. Additional improvements are expected as we move through the year. Selling, general and administrative expenses for the first quarter of 2024 and totaled $17.3 million, representing an increase of $2.3 million or 15% as compared to the prior year. This increase included nonrecurring expenses, totaling $1.2 million, timing-related increases of [ $604,000 ] and expense increases associated with inflation and a higher revenue buy in totaling $700,000. First quarter expenses that we do not expect to recur in the coming periods include a fee paid to a former Board member in conjunction with a cooperation agreement and related legal expenses totaling $650,000. Fees paid to the company's former audit firm for their consent to file our 2023 annual report totaling $300,000, approximately $100,000 in legal and accounting fees associated with a reorganization project to simplify our legal structure, and other onetime expenses totaling $200,000. The timing impacts, which resulted in higher expenses mainly included amounts recorded during the quarter for the company's short-term management incentive program, which was $250,000 higher in 2024 and a higher amount of expense recorded in equity-based compensation totaling $300,000. These amounts vary from quarter to quarter based on program metrics and other factors. The remaining increase in SG&A included annual increases in compensation rates, higher commission expenses tied to higher revenue and other volume-driven increases in operating expenses. Adjusted EBITDA during the 2024 first quarter was $3.9 million or 12.1% of net revenue which represented a decrease of $400,000. This amount did not include some of the items I just mentioned, including the benefit related to the lower missing pump expense, the fees and expenses for the cooperation agreement and a portion of the other nonrecurring expenses totaling $200,000. Nonrecurring expenses that were included in adjusted EBITDA totaled $400,000. Turning to a few points on our financial position and capital reserves. Our operating cash flow for the first quarter totaled $400,000, an improvement of $500,000 over the prior year first quarter. This was due to a lower amount of growth in our working capital levels, which reflected slower sequential revenue increases over the immediately prior quarterly periods. Additionally, our net capital expenditures were relatively low $400,000 during the 2024 first quarter and represented a $2.6 million decrease from the prior year amount. This lower amount is partly related to the source of our revenue growth being driven from less capital-intensive revenue sources such as biomedical services and from initiatives we have begun been pursuing to increase pump utilization, including reducing the number of lost pumps. We expect higher amounts through the remainder of 2024 as revenue growth partly shifts back to more capital extensive product lines. Because of these factors, we continue to be positioned well to fund continued net revenue growth with the growing cash flow from operations backed by significant liquidity reserves available from our revolving line of credit and manageable leverage and debt service requirements. Our net debt increased slightly by $200,000 to $29.1 million during the 2024 first quarter. Our available liquidity continued to be strong and totaled $45.2 million at the end of the quarter. Our ratio of total debt to adjusted EBITDA was a modest 1.3x at the end of the quarter. Our debt consists of borrowings on our revolving line of credit with no term payment requirements nearly 4 years in remaining term and with $20 million of the outstanding balance protected from increasing interest rates through an interest rate swap having the same expiration. Finally, let me share some of our plans to invest in our information technology and business applications. As Rich mentioned, when we reported our 2023 earnings, we have embarked on a project to upgrade some of our core business applications. This includes a full replacement of our main ERP application and other upgrades. These changes will facilitate our continued growth and enhance our operating efficiency but are also necessary due to the approaching end of life for support. The product, which has been under investigation and vendor selection for the past year, was launched in the past couple of weeks. The total expected cost of the project is expected to be between $3 million and $4 million and will include software subscription expenses, integration consultant fees, staff augmentation costs, absorption of internal direct staff time where staff augmentation is not deployed and miscellaneous expenses. The project and related expenses will occur over an 18- to 24-month period. The planned productivity improvements, particularly as we continue to grow, are expected to provide a full payback over time and a favorable return on investment after the project is complete. I will now turn over the call to Carrie.

