Quipt Home Medical Corp. (the “
Company”) (NASDAQ:
QIPT; TSX: QIPT), a U.S. based home medical equipment provider,
focused on end-to-end respiratory care, today announced its first
quarter fiscal 2024 financial results and operational highlights.
These results pertain to the three months ended December 31,
2023, and are reported in United States dollars ("$", "dollars" and
"US$") and have been rounded to the nearest hundred thousand.
Quipt will host its Earnings Conference Call on
Thursday, February 15, 2024, at 10:00 a.m. (ET). The dial-in number
is 1 (800) 319-4610 or 1 (604) 638-5340. 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 Q1
2024 was $65.4 million compared to $40.8 million for Q1 2023,
representing a 60% increase. The Company reported 2% sequential
organic growth compared to Q4 2023.
- The Company
expects solid organic growth patterns for the balance of fiscal
2024, with the ongoing objective of achieving 8-10% annualized
organic revenue growth.
- Recurring
Revenue (defined in Non-IFRS Measures below) for Q1 2024 was very
strong and exceeded 83% of total revenue, driven by overall growth
in new equipment set-ups, which is the initial delivery of
equipment to a patient.
- Adjusted EBITDA (defined in
Non-IFRS Measures below) for Q1 2024 was $15.3 million (23.5% of
revenue) compared to $9.0 million (22.0% of revenue) for Q1 2023,
representing a 71% increase.
- Net income
(loss) for Q1 2024 was $(0.6) million, or ($0.01) per diluted
share, as compared to $0.3 million, or $0.01 per diluted share for
Q1 2023.
- Cash flow from
operations was $11.7 million for the three months ended
December 31, 2023, compared to $4.8 million for the three
months ended December 31, 2022.
- For Q1 2024,
bad debt expense as a percentage of revenue improved to 4.3%,
compared to 5.6% for Q1 2023.
- The Company
reported cash on hand of $18.3 million as of December 31, 2023,
compared to $17.2 million as of September 30, 2023. The Company has
total credit availability of $41 million as of December 31, 2023,
with $20 million available on its revolving credit facility and $21
million available pursuant to a delayed-draw term loan
facility.
- The Company maintains a conservative balance sheet with net
debt to Adjusted EBITDA leverage of 1.3x.
Operational
Highlights:
- The Company’s
customer base increased 56% year over year to 155,434 unique
patients served in Q1 2024 from 99,420 unique patients in Q1
2023.
- Compared to
146,350 unique set-ups/deliveries in Q1 2023, the Company completed
215,370 unique set-ups/deliveries in Q1 2024, an increase of 47%.
This includes 123,190 respiratory resupply set-ups/deliveries for
the three months ended December 31, 2023, compared to 69,482 for
the three months ended December 31, 2022, an increase of 77%, which
the Company credits to its continued use of technology and
centralized intake processes.
- The Company’s
resupply program is a major proponent of the Company’s 83%
recurring revenue base as the Company has significantly scaled, now
representing 49% of the recurring revenue mix, driving higher
margin revenue. The program now consists of approximately 172,000
patients as of December 31, 2023, compared to approximately 100,000
patients as of December 31, 2022.
- The Company
continues to experience very strong demand trends for respiratory
equipment, including CPAPs, BiPAPs, oxygen concentrators,
ventilators, as well as the CPAP resupply and other supplies
business.
- The Company has
continued expanding its sales reach, driving organic growth which
spans across 26 U.S. states with the addition of experienced sales
personnel.
- The Company has
287,500 active patients, 34,400 referring physicians and 125
locations.
Management
Commentary:
“We continued experiencing robust demand trends
in the first quarter across our diverse product offering and are
very pleased with the continued record financial and operational
results we have posted. Our commitment to scaling our operations
efficiently is evident in our margin profile, which has shown
remarkable consistency. Moreover, we saw steady sequential organic
growth, reduced our bad debt expense year over year, and
significantly improved our net operating cash flow. To maintain our
positive momentum and competitive edge, we will continue putting a
high priority on strategic investments in both inorganic and
organic growth opportunities, including penetrating our key sales
touch points, with the continued expansion into continuum markets
which has been very successful to date,” said CEO and Chairman
Gregory Crawford.
“We are actively expanding our patient-centric
ecosystem across 26 states, offering specialized clinical
respiratory programs, to provide efficient and tailored home
treatment. Our strategic initiatives are concentrated in regions
with a high COPD prevalence, with a concerted sales effort aimed at
penetrating targeted markets to fuel our organic growth trajectory.
A significant driver of our growth is our proven diversified
business model which has increased our overall performance by
extending a patient’s lifetime relationship with us and generates
higher recurring revenue. Our healthy balance sheet, well-timed
organic growth initiatives, and strategic acquisition and
integration strategy provide us with ample opportunity to
capitalize on the expanding market for at-home clinical respiratory
care.”
