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>>> Quipt Home Medical Reports Record First Quarter Fiscal 2023 Financial Results Posting Positive Net Income, Revenue Growth of 38% and Adjusted EBITDA Growth of 50%


GlobeNewswire

Quipt Home Medical Corp.

February 14, 2023


https://finance.yahoo.com/news/quipt-home-medical-reports-record-123000564.html


Posts Strong Adjusted EBITDA Margin of 22% and Sequential Organic Growth of 2%

CINCINNATI

Feb. 14, 2023 (GLOBE NEWSWIRE) -- Quipt Home Medical Corp. (the “Company”) (NASDAQ:QIPT; TSXV:QIPT), a U.S. based home medical equipment provider, focused on end-to-end respiratory care, today announced its first quarter fiscal 2023 financial results and operational highlights. These results pertain to the three months ended December 31, 2022 and are reported in U.S. Dollars.

Quipt will host its Earnings Conference Call on Tuesday, February 14, 2023 at 10:00 a.m. (ET). The dial-in number is 1 [phone] or 1 [phone]. The live audio webcast can be found on the investor section of the Company’s website through the following link: www.quipthomemedical.com.

Financial Highlights:

Revenue for fiscal Q1 2023 was $40.8 million compared to $29.5 million for fiscal Q1 2022, representing a 38% increase year-over-year.

Organic growth increased by 2% sequentially compared to fiscal Q4 2022. The Company anticipates organic growth meeting and surpassing historical levels of 8-10% as calendar 2023 progresses.

Recurring Revenue (as defined below) for fiscal Q1 2023 continues to be strong and exceeded 77% of total revenue.

Adjusted EBITDA (defined below) for fiscal Q1 2023 was $9.0 million (22.0% margin), compared to Adjusted EBITDA for fiscal Q1 2022 of $6.0 million (20.3% margin), representing a 50% increase year-over-year. The Company expects to continue seeing strong margin performance in fiscal 2023.

Net income for fiscal Q1 2023 was $325,000 or $0.01 per fully diluted share, compared to a net loss for fiscal Q1 2022 of $2.1 million or ($0.06) per fully diluted share. The Company believes the recent consumer price index updates by the United States Centers for Medicare & Medicaid Services to the Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) fee schedule will have a positive impact on the Company’s net income in calendar 2023.

For fiscal Q1 2023, bad debt expense was at 5.6% of total revenues compared to 8.2% of total revenues in fiscal Q1 2022. This decrease is primarily due to improved collections and is an example of how the Company can scale and add more revenue through add-on acquisitions without compromising billing and collection capabilities.

Cash flow from continuing operations was $4.8 million for fiscal Q1 2023, compared to $5.1 million for fiscal Q1 2022. The decrease was largely due to the increase in net working capital.

The Company reported $3.7 million of cash on hand and total credit availability of $101.9 million as of December 31, 2022 with $16.9 million available towards a line of credit and $85.0 million available on a delayed draw term loan (DDTL). The Company paid down $3.9 million of its line of credit during fiscal Q1 2023.

Operational Highlights:

The Company’s customer base increased 32% year over year to 99,420 unique patients served in fiscal Q1 2023 from 75,309 unique patients served in fiscal Q1 2022.

Compared to 118,100 unique set-ups/deliveries in fiscal Q1 2022, the Company completed 146,350 unique set-ups/deliveries in fiscal Q1 2023, an increase of 24%. There were 69,482 respiratory resupply set-ups/deliveries during fiscal Q1 2023 compared to 51,137 during fiscal Q1 2022, an increase of 36%, which the Company credits to its continued use of technology and centralized intake processes.

The Company has seen the supply chain for sleep devices rapidly improve in real time with the expectation that supply levels will be back to pre-pandemic levels in the first half of calendar 2023. The team is actively driving set-ups across the organization to match the robust demand which we feel will continue for the foreseeable future.

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 has expanded its sales reach, which now spans across 26 U.S. states with the addition of experienced sales personnel.