Thanks, Barry. In my comments, I will be providing a brief summary of current developments related to our Biomed and Wound Care business initiatives. First, Biomed as planned, during the first quarter, we completed the initial onboarding of facilities and pumps under the master service agreement with GE Healthcare. While there will always be changes in updates related to GE adding or dropping locations, for the most part, we are now working with facilities of which we are familiar, and we are in full swing shifting focus to operating efficiencies. We have onboarded approximately 220,000 devices to date. Our work cycle has 2 annual parts. First, we perform annual preventative maintenance to certify all equipment. That certification, inventory and repair is what we focus on when each device is onboarded. Second, we provide necessary biomedical services to maintain the equipment in good working order throughout the following year. Having completed the initial onboarding and preventative maintenance, our work now involves going back to recertify the devices we onboarded last year, the second year and subsequent years will be vastly different than the initial onboarding year. As we already know the facilities and staff we need to coordinate with, and we know the fleet and the condition of the devices because we've had our team taking care of that equipment over the course of the prior year. Additionally, this year, we have our technicians already positioned in each geography. As a big part of the onboarding was putting our team into place to maintain the equipment in each facility covered under the MSA. This is the national network of biomed technicians we refer to on every call. Now that we have technicians in the geography, the task of doing the annual preventative maintenance cycle is a smaller look for us. Fewer people are necessary, there is less travel cost and the work can be staged by our local staff to minimize both time and effort. Moving into our second full year with almost all devices already onboarded, in our systems and being taken care of on a day-to-day basis by our text, operating efficiencies will be much higher than last year. That said, our culture is to strive for continual process improvements and we will keep managing towards greater efficiencies and higher margins as we proceed deeper into the term of the MSA. There is the second major driver that will be improving our Biomed efficiencies this year and into the future. In addition to lowering costs, we plan to increase our Biomed revenue by leveraging the resources that we have built over the last 18 months to execute under the MSA. The technicians we have positioned in various geographies can be leveraged to perform additional work under new contracts. Rising efficiencies will allow us to increase absorption and deliver incremental revenue with substantially higher realized margins and contribution. During and following the first quarter, we are making good progress both in delivering the planned cost efficiencies and in identifying the first round of these incremental Biomed revenue opportunities. Now turning to Wound Care. While revenues in this area are still relatively small, we are making significant progress in developing multiple aspects of our Wound Care opportunity, especially those being pursued under our joint venture with Sanara. In addition to the negative pressure wound therapy business that we saw last year, we are increasingly distributing Sanara's advanced wound care products into an expanding channel of facilities and distributors. We are confident that there will be more news about our programs in Wound Care in the near future. Back to you, Rich.

