QUIPT ANNOUNCES EXECUTION OF LOI
TO ACQUIRE LEADING RESPIRATORY SUPPLIER WITH
APPROXIMATELY
$13 MILLION IN ANNUALIZED REVENUE
AND $1.6 MILLION IN NET INCOME AND PROVIDES OUTLOOK FOR
2022
CALENDAR END RUN-RATE OF $180-$190 MILLION WITH $38-$43 MILLION IN
ADJUSTED EBITDA
TARGET IS LOCATED AND SERVICES A
MAJOR METRO HUB IN THE MIDWESTERN UNITED STATES
AND WOULD
ADD OVER 15,000 ACTIVE PATIENTS
Cincinnati, Ohio – November 16, 2021 -- InvestorsHub NewsWire
-- 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 it has executed
a non-binding letter of intent (the "LOI") today to acquire an arm's length private
respiratory care company in the Midwestern United States reporting
unaudited trailing 12-month annual revenues of approximately $13
million, $1.6 million in net
income, and positive
Adjusted EBITDA. The Company is also pleased to provide an outlook
for 2022 calendar end.
Acquisition
Details
The target has a heavily weighted respiratory product mix,
serving as a leader in the respiratory home care services space for
over 25 years in a major metropolitan hub within a Midwestern U.S.
state. The target has several difficult to obtain insurance
contracts and would significantly enhance Quipt's presence in the
Midwest with a new location, covering an entire service area of a
major metro hub. The target would be expected to increase Quipt's
active patient count by over 15,000, which would bring Quipt's
total to approximately 170,000 active patients. The target has a
strong management team in place, and like Quipt, the target offers
high-quality service, equipment, and supplies.
Moreover, the target has great diversification amongst
referral sources, and a very strong and diversified payor base
resulting in long recurring revenue cycles which fit hand in hand
with Quipt's business model. Furthermore, the target does not have
current exposure to ventilation therapy, providing Quipt a
significant growth opportunity to introduce its clinical
ventilation therapy program as well as complimentary clinical
respiratory products and services. In addition, the target would
add patients to Quipt's existing subscription-based resupply
program, and Quipt expects that it would derive strong revenue
synergies from this initiative.
According to the LOI, Quipt expects to close the acquisition
for cash at a reasonable multiple that would immediately be
accretive to Quipt's Adjusted EBITDA and net income. As part of the
proposed acquisition the Company would not assume any long term
debt of the target. Closing of the acquisition is subject to final
due diligence, final negotiation and execution of a definitive
purchase agreement, all closing conditions being satisfied or
waived and all necessary approvals and is expected to occur within
the next 60 days.
The acquisition would be expected to increase Quipt's annual
revenues by approximately $13 million and $1.6 million in net
income. Leveraging existing infrastructure, Quipt would expect to
achieve additional revenue generated from organic growth, cross
selling and corporate synergies.
Outlook for
Calendar End 2022 (Fiscal Q1 2023)
Based on the current business, market trends and completed
and prospective acquisitions, the Company is providing guidance for
its run-rate revenue for end of calendar 2022 (fiscal Q1 2023)
of $180 to $190
million with $38-$43
million in Adjusted EBITDA (defined below).
Management
Commentary
"This is an extremely exciting growth period for Quipt as we
see continued acceleration within the existing business and a
plethora of strategic acquisition opportunities that we hope will
help us scale into attractive markets across the United States,"
said Greg Crawford, Chairman and CEO of Quipt. "This acquisition
target is very powerful as it services a significant metro hub in
the Midwest and after closing, we plan on quickly integrating their
business operations and leveraging the Company's payor contracts
across our existing Midwest locations. We anticipate that this
acquisition would be immediately accretive to Quipt's Adjusted
EBITDA, overall profitability and would add approximately $13
million to the top-line and $1.6 million in net income.
Additionally, we expect to see cross-selling growth from lathering
on our clinical ventilation therapy program as an extension to
their existing respiratory product mix. We expect to remain very
active as we close out 2021 and enter 2022 and look forward to
sharing our progress."
Chief Financial Officer, Hardik Mehta added, "This target is
a prime example of our ability to execute on our stated
three-tiered acquisition strategy and we look forward to a
potential closing on this exciting respiratory care company that
strategically assists us in further penetrating the favorable
Midwest region. We are also taking this opportunity to
significantly increase guidance of our run-rate revenue by end of
calendar 2022. This considerable increase stems from the ongoing
strength of the business, favorable industry dynamics and robust
acquisition pipeline. As a reminder our balance sheet remains very
solid with over $30 million in cash and an untapped $20 million
credit facility, giving us ample flexibility as we continue on our
strategic path."
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 target disclosed herein is
unaudited and derived as a result of the Company's due diligence,
including a review of the target'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 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's
outlook for calendar 2022; the Company being extremely confident in
its acquisition pace staying strong through the remainder of 2021
and into 2022; Quipt expecting that it would derive strong revenue
synergies from the acquisition; Quipt expecting to achieve additional revenue
generated from organic growth, cross selling and corporate
synergies with the acquisition; Quipt anticipating that
this acquisition would be immediately accretive to Quipt's
Adjusted EBITDA, overall
profitability and would add approximately $13 million to the
top-line and $1.6 million in net income; Quipt expecting to
see cross-selling growth from
lathering on our clinical ventilation therapy program as an
extension to their existing respiratory product mix; and Quipt expecting to
remain very active as it closes out 2021 and enters 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; the financial information
regarding the target 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 $45 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 Stevens
VP of Corporate Development
859-300-6455
cole.stevens@myquipt.com
Gregory Crawford
Chief Executive Officer
Quipt Home Medical
Corp.
859-300-6455
investorinfo@myquipt.com