Quipt Home Medical Corp. (the “
Company”)
(NASDAQ:QIPT; TSXV:QIPT), a U.S. based leader in the home medical
equipment industry, focused on end-to-end respiratory care, today
announced its second quarter fiscal 2022 financial results and
operational highlights. These results pertain to the three-month
period ended March 31, 2022 and are reported in U.S. Dollars.
Financial
Highlights:
- Revenue for Q2 2022 was $33.6
million compared to $24.2 million for Q2 2021, representing a 38%
increase in revenue year-over-year. Compared to Q1 2022, the
Company experienced sequential organic growth of 2%.
- As of March 31, 2022, the Company’s
backlog decreased to approximately 6,500 patients in the queue to
be set up on sleep devices. At the start of Fiscal Q3 2022, the
Company had the highest CPAP inventory level since the recall began
and is continuing to drive patient set-ups to ease the backlog. The
Company remains cautiously optimistic that sleep device allocations
will increase in the second half of 2022, which will continue to
relieve some of the backlog, generating a lift in revenue from this
impacted segment of the business.
- The sleep segment revenue impact
was approximately $1.0 million to $1.5 million in Q2 2022.
- Recurring Revenue as of Q2 2022 was 77% of total revenue.
- Revenue for the six months ended March 31, 2022 of $63
million, a 34.2% increase from the prior year period.
- Adjusted EBITDA for Q2 2022 was $7.0 million (21% margin),
compared to Adjusted EBITDA for Q2 2021 of $5.4 million,
representing a 31% increase year-over-year.
- Adjusted EBITDA for the six months ended March 31, 2022 of
$13.1 million, a 24% increase from the prior year period, and
represented 20.7% of revenue.
- Net income for Q2 2022 was $5 million or $0.14 per fully
diluted share, compared to a loss of $12.5 million for Q2 2021 or
$(0.43) per fully diluted share.
- Cash flow from continuing operations was $12.2 million for the
six months ended March 31, 2022 compared to $6.6 million in the
corresponding period.
- The Company reported $17.4 million of cash on hand as at March
31, 2022.
- The Company has an undrawn credit facility of $20 million as at
March 31, 2022.
Operational
Highlights:
- Through the Company’s continued use of technology and
centralized intake processes, respiratory resupply set-ups and/or
deliveries increased to 50,713 for the three months ended March 31,
2022, compared to 35,702 for the same period ended March 31, 2021,
an increase of 42%.
- The Company’s customer base increased 37% year over year from
56,972 unique patients served in Q2 2021 to 78,273 unique patients
in Q2 2022.
- Compared to 118,878 unique set-ups/deliveries in Q2 2022, the
Company completed 83,606 unique set-ups/deliveries in Q2 2021, an
increase of 42%.
- The Company has recently accelerated its hiring of experienced
sales personnel to expand its sales reach across the United
States.
- The Company continues to experience robust demand for
respiratory equipment, such as Oxygen Concentrators, Ventilators,
as well as the CPAP resupply and other supplies business.
- The Company operates out of 87 locations in eighteen states
across the United States, completing hundreds of thousands of
deliveries each year to more than 180,000 active patients, with
over 19,000 referring physicians.
Acquisition Related
Updates:
- Completed four acquisitions during the six months ended March
31, 2022 and one subsequent to March 31, 2022.
- On January 1, 2022, the Company acquired At Home Health
Equipment, Inc., a business with operations in Indiana, reporting
unaudited trailing 12-month annual revenues of approximately $13
million and $1.6 million in net income with anticipated Adjusted
EBITDA of $2.9 million (22% margin) post integration. The
acquisition added over 15,000 active patients. Integration is near
completion.
Subsequent Events to the Three Months
Ended March 31, 2021:
- On April 19,
2022, the Company announced the acquisition of Good Night Medical,
LLC, 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 of $1.5 million (20%
margin) post integration. The acquisition added 10,000 active
patients, and encompassed 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. Integration
is well underway.
- On April 26,
2022, the Company announced the execution of a national insurance
contract with a top five health insurer in the United States, which
will expand patient accessibility across the country.
Reiteration of Outlook for Calendar End 2022 (Fiscal
Year 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.
Management
Commentary:
“We are extremely proud of the robust results we
experienced in our fiscal second quarter which showed accelerating
momentum across our heavily weighted respiratory product mix as the
quarter progressed. Looking to the beginning of the fiscal third
quarter, we are pleased to report we had the highest level of CPAP
inventory since the recall began and have seen a positive inventory
trend continue in real time,” said CEO and Chairman Greg Crawford.
“Moreover, demand remains very strong for at home respiratory care
which will continue to foster consistent financial performance.
This strong demand coupled with an extremely bullish regulatory
environment, provides us the ability to drive our organic and
inorganic initiatives over the near term, and we are working
diligently to progress on our plan of becoming a leader in clinical
respiratory care throughout the United States. On the acquisition
front, our pipeline remains very strong with many strategic
opportunities ranging in size, and we look forward to progressing
on attractive targets to leverage the unparalleled scalable
platform we have created. Our strategy is allowing us to grow
market share in new and existing markets and we are also excited to
accelerate the hiring of experienced sales professionals as we exit
the pandemic environment, which we expect to be a drive of future
organic growth. 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.”