Thanks, Carrie. In my opening, I started to communicate our excitement about the direction and growing momentum within the business. I also noted that InfuSystem's revenue sources are becoming increasingly and purposefully diversified. In addition to providing from the more consistent growth trajectory I referenced earlier, we are also seeing a welcome diversification in the capital intensity of our business. We have commented before that our Biomed business, now that the national network has been set up, we'll require relatively little incremental investment as it continues growing. Now we are also seeing that in our wound care initiatives that they should be less capital intensive than what we have seen historically with our oncology and rental businesses. Going further and discussing the evolution of our business, recall that a few years back when we started pursuing opportunities beyond oncology, we adopted and described the platform strategy that was one of product line extensions. That is, we would replicate our business in oncology by extending our third-party payer model to other therapies. That was a fairly obvious thing to do in response to Cardinal approaching us to partner with them to improve the negative pressure offering. What they wanted was for us to create a last-mile solution for their pumps, similar to what we had created in Oncology and then Pain Management. So in announcing the Cardinal opportunity, we framed it as negative pressure becoming our third therapy. But since announcing that platform strategy, our business has evolved in other directions, and we now see significant growth opportunities away from our earlier pump centric orientation. We are evolving into more of a platform services company. Offering a suite of highly developed assets and skills increasingly in demand by other companies that see these opportunities to leverage our InfuSystem as a partner. This platform services model is increasingly compelling, allowing us to wrap our unique assets and skills around our partners' products and business plans. We are seeing a steady stream of opportunities, many of which are bigger, require less upfront investment by us, present the likelihood of a faster payback and generally involve less business risk than initiatives we might pursue on our own. Along those lines, we've been saying for a while that the opportunities in front of us relating to our partnerships with GE and Sanara are more than enough to drive growth over the next several years. Let me explain this by walking through some of the opportunities we see developing in or around these new partnerships. GE Healthcare is, of course, a multibillion-dollar revenue company, that among other things, takes care of equipment in over 1,000 hospitals and clinics across the country, and they approached us looking to leverage our expertise in maintaining large fleets of small medical devices such as infusion pumps. We have to [indiscernible] been focused on the master services agreement. But we have also emphasized in the beginning that the MSA is only a starting point for a much bigger Biomed growth initiative. We continue to speak with GE about additional work we can do for them beyond the original MSA. On top of that, we are seeing opportunities coming to us that results from having GE as a reference account and our new ability to deploy a national network of biomed technicians. There are deals in the works that we hope to announce later this year. And on top of the biomed opportunities, there are developing prospects for us to expand our core rental business into the acute care channel through some of the doors the GE relationship is open for us. Turning to Sanara. This opportunity came to us as a direct result of our work in Wound Care with Cardinal. Just as we see occurring with GE, the opportunities under this new partnership continue to expand as the relationship matures. I can't go into much detail today, but the initiatives we are currently pursuing include the original third-party payer solution, where InfuSystem distributes Sanara's advanced wound and skin care products as well as supplies and negative pressure solutions into the channel that includes long-term care, skilled nursing and wound care facilities. There are also emerging opportunities to distribute Sanara's advanced wound and skin care products outside of that original channel. And finally, there is the Tissue Health Plus project that Sanara has spoken to on each of its last 3 earnings calls. Given the number and quality of the growth opportunities that are coming inbound to us, often from larger companies and involving initiatives far bigger than anything we might pursue ourselves. We have moved well past the old framework that had InfuSystem looking for additional therapies where we could extend our oncology model. We increasingly see ourselves as a platform services company possessing unique assets and skills that can be deployed to solve difficult problems for our partners. We have proven ability to provide solutions and revenue cycle, biomedical services, logistics, patient support and technology. And all of these skills are backed by our culture of white glove service that puts the needs of the patient first. As always, I'd like to take this opportunity to thank the InfuSystem team for their unwavering commitment to our patients and for making all of this possible. Before Q&A, I'll provide more color around our guidance for the year. As we said in the press release, our targets for high single-digit revenue growth and adjusted EBITDA for the year in the high teens remains unchanged from earlier this year. We have a lot of business coming forward, and we are confident in achieving these results. If business comes forward faster than our current models indicate, we will update our guidance in future quarterly calls. As we have emphasized in the past, we provide guidance only on things we can clearly see. Accordingly, our guidance does not include anything for developing initiatives that could result in incremental revenue gains this year. Further, our current guidance does not include expenses related to the planned upgrades of the company's financial and ERP software systems. Operator, we are ready to begin the Q&A portion of the call.

[Operator Instructions] And first up, it looks like we have Brooks O'Neil of Lake Street.

First, Rich, I just -- I might have been distracted for a second thinking about questions. But would you repeat that very last comment you made about the expenses related to the ERP system and whether they were or were not included in the guidance?

Barry, why don't you answer it?

Okay. Yes. So we did not include those expenses in the guidance. So we're not sure whether we'll be adding them back for our adjusted EBITDA disclosure. But when we look at the amount of EBITDA, we expect for the rest of the year, we don't include those expenses.

Okay. That's helpful. And then just -- I'm thinking about sort of a philosophical question. I understand what you said, Rich, about the guidance philosophy, and I appreciate that a lot. I think it makes a ton of sense. I'm just curious, though, as you think about the new vision you laid out and the opportunities you can envision, would you say the company's long-term expectation is for mid- to high single-digit revenue growth? Or do you see opportunities conceptually? I'm not asking you to guide, but do you see opportunities conceptually where the company could grow at a -- let's call it, a faster pace than that.

Can you guys hear me now? Good. The audio is fixed. So Brooks, I think overall long term, it should be high single digits, not every single year, right? It depends on what the comps are in the prior year, how fast we grow the prior year and kind of where the opportunities are in their development. I think moving forward with biomed now that we kind of have our feet under us with GE. And as I mentioned, there's other opportunities coming. And with the Sanara relationship in Wound Care, I'm not going to put a number on our long-term growth, but getting into the double digits every year probably shouldn't be a challenge for us kind of after this year. 2025 has a lot of things, right? Wound Care should really be up and running next year. The NOPAIN Act for pain kicks in January 1, our Biomed opportunity should start flowing in by then. So starting in '25 and beyond, getting to double digits shouldn't be an issue. It doesn't mean there won't be another year where we grow 7%, 8%, 9%. But long term, our growth should be more accelerated than it has been. We're just getting some of these things going, and I think they are long-term growth opportunities. It's not like GE was a 1-year growth thing, right? We onboarded most of it last year. We saw most of the growth this year with a little bit this year coming in. But these other opportunities, it's not a onetime hit. They're just long-term markets we're getting into and partnerships that we have that should drive growth for years to come pretty solidly in the double digits.