Subsequent Highlights:

On January 3, 2023, the Company announced the completed acquisition of Great Elm Healthcare, LLC (“Great Elm”), a clinical respiratory company with locations across eight states in the Midwest, Southwest and Pacific Northwest, for a total purchase price of $80 million (subject to customary adjustments of Great Elm’s working capital, existing debt and expenses). Based on an independent quality of earnings report, Great Elm had unaudited revenues for the 12 months ended August 31, 2022 of $60 million ?with an Adjusted EBITDA (defined below) of $13 million.

Quipt has identified $2 million in cost savings and synergies, which it expects to capture during the first six months post-closing and would result in Great Elm’s Anticipated Annualized Adjusted EBITDA (defined below) to be $15 million, representing a purchase price of 5.2x Adjusted EBITDA post cost savings and synergies.

Post-acquisition, the Company anticipates Annualized Revenue (defined below) and Anticipated Annualized Adjusted EBITDA of $220 million and $49 million, inclusive of the $2 million of anticipated synergies and cost savings.

Post-acquisition, Quipt's Recurring Revenue (defined below) is expected to increase from 77% for the fiscal year ended September 30, 2022, to 82%, on a pro forma basis.

The Company has now reached 270,000 active patients, 32,500 referring physicians and 115 locations.

Management Commentary:

“We are pleased to announce another record quarter in the first quarter of our fiscal year 2023, and we are seeing considerable momentum throughout the business as calendar year 2023 gets underway. Organic growth has returned to historic levels, our Adjusted EBITDA margin has accelerated, supply chain concerns have subsided, and we just completed our largest acquisition to date. The strong performance during the first quarter of the fiscal year is evidence of the ongoing operational excellence in which we take great pride. We are thrilled that our Adjusted EBITDA margin has reached 22% as we get closer to critical scale, and we expect that margins will continue to increase in the future,” said CEO and Chairman Greg Crawford.

“Our nationwide expansion of our patient centric ecosystem has been targeted on geographies with a high prevalence of chronic obstructive pulmonary disease (COPD) COPD and we have made tremendous progress reaching 26 states. As we can see from the current environment, a lot is being done to make sure that a patient is treated at home whenever it is practical. Therefore, we will continue to develop our healthcare network through the utilization of our clinical service model, which is based on technological applications like remote patient monitoring, to minimize the load that is being placed on the conventional healthcare system. Given the favorable regulatory environment, the ongoing strong demand for respiratory equipment, the positive demographic trends, and Quipt's continuous operational success across the board, the Company is in the best position it has ever been in as we start 2023.”

Chief Financial Officer Hardik Mehta added, “Our exceptional financial and operational success in the first quarter of the fiscal year 2023 has given us a lot to be proud of. It is a remarkable success for the team that we were able to improve our Adjusted EBITDA margin to 22%, recover to 2% sequential organic growth, and post positive net income. We expect our margins to remain strong as we progress through 2023 given the continued scaling of the business. In addition, at the beginning of the year, we announced the closing of our most significant acquisition to date, which was the purchase of Great Elm Healthcare. This acquisition encompassed eight states, seven of which had not previously been covered by Quipt. We have been successful in maintaining a conservative net leverage ratio of 1.96x, allowing us to have a significant amount of financial flexibility going ahead. We believe that we will be able to increase the amount of our senior credit facilities as soon as the ?right opportunity presents itself to us. The combined Annualized Revenue and Anticipated Annualized Adjusted EBITDA for Quipt in real time is $220 million and $49 million, respectively. This figure considers the cost reductions and synergies that resulted from the transaction, which totaled $2 million, but does not include the recent increase in the consumer price index updates to the DMEPOS fee schedule. Given our solid financial position, improved supply chain, and favorable operating climate, we continue to concentrate our efforts on our strong organic growth initiatives, and strategic acquisition candidates that would allow us to expand our company into existing and new favorable geographic areas in the United States.”

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.

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