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 executed a non-binding letter of intent (the
“
LOI”) dated November 22, 2021 to acquire an arm’s
length private respiratory care company servicing seven states
throughout the U.S. reporting unaudited trailing 12-month annual
revenues of approximately $14 million, $1 million in net income,
and positive Adjusted EBITDA (defined below).
Acquisition
Details
The target specializes in providing
high-quality, comprehensive respiratory care to patients in the
long-term care setting including ventilator management, equipment,
oxygen and providing supplies. The target provides these facilities
with not only the necessary clinical personnel, but also
state-of-the-art respiratory tools and equipment, making it easy
for them to care for patients with complex respiratory needs. The
target also has a pulmonary rehabilitation service, which assists
patients with an even wider variety of respiratory care issues. The
target services facilities in seven states throughout the United
States, four of which would be new states for Quipt. The target
employs 165 remote respiratory therapists which would significantly
bolster an already robust Quipt clinical team. With a mission that
seeks to improve the patients’ health and quality of life by
providing outstanding, compassionate respiratory care and
unparalleled customer service, this target matches the same
passionate mission that Quipt continues to employ.
The target represents a new vertical of business
for Quipt, which would leverage the Company’s highly successful
clinical respiratory care platform serving patients in the home,
into the long-term care setting. Quipt anticipates purchasing power
advantages to bring down the cost of respiratory equipment, and
cross selling opportunities to service additional patient needs
with complimentary equipment, and supplies. The target would expand
Quipt’s reach, offerings, and allow for the Company to access more
sales touch points, which the Company anticipates will have benefit
to its current business.
According to the LOI, Quipt expects to close the
acquisition for $5,000,000, plus a $500,000 earn out based on
certain revenue targets, payable in cash, 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 90 days.
The acquisition would be expected to increase
Quipt’s annual revenues by approximately $14 million and $1 million
in net income before synergies. Leveraging existing infrastructure,
Quipt would expect to achieve additional revenue generated from
organic growth, cross selling, and corporate synergies.
Reiteration of Outlook for Calendar End
2022 (Fiscal Q1 2023)
Based on the current business, market trends and
completed and prospective acquisitions, the Company is reiterating
the guidance provided on November 16, 2021, for its run-rate
revenue for end of calendar 2022 (fiscal Q1 2023) of $180-$190
million with $38-$43 million in Adjusted EBITDA.
Update on Debt Facility
In Fall of 2021, the Company had initiated steps
to increase its $20 million credit facility to support the robust
pipeline of acquisitions that it was building. The Company is now
in the final stages of securing a commitment on increasing the debt
facility to $100 million. The primary use of this facility is to
fund large acquisitions and to support working capital.
Management
Commentary
“We continue to strategically work though our
robust acquisition pipeline, which has companies reflective of all
three tiers of our previously disclosed acquisition strategy. This
target is an extremely exciting opportunity for us to expand our
operating scope to include patients with respiratory related needs
in the long-term care setting, which we see as an area of
significant growth for years to come. We would leverage our at home
care model, which we feel is best in class into this new segment
for us, and anticipate numerous cost and revenue synergies,” said
Greg Crawford, Chairman and CEO of Quipt. “This acquisition target
would add four new states to our operating footprint, and 165
respiratory therapists to enhance our clinical team even further,
as well as add approximately $14 million to the top-line and $1
million in net income.”
Chief Financial Officer, Hardik Mehta added,
“This target is a prime example of our diverse acquisition pipeline
which consists of targets that focus on our core markets as well as
ancillary opportunities that fit the existing platform we have
built out. With the platform we have, we can execute and create
value in a plethora of industry segments including the recently
announced acquisition of a biomedical services business that serves
a multitude of healthcare settings, and now serving patients with
respiratory needs in the long-term care setting. We have
significant momentum across the organization and look forward to
sharing our progress as we move into 2022. As a reminder, our
balance sheet remains very solid with substantial flexibility to
allow us to continue to implement our corporate strategy without
interruption. The LOI and the letter of intent announced on
November 16, 2021, both are expected to be closed using cash on
hand and existing debt facility.”
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: Quipt’s expectations of closing the acquisition; Quipt’s
expectations for the results upon closing and integration,
including cost reductions, synergies, and expanding Quipt’s reach;
Quipt expecting to close the acquisition for cash at a reasonable
multiple that would immediately be accretive to Quipt’s Adjusted
EBITDA and net income; closing expected to occur within the next 90
days; the acquisition increasing Quipt’s annual revenues by
approximately $14 million and $1 million in net income before
synergies; leveraging existing infrastructure, Quipt expecting to
achieve additional revenue generated from organic growth, cross
selling, and corporate synergies; the Company’s guidance for fiscal
Q1 2023; and the Company securing an increase in its debt facility;
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; and the
Company completing the negotiation and execution of agreements for
the increase in its debt facility. 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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