Great. And then I'm just curious, obviously, over the past few years, you've thought about adding devices on the platform you described for oncology. And you were talking about a different business model today, which I assume means not so much adding devices to the mix. But would you say that these newer opportunities are going to come broadly within biomedical services and Wound Care? Or are you thinking that there could be opportunities to go in new directions that just leverage your capability?

So I think what we're going to see in the future and what we've seen over the last couple of years, is as the businesses evolve. So if you rewind a few years ago, it started with Cardinal. I mean, we even talked about lymphedema at 1 point, right? The whole concept of that we can take a device, we can wrap our services around it, going to the market and try to win some market share is kind of what we've done in Pain, right? So let's use a as an example. It costs quite a bit of money to stand up the sales team and go do that, right? You're blazing new trails for the company. It can take a while, and there's some risk to it. The real difference is with Sanara and GE, which really opened our eyes to this is those guys came to us with business models and products and said, we just need your support and your help, right, to get into the market. We didn't need to blaze a new trail. The trail is already built by these guys. The product was already there. They have already identified the market. And all we're doing is supporting that, right? Whether that's our revenue cycle team and leveraging our contracts, our biomed capabilities like with GE, our sales team like it would be great to put something into Oncology that we already have a team stood up right? And it's just them talking about new products in that market. Those are the type of things that you'll see more on. And we have -- I think I said in my prepared remarks, there's a lot of those inbound to us. We're not -- we don't have to go hunt them. They're already coming to us. Now it's just a matter of Barry's team modeling it out, making sure it makes sense financially, the sales team making sure we can get to the market and we have a team. It's just -- it's a very nuanced change, and it's not something that was really purposely done. It's just how it evolved from where we started. And where we started kind of brought us to this point with Cardinal, right? That brought Sanara to us. One of the acquisitions -- the acquisition we made with OB Health brought us GE. And leveraging our capabilities with their business models, their plans, their products, I think, is a much better fit than us trying to build the entire building on our own. And I think that's what you're going to see more in the future.

Next up, we have Jim Sidoti of Sidoti & Company.

Sorry, I had to join the call late as I was in a couple of the calls. But can you just -- I don't know if you said it or not already, but the Oncology business there 1%. What was really behind that? And where do you expect that to end up this year?

Yes. So Jim, it was actually higher volume than last year. But this year, we had our gross-to-net model realizable revenue was a bit lower than last year, but only because last year was an anomaly. That net revenue adjustment was impactful more this year and more normalized this year. If that makes sense. So we expect a more normal pattern this year than the prior year, where we're going to actually improve our gross-to-net as we go through the year because there's less co-pays and deductibles that hit months after Q1.

Okay. All right. So I mean, historically, it's been a low single-digit growth business, do you think that's where it ends up again this year?

Yes, absolutely. That's our plan. We'll bounce back in terms of -- and that affects our profitability in Q2 and beyond compared to Q1, and that's normal.

Okay. And I know you had a lot of auditing activity in the first quarter, you changed auditors. Is that one of the reasons why the G&A up over $18 million? And where do you think that come...

These 3 main impacts to the first quarter generally for us that may give us a seasonality in the way of EBITDA hits our quarters because there's some expenses in the first quarter that we don't have as much of in other quarters. And the audits one of them we book our audit expenses as the audit incurs and that's predominantly in the first quarter. And by the way, now that we're doing a fully integrated audit with control being audited, that was more -- that's a higher amount just for us generally, and we had extra expenses because we had to get a consent from our old auditors because we switched auditors. So a pretty big impact just in Q1 of this year. The other thing is that some of our marketing activities, such as we have an annual sales meeting and other things hit us much more hard in the first quarter than other places. So between the seasonality and gross-to-net for the TPP Oncology business, the higher amount of audit expenses in the first quarter and higher marketing expenses in the first quarter. We're always going to show our lower first quarter result from an EBITDA and profitability perspective than other quarters. And that's the pattern you see in the past as well.