Chief Financial Officer Hardik Mehta added, “Our
record fiscal second quarter results demonstrate our ability to
successfully navigate a challenging operating environment, with
revenue reaching $33.6 million, experiencing improving organic
growth over fiscal Q1 2022, strong operating cash flow and seeing
our Adjusted EBITDA margin accelerate to 21%. The strong
performance was driven through elevated demand for oxygen,
ventilation therapy and our other supplies business, leading to
larger volumes, and continuing to support the business with lower
operating costs. We are also very pleased with the integration
process of our recent acquisitions, as we continue to drive
meaningful cost and revenue synergies. Integration is the key to
our ongoing financial and operating success as it positions us to
continue working towards potential future strategic acquisitions.
We continue to add attractive targets to our already deep
acquisition pipeline that fit our stringent criteria including
potential expansionary opportunities into synergistic verticals of
service that would enhance our end-to-end product and service
offering. Our goal is to be very active over the near term and look
forward to updating investors on our progress.”
The financial statements of the Company for the
three and six months ended March 31, 2022 and 2021 and accompanying
Management Discussion & Analysis (MD&A) are available
at www.sedar.com.
ABOUT QUIPT HOME MEDICAL CORP.
The Company provides in-home monitoring and
disease management services focused on 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 recent acquisitions 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" and
similar expressions as they relate to the Company, including: sleep
device allocations increasing in the second half of 2022, which
will relieve some of the backlog, generating a lift in revenue from
this impacted segment of the business; anticipated Adjusted EBITDA
of acquisitions post integration; and the Company’s outlook for
calendar 2022; 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,
without limitation: the Company’s ability to maintain/slightly
increase its collections ratios; the Company maintaining its gross
margins and maintaining its revenue growth; the Company maintaining
its selling, general and administrative expenses; acquisitions
achieving results at least as good as historical performances; the
financial information regarding acquisitions 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; and the Company organically growing at a
rate of 10% and completing acquisitions that add at least $39 to
49 million in new revenue at approximately 20% Adjusted EBITDA 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; and the occurrence of natural and unnatural
catastrophic events and claims resulting from such events; as well
as those risk factors discussed or referred to in the Company’s
disclosure documents filed 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, including interest expense, income taxes,
depreciation, amortization, stock-based compensation, goodwill
impairment and change in fair value of debentures and financial
derivatives. The following table shows our Non-IFRS measure
(Adjusted EBITDA) reconciled to our net income for the indicated
periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three |
|
Three |
|
Six |
|
Six |
|
|
|
|
months |
|
months |
|
months |
|
months |
|
|
|
|
ended March |
|
ended March |
|
ended March |
|
ended March |
|
|
|
|
31, 2022 |
|
31, 2021 |
|
31, 2022 |
|
31, 2021 |
|
Net income (loss) |
|
|
$ |
5,036 |
|
|
$ |
(12,490 |
) |
|
$ |
2,905 |
|
|
$ |
(11,125 |
) |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
|
5,459 |
|
|
|
3,940 |
|
|
|
10,473 |
|
|
|
7,621 |
|
|
Interest expense, net |
|
|
|
487 |
|
|
|
513 |
|
|
|
986 |
|
|
|
999 |
|
|
Provision (benefit) for income
taxes |
|
|
|
155 |
|
|
|
— |
|
|
|
303 |
|
|
|
(1,407 |
) |
|
EBITDA |
|
|
|
11,137 |
|
|
|
(8,037 |
) |
|
|
14,667 |
|
|
|
(3,912 |
) |
|
Stock-based compensation |
|
|
|
1,161 |
|
|
|
12 |
|
|
|
3,271 |
|
|
|
27 |
|
|
Acquisition-related costs |
|
|
|
237 |
|
|
|
16 |
|
|
|
299 |
|
|
|
72 |
|
|
Gain (loss) on foreign
currency transactions |
|
|
|
85 |
|
|
|
98 |
|
|
|
126 |
|
|
|
100 |
|
|
Other income from government
grant |
|
|
|
(4,254 |
) |
|
|
— |
|
|
|
(4,254 |
) |
|
|
— |
|
|
Change in fair value of
debentures and warrants |
|
|
|
(1,319 |
) |
|
|
13,297 |
|
|
|
(1,058 |
) |
|
|
14,280 |
|
|
Adjusted EBITDA |
|
|
$ |
7,047 |
|
|
$ |
5,386 |
|
|
$ |
13,051 |
|
|
$ |
10,567 |
|
|
Management uses this non- IFRS measure as a key
metric in the evaluation of the Company’s performance and the
consolidated financial results. The Company believes this non- IFRS
measure is useful to investors in their assessment of the operating
performance and the valuation of the Company. In addition, this
non- IFRS measure addresses questions the Company routinely
receives from analysts and investors and, in order to assure that
all investors have access to similar data, the Company has
determined that it is appropriate to make this data available to
all investors. However, non- IFRS financial measures are not
prepared in accordance with IFRS, and the information is not
necessarily comparable to other companies and should be considered
as a supplement to, not a substitute for, or superior to, the
corresponding measures calculated in accordance with IFRS.
For further information please visit our website
at www.Quipthomemedical.com, or contact:
Cole StevensVP of Corporate DevelopmentQuipt 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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