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 pleased to announce that it has
recently acquired a business with operations in Illinois, reporting
unaudited trailing 12-month annual revenues of approximately $2.5
million. Post integration, Quipt expects an Adjusted EBITDA
(defined below) for the acquisition target of $0.6 million. As a
reminder all figures stated are in USD.
Acquisition
Details
The acquisition adds a strategic location
servicing Central Illinois, a heavily weighted respiratory product
mix, and over 3,700 active patients. Moreover, the acquisition
provides Quipt important insurance contracts and decades of
operating experience, with an over 40-year operating track record
in the markets served. The business has a diverse payor mix and
full suite of products with a focus on respiratory care,
representing over 85% of the mix.
The acquisition further expands Quipt’s
operations in Illinois after the Company entered the market in
August of 2020 and provides Quipt a coverage sphere between the
major markets of St. Louis, Missouri and Chicago, Illinois. With
the recent acquisitions, the expansionary operating footprint
aligns closely with regions that have a high prevalence of COPD, a
key target patient group; this includes Arkansas, Mississippi,
Missouri, and Illinois, which are among the highest prevalence U.S.
States. According to the NIH, about 570,000 people in Illinois have
COPD.
The management team in place at the acquisition
target has historically focused on a robust service intensive
model, centered around patient education and compliance which is
highly compatible with Quipt’s operating premise. This acquisition
provides immediate cross selling and patient growth opportunities
and adds patients to Quipt’s existing subscription-based resupply
program.
Under the terms of the definitive purchase
agreement, Quipt acquired the DME operation of the business for
approximately $1.7 million in cash, and the real estate for $0.5
million. It is expected that post integration the acquisition will
increase Quipt’s annual revenues by approximately $2.5 million and
Adjusted EBITDA by $0.6 million.
Management
Commentary
“Our robust operating engine and proven ability
to integrate acquired assets allows us to continue the strong pace
of closing strategic acquisitions. Since July we have now completed
6 acquisitions with combined revenues of over $16 million.
Combining these newly acquired entities provides us a pathway to
scale into new states with each business having a proven track
record in the markets they serve and diversified product mixes. In
this short period of time, we have amassed infrastructure in 4 new
states and further penetrated existing states such as Illinois,”
said Greg Crawford, Chairman and CEO of Quipt. “Given the favorable
regulatory environment, we have been able to accelerate our
expansion efforts by economically acquiring smaller respiratory
focused home medical providers throughout the United States that
fit our stringent acquisition criteria. This newest transaction in
Illinois is another example of our strategy to make tuck-in
acquisitions to fill in attractive geographies, obtain important
insurance contracts, add to our active patient base, and build out
our referring physician network. Our current pipeline consists of
companies reflective of all three tiers of our previously disclosed
acquisition strategy and we are extremely optimistic we will
maintain momentum in closing targets that fit the mold.”
“I also want to take this opportunity to
reiterate how strongly the underlying business continues to perform
amongst the challenges presented from the global pandemic and
supply chain constraints. Demand for respiratory equipment
continues to be robust, and we have not seen any signs of that
slowing. We are extremely excited with the operating excellence we
have been able to display to date and look forward to carrying the
strong momentum into 2022.”
Chief Financial Officer, Hardik Mehta added, “We
continue on our strategic mission of growing into a national
provider of respiratory focused homecare in the United States, and
this acquisition once again showcases how we can lather on our
existing platform to convert low margin businesses into high margin
businesses through operating efficiencies and cost savings
synergies. The transaction is reflective of this model and adds
$2.5 million in revenue with an expectation that post integration
it will have a 25% Adjusted EBITDA margin, with a heavily
respiratory weighted product mix, and provides us additional
infrastructure in Illinois. We continue to invest in technology to
improve our operating efficiencies, whether through the ongoing use
of our data driven tools, revenue cycle management or through our
automated subscription-based resupply program. These actions drive
sustained value to the company and allows us to continue to
increase our productivity. Moreover, we have a robust balance sheet
with over $30 million in cash, and a $20 million undrawn credit
facility allowing us to strategically work through our acquisition
pipeline, which includes larger revenue opportunities that meet our
criteria, and I am extremely confident in our pace staying strong
through the remainder of 2021 and into 2022.”
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.
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.
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: post
integration financial results (revenue and Adjusted EBITDA) of the
acquisition target; the Company’s acquisition approach; the
Company adding patients to its existing subscription-based resupply
program; the Company being extremely optimistic that it will
maintain momentum in closing additional targets; the Company
converting low margin businesses into high margin businesses
through operating efficiencies and cost savings synergies; and the
Company being extremely confident in its acquisition pace staying
strong through the remainder of 2021 and into 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: the acquisition targets achieving results
at least as good as historical performances; and the Company
successfully identified, negotiating and completing additional
acquisitions, including accretive acquisitions. 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
859-300-6455cole.stevens@myquipt.com
Gregory CrawfordChief Executive OfficerQuipt Home Medical
Corp.859-300-6455investorinfo@myquipt.com
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