Okay. So those G&A expenses you think on a back in Q2 and Q3?

That's correct. As we pointed out, there's a significant amount of not only the seasonality, but other onetime expenses that we had this year, right, that obviously won't repeat in the coming quarters. Some of that hit EBITDA, some of that didn't...

Okay. All right. And then it sounds like the Sanara is something that we should really expect and have more of an impact in Q3 and probably Q4 as you're progressing. Is that right?

Yes. I mean we spent most of last year just getting ourselves ready with the licensing, accreditation, the sales team starting their activities and training and everything. This year, those guys are out there hitting hard. And we did see a slight increase even with the tough comps on the leases of equipment last year. So we're still going to have those leases and comps for the next couple of quarters, that's not the real revenue we want, though, right? We want the Sanara products and the other Wound Care products we have to really grow. The leases will -- they're nice when they come in. So this year is a much better type of growth that we want long term than just getting some nice leases to come in, we will have those in the future. Sanara looks really good. The team is starting to gain some traction. I think quarter-to-quarter, we're going to see it grow, and it should start to really hockey stick up by the end of this year and certainly into next year.

All right. All right. And then last 1 for me. it seems like GE is where you want it to be at this point, but are there other GEs out there that you're working with? And do you think you could land another contract with another equipment provider over the next year or two?

Yes, I think we have more agreements coming. I don't see anything to the magnitude of GE, the $10 million to $12 million range. But we have some things in the works now that hopefully we can speak to by the end of the year that are -- they range from hundreds of thousands to a little over $2 million. And those are much nicer. They tend to be more profitable and easier to implement. So we have some things now. We've taken the governor off the sales team, which we put on purpose because we wanted to make sure we focused on the MSA, the original MSA with GE -- now we've kind of taken the reins off those guys and we're letting them go, and we're starting to see some opportunities pop up. And as we sign contracts, we'll give you guys visibility into that.

Are you looking to stay in the same geographies where you have teams in place now? Or would you expand again...

Yes. And the good news is the geography is all over the country, right? We pretty much have technicians everywhere. So there's not a lot of restraint on where.

[Operator Instructions] Next up, we have Aaron Warwick of Breakout Investors.

Just First, I wanted to start off a question about the guidance and relative to the first quarter. And then I wanted to talk a little bit more about conceptually what you spoke about there, Rich, towards the end of the prepared remarks. Getting into the guidance, I mean, I was a little surprised the quarter seems weak from -- in terms of both revenue and adjusted EBITDA. But you guys obviously had a good feel when you put out that guidance that would have been almost towards the end of the first quarter and you're reiterating it today. So it sounds like you're planning on a pretty strong back 3 quarters of the year. Is that...

Yes. Yes, I think that's right. On the top line, we are right on plan. So this is exactly what we expected as Wound Care ramps and some of these other opportunities start to show up. On the bottom line, we are effectively on plan. If you take out some of the nonrecurring things that happen, like the audit fees that Barry mentioned. So we're kind of right where we thought we would be. And yes, our revenue should grow throughout the year as these things come on board. So yes, we're not concerned about getting to those numbers. And Q1 is always low on the bottom line anyways. I think Barry just mentioned that with all those one time -- or stuff that just comes in Q1, right, the timing of it. So nothing to worry about for the last 3 quarters.

Okay. And even still, it sounds like there's potential upside just because you have indicated your new philosophy of guiding for what you already sort of have in the bag, I guess, I mean, obviously, still have to play out. But you can envision that you're not really building anything in there that's not already won. Is that...

Yes. I mean that's the philosophy, right, that there should always be upside in the number, there should be more on the opportunity side than the risk side in the model. And if they play out, then we'll raise our guidance. If they don't, we can still get into our range where we want to be. So we're just trying to mitigate that risk for you guys, tell you where we are. And if there's upside, we'll let you know as soon as it comes. But we want to wait, I mean, even on the biomed side, right? There's some opportunities that we're pretty close to, but I want to wait until the contract is signed and we start working on them to be able to give you guys that visibility. I don't want to jump the gun on it.

Yes. And did I understand correctly related to that, do you have a new customer there? Is that what it said in the press release that you have already started to recognize revenue in the first quarter from?

