Quipt Home Medical Corp. (“
Quipt” or the
“
Company”) (NASDAQ:QIPT; TSXV:QIPT), a U.S. based
leader in the home medical equipment industry, focused on
end-to-end respiratory care, is very pleased to announce that it
has acquired Good Night Medical, LLC (“
Good Night
Medical”), a business with operations across seven U.S.
states, reporting unaudited trailing 12-month annual revenues of
approximately $7.5 million and with anticipated Adjusted EBITDA
(defined below) of $1.5 million (20% margin) post integration. As a
reminder all figures stated are in USD.
Acquisition
Details
The acquisition encompasses locations across
seven U.S. states including Arkansas, Georgia, Massachusetts, North
Carolina, Ohio, Texas and California. The acquisition provides
Quipt an expansionary opportunity into Massachusetts, North
Carolina and Texas, which are new U.S. states for Quipt’s coverage
sphere including important new commercial insurance contracts. The
other four U.S. states are current areas of service for Quipt,
which provide for actionable revenue and cost synergy opportunities
as further scale is created in each operating region. The
expansionary operating footprint aligns closely with regions that
have a high prevalence of Chronic Obstructive Pulmonary Disease
(“COPD”), a key target patient group; cumulatively
the seven states Good Night Medical operates in contain some of the
highest prevalence U.S. states. According to the National
Institutes of Health (NIH), about 5 million people between the
seven states have COPD1. The favorable demographics, additional
insurance contracts, and infrastructure provides Quipt with the
right set of circumstances to further accelerate its national
expansion efforts as a leader in clinical respiratory care.
The integration process will include Quipt
applying its proven subscription-based resupply program to each
acquired business unit, as well as the highly intensive service
model Quipt is known for. Consistent with the transactions Quipt
has completed to date, Good Night Medical brings an experienced
operational team.
Good Night Medical has been a leader in the
respiratory home care services space for over 9 years and has
several difficult to obtain insurance contracts that significantly
enhance Quipt’s presence in each of Good Night Medical’s regions.
Good Night Medical has 10,000 active patients, bringing Quipt’s
total to approximately 180,000 active patients, and like Quipt,
Good Night Medical offers high-quality service, equipment, and
supplies.
Moreover, Good Night Medical has strong
diversification amongst referral sources, and a payor base, with
exposure to less than 30% from Medicare. Furthermore, Good Night
Medical has no exposure to ventilation therapy, which provides
Quipt an opportunity to grow as well as other complimentary
clinical respiratory products and services. In addition, Good Night
Medical provides Quipt the opportunity to add patients to Quipt’s
existing subscription-based resupply program, and Quipt expects
that it can derive strong revenue synergies from this
initiative.
Under the terms of the definitive purchase
agreement, Quipt acquired Good Night Medical for approximately $7
million in cash. It is expected the acquisition will increase
Quipt’s annual revenues by approximately $7.5 million, and, post
integration, Adjusted EBITDA by $1.5 million (20% margin).
Reiteration of Outlook for Calendar End
2022 (Fiscal Q1 2023)
Based on the current operations, market trends
and completed and prospective acquisitions, the Company is
reiterating its outlook for its annual run-rate revenue by the end
of calendar 2022 (Fiscal Q1 2023) to be $180-$190 million with
$38-$43 million in run-rate Adjusted EBITDA.
_____________________________________
1 Source:
https://www.nhlbi.nih.gov/health-topics/education-and-awareness/copd-learn-more-breathe-better/state-prevalence
Management
Commentary
“This acquisition of Good Night Medical is a
prime example of the quality respiratory businesses we have in our
robust pipeline. Good Night Medical strengthens our healthcare
network across multiple states, enhancing our national coverage
sphere over an area that includes about 5 million COPD sufferers in
the United States. Furthermore, I believe that this acquisition
will help us achieve long term cost saving goals that will drive
our future margin acceleration by giving us increased scale across
the organization,” said Greg Crawford, Chairman and CEO of Quipt.