“We take great pride in our continued cost
discipline and capital allocation prudency which are the
cornerstones of our consistent financial and operating results. Our
Fiscal Q1 results underscore this with an Adjusted EBITDA margin of
23.5% of revenue, and net cash flow from operations which came in
at 18% of revenue,” said Hardik Mehta, Quipt’s Chief Financial
Officer. “We are thrilled to surpass the milestones of $261 million
in Run-Rate Revenue and $61 million of Run-Rate Adjusted EBITDA
(both defined in Non-IFRS Measures below). Our strategic capital
management approach has endowed us with a conservative balance
sheet characterized by a low Leverage Ratio of 1.3x net debt to
Adjusted EBITDA, bolstered by over $59 million in available credit
and cash on hand. Despite the challenges posed by higher interest
rates, our strong financial foundation ensures we are well equipped
to pursue our strategic objectives. With our flexible capital
structure, we continue to explore diverse avenues to enhance
shareholder value. The structure of our operations, coupled with
our solid financial position, which includes the ability to
increase the size of our senior credit facility, equips us with all
the necessary tools to successfully drive our growth strategy
forward.”
From time to time, the Company is involved in
various legal proceedings arising from the ordinary course of
business. The Company received a civil investigative demand from
the U.S. Attorney’s Office for the Northern District of Georgia
pursuant to the False Claims Act regarding an investigation
concerning whether the Company may have caused the submission of
false claims to government healthcare programs for CPAP
equipment. The Company is cooperating with the investigation
and the DOJ has not indicated to the Company whether it
believes the Company engaged in any wrongdoing. No assurance
can be given as to the timing or outcome of the DOJ’s
investigation.
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.
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: the Company anticipating solid and robust
organic growth, with the goal of achieving 8-10% revenue growth on
an annualized basis; 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 Company successfully identified,
negotiating and completing additional acquisitions; and
operating and other financial metrics maintaining their current
trajectories. 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: risks related to credit, market (including equity,
commodity, foreign exchange and interest rate), liquidity,
operational (including technology and infrastructure),
reputational, insurance, strategic, regulatory, legal,
environmental, and 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-IFRS Measures
This press release refers to “Recurring
Revenue”, “Adjusted EBITDA”, “Run-Rate Revenue”, “Run-Rate Adjusted
EBITDA”, and “Leverage Ratio”, which are non-IFRS financial
measures that do not have standardized meanings prescribed by IFRS.
The Company’s presentation of these financial measures may not be
comparable to similarly titled measures used by other companies.
These financial measures are intended to provide additional
information to investors concerning the Company’s
performance.
Recurring Revenue for Q1 is calculated as
rentals of medical equipment of $27.4 million plus sales of
respiratory resupplies of $26.8 million for a total of $54.2
million, divided by total revenues of $65.4 million, or 83%.
Adjusted EBITDA is calculated as net income
(loss), and adding back depreciation and amortization, interest
expense, net, provision for income taxes, stock-based compensation,
professional fees related to civil investigative demand,
acquisition-related costs, share of loss of equity method
investment, and loss (gain) on foreign currency transactions. The
following table shows our non-IFRS measure, Adjusted EBITDA,
reconciled to our net income (loss) for the following indicated
periods (in $millions):
|
|
|
|
|
|
|
|
Three |
|
Three |
|
|
months |
|
months |
|
|
ended December |
|
ended December |
|
|
31, 2023 |
|
31, 2022 |
|
Net income (loss) |
$ |
(0.6 |
) |
|
$ |
0.3 |
|
Add back: |
|
|
|
|
|
|
Depreciation and
amortization |
|
12.3 |
|
|
|
6.8 |
|
Interest expense, net |
|
2.0 |
|
|
|
0.7 |
|
Provision for income
taxes |
|
0.2 |
|
|
|
0.3 |
|
Stock-based compensation |
|
1.0 |
|
|
|
0.6 |
|
Professional fees related to
civil investigative demand |
|
0.4 |
|
|
|
— |
|
Acquisition-related costs |
|
0.2 |
|
|
|
0.3 |
|
Share of loss in equity method
investment |
|
0.1 |
|
|
|
— |
|
Loss (gain) on foreign
currency transactions |
|
(0.3 |
) |
|
|
0.0 |
|
Adjusted EBITDA |
$ |
15.3 |
|
|
$ |
9.0 |
|
Run-Rate Revenue is calculated as revenue for Q1
2023 of $65.4 million times four quarters equals $261.6
million.
Run-Rate Adjusted EBITDA is calculated as
Adjusted EBITDA for Q1 of $15.3 million times four quarters equals
$61.2 million.
Leverage Ratio is calculated as long-term debt
less cash, divided by Run-Rate Adjusted EBITDA, and is reconciled
as follows (in $millions):
|
As of and for |
|
the three months |
|
ended December |
|
31, 2023 |
|
Senior credit facility, principal |
$ |
65.5 |
|
Equipment loans |
|
13.3 |
|
Lease liabilities |
|
18.8 |
|
Cash |
|
(18.3 |
) |
Long-term debt less cash |
|
79.3 |
|
Run-Rate Adjusted EBITDA |
|
61.2 |
|
Leverage Ratio |
|
1.3x |
|
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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