So we have a big oncology customer that's actually renting equipment and buying supplies from us. It just got onboarded in the last couple of weeks, and it's sizable. I mean, it's well over $100,000 a month, so we're going to start seeing that revenue a little bit this quarter, but it should really kick in Q3 and Q4, which will obviously also help us get to our number.

What should we expect in terms of -- I mean, because there was no press release or if there was, I missed it, but like a customer of that size? Is that something that you guys would tell us in between calls? Or are you just going to be updating on the quarterly calls related to...

Yes, I think it's -- Aaron, I think it depends if it's like a strategic customer or something different, we may put out a press release. We don't historically do it with customers once in a while, we do. And it's also driven by whether or not the customer wants us to use their name, how long it takes to even get that permission, that sort of thing. But we open up customers that are $1 million here and there for different parts of our business. We don't necessarily announce it. Those will probably keep for just quarterly results and earnings calls. But if it's something more strategic than hey, it's just a big win, we'll give you guys visibility into that.

That makes sense. I guess you really have in the past, it's mostly been partnerships and things of that nature so...

Exactly, yes.

And then I guess that kind of leads into. So you kind of talked about this philosophical change. I appreciate that because I've been wondering and some people have asked me, specifically, you mentioned lymphedema, which you just -- up until now, you haven't talked about for several quarters. And I mean, just -- hearing you talk about the opportunities, the double-digit growth likely for '25 and beyond, obviously, some huge opportunities. I mean just to put this into context for myself, I guess, you had mentioned at 1 point, I think when we started this whole lymphedema conversation 3 to 4 years ago. It was like a $300 million TAM. But as you said, that was something that you would have to attack on your own. So -- but nonetheless, I mean, that's an enormous opportunity. So what you're seeing now with this change in philosophy must be pretty significant for you to just back away from that type of opportunity in lymphedema. Am I remembering that correctly, I guess, in terms of the possible size, I'm not necessarily saying you're going to have $300 million in revenue from these -- from this philosophical change, but it should be quite a contribution to the bottom line if you're sort of putting that on pause.

Yes. So there's a lot of factors that go into these decisions, right? So it's not just the TAM because there's some TAMs out there that are even bigger that we could, in theory, go after and maybe play around the periphery win some market share generate some revenue. It's how quick can we get into the market, how well does it fit with what we do. Do we have the right partner? Do we have to build it from scratch? Like all those things come into play. And lymphedema -- so when you compare like lymphedema versus GE or Sanara, right? I mean, that's really the decision-making tree for us, right? So lymphedema was on plan, but it would be blazing new trails for us. So that was 1 piece of the decision making. Our experience based on our oncology products, obviously makes sense, right? We can repair the device, we can support it and all that. But when you look at GE, GE was kind of presented to us, it was easy -- I shouldn't say easy. I think Carrie will kill me if I say that, but it was -- we knew exactly how to do it. They had a model already built. We just had to go help them execute on that model, right? Pretty easy thing to do. Sanara, TAM-wise is much bigger, right? Wound Care in general is [indiscernible] the lymphedema market. And we have a partner that already has phenomenal products, but I would argue the best in the world from a product line standpoint with a model we can go after. So it's more than just 1 metric. When you look at the whole picture, and how easy is it to get in the market? What's the risk for us? Do we have to stand up sales teams like all of that goes into the thought process. And when we compare lymphedema to these other guys, these other opportunities are just too good. It doesn't mean lymphedema is off the list, but I don't see it coming in the next 18 to 24 months. But someday, maybe we do, right? Maybe a partner shows up with a great product and model and they want us to just help them. That's probably how we would get into that market more so than just us getting a device that we could use and go and do it on our own. It just takes a lot longer, a lot more cost and a lot more risk.

Well, and obviously, you've had other opportunities open up because of what you said about GE and Sanara. So exactly it sounds like it opens -- well, I know it's been a bit of a transition for you guys and still going on from that standpoint. But I think it commend you for being willing to be flexible and do what's best for ultimately, the bottom line. So thank you, guys. Appreciate.

Thanks, Aaron.

And with that, ladies and gentlemen, this concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Richard Dilorio.

I want to thank everyone for participating on today's call, and we look forward to our second quarter call when we'll update you on our results and progress with this year's strategic priorities. Have a great day.