“We see several actionable synergies and believe our strong sleep
re-supply business presents us with significant upside as we deploy
our technology therein. Integration is the key to our ongoing
financial and operating success as it allows us to continue the
strong pace of closing strategic acquisitions, alongside the
stringent approach to our due-diligence process that provides us
acquisition opportunities that work towards our long-term strategic
objectives. We are extremely encouraged about the growth path we
are on, carving out a special segment of the homecare industry and
we are well positioned to seize the growth opportunity ahead of
us.”
“Additionally, I want to take a moment to
provide an update on our sleep therapy business unit. As noted in
our fiscal Q1 2022 financial news release, we have seen significant
backlog, with nearly 8,000 patients waiting for a sleep device. It
is important to understand that this backlog is extremely sticky
with the entire industry experiencing supply constraints, and we
view the revenue impact as delayed not lost. Furthermore, I am
pleased to share that we began the month of April with the largest
on hand inventory of CPAP devices since the recall commenced and I
am cautiously optimistic as we move through the second half of the
year that the supply pressures will continue to alleviate.”
Chief Financial Officer, Hardik Mehta added,
“This acquisition allows us to build out our operating footprint
within existing and new markets as we reach approximately 180,000
active patients, add $7.5 million in revenue, a meaningful EBITDA
contribution, as well as providing us significantly enhanced
infrastructure across seven states. We are pleased with the
consistent performance across our entire operation year to date and
are very well positioned as we move through 2022 and beyond to grow
into a leader in respiratory homecare across the United States. The
bullish regulatory environment, industry tailwinds, and need for
respiratory homecare, gives us an incredible runway in
strategically gaining market share in favorable geographies.
Looking at our current pipeline, it remains very exciting, and we
expect to remain very active over the near term with exciting
targets that meet our stringent criteria and are thrilled to
continue to execute on our growth pillars over the course of the
year.”
ABOUT QUIPT
HOME MEDICAL
CORP.
The Company provides in-home monitoring and
disease management services including end-to-end respiratory
solutions for patients in the United States healthcare market. It
seeks to continue to expand its offerings to include the management
of several chronic disease states focusing on patients with heart
or pulmonary disease, sleep disorders, reduced mobility, and other
chronic health conditions. The primary business objective of the
Company is to create shareholder value by offering a broader range
of services to patients in need of in-home monitoring and chronic
disease management. The Company’s organic growth strategy is to
increase annual revenue per patient by offering multiple services
to the same patient, consolidating the patient’s services, and
making life easier for the patient.
Reader Advisories
Readers are cautioned that the financial
information regarding the acquisition disclosed herein is unaudited
and derived as a result of the Company’s due diligence, including a
review of the acquisition’s bank statements and tax returns.
There can be no assurance that any of the
potential acquisitions in the Company’s pipeline or in negotiations
will be completed as proposed or at all and no definitive
agreements have been executed. Completion of any transaction will
be subject to applicable director, shareholder, and regulatory
approvals.
Unless otherwise specified, all dollar amounts
in this press release are expressed in U.S. dollars.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Forward-Looking
Statements
Certain statements contained in this press
release constitute "forward-looking information" as such term is
defined in applicable Canadian securities legislation. The words
"may", "would", "could", "should", "potential", "will", "seek",
"intend", "plan", "anticipate", "believe", "estimate", "expect",
"outlook", and similar expressions as they relate to the Company,
including: post integration financial results (revenue and Adjusted
EBITDA) of Good Night Medical; Quipt accelerating its national
expansion efforts as a leader in clinical respiratory care; Quipt’s
growth opportunities as a result of the acquisition of Good Night
Medical; Quipt adding patients to its subscription-based resupply
program; Quipt expecting that it can derive strong revenue
synergies; the Company’s outlook for calendar 2022; the acquisition
helping Quipt achieve long term cost savings that will drive future
margin acceleration; Quipt’s acquisition pipeline and pace of
further acquisitions; Quipt believing that supply pressures will
continue to alleviate; and Quipt remaining very active with
acquisitions over the near term; are intended to identify
forward-looking information. All statements other than statements
of historical fact may be forward-looking information. Such
statements reflect the Company's current views and intentions with
respect to future events, and current information available to the
Company, and are subject to certain risks, uncertainties and
assumptions, including: the acquisition achieving results at least
as good as historical performances; the financial information
regarding the acquisition being verified when included in the
Company’s consolidated financial statements prepared in accordance
with generally accepted accounting principles in Canada as set out
in the CPA Canada Handbook – Accounting under Part I, which
incorporates International Financial Reporting Standards as
issued by the International Accounting Standards Board; the
Company successfully identified, negotiating and completing
additional acquisitions, including accretive acquisitions; the
Company organically growing at a rate of 10% and completing
acquisitions that add at least $25 million in new revenue in
order to meet 2022 outlook. Many factors could cause the actual
results, performance or achievements that may be expressed or
implied by such forward-looking information to vary from those
described herein should one or more of these risks or uncertainties
materialize. Examples of such risk factors include, without
limitation: credit; market (including equity, commodity, foreign
exchange and interest rate); liquidity; operational (including
technology and infrastructure); reputational; insurance; strategic;
regulatory; legal; environmental; capital adequacy; the general
business and economic conditions in the regions in which the
Company operates; the ability of the Company to execute on key
priorities, including the successful completion of acquisitions,
business retention, and strategic plans and to attract, develop and
retain key executives; difficulty integrating newly acquired
businesses; the ability to implement business strategies and pursue
business opportunities; low profit market segments; disruptions in
or attacks (including cyber-attacks) on the Company's information
technology, internet, network access or other voice or data
communications systems or services; the evolution of various types
of fraud or other criminal behavior to which the Company is
exposed; the failure of third parties to comply with their
obligations to the Company or its affiliates; the impact of new and
changes to, or application of, current laws and regulations;
decline of reimbursement rates; dependence on few payors; possible
new drug discoveries; a novel business model; dependence on key
suppliers; granting of permits and licenses in a highly regulated
business; the overall difficult litigation environment, including
in the U.S.; increased competition; changes in foreign currency
rates; increased funding costs and market volatility due to market
illiquidity and competition for funding; the availability of funds
and resources to pursue operations; critical accounting estimates
and changes to accounting standards, policies, and methods used by
the Company; the occurrence of natural and unnatural catastrophic
events and claims resulting from such events; and risks related to
COVID-19 including various recommendations, orders and measures of
governmental authorities to try to limit the pandemic, including
travel restrictions, border closures, non-essential business
closures, quarantines, self-isolations, shelters-in-place and
social distancing, disruptions to markets, economic activity,
financing, supply chains and sales channels, and a deterioration of
general economic conditions including a possible national or
global recession; as well as those risk factors discussed or
referred to in the Company’s disclosure documents filed with
United States Securities and Exchange Commission and available at
www.sec.gov, and with the securities regulatory authorities in
certain provinces of Canada and available at www.sedar.com. Should
any factor affect the Company in an unexpected manner, or should
assumptions underlying the forward-looking information prove
incorrect, the actual results or events may differ materially from
the results or events predicted. Any such forward-looking
information is expressly qualified in its entirety by this
cautionary statement. Moreover, the Company does not assume
responsibility for the accuracy or completeness of such
forward-looking information. The forward-looking information
included in this press release is made as of the date of this
press release and the Company undertakes no obligation to publicly
update or revise any forward-looking information, other than as
required by applicable law.
Non-GAAP
Measures
This press release refers to “Adjusted EBITDA”
which is a non-GAAP and non-IFRS financial measure that does not
have a standardized meaning prescribed by GAAP or IFRS. The
Company’s presentation of this financial measure may not be
comparable to similarly titled measures used by other companies.
This financial measure is intended to provide additional
information to investors concerning the Company’s performance.
Adjusted EBITDA is defined as EBITDA excluding stock-based
compensation. Adjusted EBITDA is a Non-IFRS measure the Company
uses as an indicator of financial health and excludes several items
which may be useful in the consideration of the financial condition
of the Company, as applicable, including interest expense, income
taxes, depreciation, amortization, stock- based compensation,
goodwill impairment and change in fair value of debentures and
financial derivatives.
For further information please visit our website
at www.Quipthomemedical.com, or contact:
Cole StevensVP of Corporate Development Quipt Home Medical
Corp.859-300-6455cole.stevens@myquipt.com
Gregory CrawfordChief Executive OfficerQuipt Home Medical
Corp.859-300-6455investorinfo@myquipt.com
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