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 second
quarter fiscal 2024 financial results and operational highlights.
These results pertain to the three and six months ended March 31,
2024, 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, May 16, 2024, at 10:00 a.m. (ET). The dial-in number is 1
(844) 763 8274 or 1 (647) 484 8814. 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 Q2 2024 was $64.0
million compared to $58.1 million for Q2 2023, representing a 10%
increase. Organic growth contributed approximately $3.3 million, or
6% on an annual basis.
- The Company absorbed a revenue impact in the quarter resulting
from expiration of the Medicare 75/25 blended rate as of January 1,
2024. The Medicare 75/25 blended rate had been providing rate
relief in certain geographies. Additionally, in certain regions,
the Company experienced the withdrawal of Medicare Advantage (“MA”)
members due to the capitated agreement engaged on with other
providers in the industry.
- The Company remains focused on the ongoing objective of
returning to an 8-10% annualized organic revenue growth pace and
continues to implement its strategic growth initiatives on this
front.
- Revenues for the six months ended
March 31, 2024, increased to $129.3 million, representing an
increase of 31% from the six months ended March 31, 2023.
- Recurring Revenue (Non-IFRS
financial measure or ratio, see “Non-IFRS Financial Measures”) for
Q2 2024 continued to be strong, representing 79.6% of total
revenue, driven by overall growth in new equipment set-ups.
- Adjusted EBITDA (Non-IFRS financial
measure or ratio, see “Non-IFRS Financial Measures”) for Q2 2024
was $14.9 million (23.3% of revenue) compared to $13.1 million
(22.5% of revenue) for Q2 2023, representing a 14% increase.
- Adjusted EBITDA for the six months
ended March 31, 2024, increased to $30.2 million, representing an
increase of 37% from the six months ended March 31, 2023, and
represented 23.4% of revenues.
- Net income (loss) for Q2 2024 was
$(1.4) million, or ($0.03) per diluted share, as compared to $(0.7)
million, or $(0.02) per diluted share for Q2 2023.
- Cash flow from operations was $17.1
million for the six months ended March 31, 2024, compared to $14.8
million for the six months ended March 31, 2023.
- For Q2 2024, bad debt expense as a
percentage of revenue improved to 4.2%, compared to 4.3% for Q2
2023.
- The Company reported cash on hand
of $14.6 million as of March 31, 2024, compared to $17.2 million as
of September 30, 2023. The decline in cash was primarily the result
of the recent cyber-attack on Change Healthcare, which impacted the
ability to process and bill claims in the back half of the quarter.
The Company expects cash collections to normalize in the coming
months as the backlog of claims are resolved and future claims are
adjudicated in a timely manner like they have been
historically.
- The Company had total credit
availability of $39.3 million as of March 31, 2024, with $18.3
million available on its revolving credit facility and $21.0
million available pursuant to a delayed-draw term loan
facility.
- The Company maintains a
conservative balance sheet with a net debt to Adjusted EBITDA
Leverage Ratio (Non-IFRS financial measure or ratio, see “Non-IFRS
Financial Measures”) of 1.4x.
Operational
Highlights:
- The Company served 148,874 unique
patients in Q2 2024 compared to 137,748 in Q2 2023, an increase of
8% year over year.
- Compared to 198,101 unique
set-ups/deliveries in Q2 2023, the Company completed 210,279 unique
set-ups/deliveries in Q2 2024, an increase of 6%. This includes
116,023 respiratory resupply set-ups/deliveries for the three
months ended March 31, 2024, compared to 106,486 for the three
months ended March 31, 2023, an increase of 9%, which the Company
credits to its continued use of technology and centralized intake
processes.
- 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 287,500 unique
active patients that were served at least once in the last twelve
months, 34,400 referring physicians, and 125 locations.
Subsequent
Highlights:
- The Company announced the
implementation of a normal course issuer bid (the “NCIB”). Under
the NCIB, the Company may purchase for cancellation up to 3,626,845
common shares, or up to $5.0 million, of the Company (each, a
“Common Share”) from time to time in accordance
with applicable securities laws, representing approximately 10% of
the Company’s public float (as defined by the TSX).
- The NCIB commenced on May 6, 2024
and will terminate upon the earliest of (i) April 30, 2025, (ii)
the Company purchasing the maximum number of Common Shares or
dollars, and (iii) the Company terminating the NCIB. As of April
30, 2024, the Company had 42,571,523 Common Shares issued and
outstanding.
Management
Commentary:
“We are very proud of the resilience of our
business and our ability to maintain our strong margin profile amid
certain industry-related challenges experienced during fiscal Q2.
We have observed several positive trends with respect to equipment
set-ups, including within our sleep segment, and we have seen no
change in favorable referral patterns. To facilitate a return to
our historical revenue growth trajectory, we are working diligently
to enhance our ongoing organic growth initiatives, such as
expanding into continuum markets, and cross selling our end-to-end
respiratory solution, which provides a unique go to market
approach. Our objective remains to return to an 8-10% annualized
organic growth rate, which we believe can be attained with the
incorporation of our updated and enhanced capital allocation
strategy. As part of this capital allocation approach, subsequent
to quarter end, we initiated a share repurchase program through an
NCIB for up to 10% of our public float. We firmly believe our
current valuation in the marketplace does not properly reflect the
underlying fundamentals of the business and our future growth, and
we will consider using this tool to enhance shareholder value as
appropriate,” said CEO and Chairman Gregory Crawford.
“Our continued financial and operational
performance is a result of our ongoing commitment to cost
discipline and prudent capital allocation, exemplified by strong
and consistent Adjusted EBITDA margin over the years and Adjusted
EBITDA margin of 23.3% for the fiscal Q2 period,” said Hardik
Mehta, Quipt’s Chief Financial Officer. “Our strong balance sheet,
with $32.9 million in liquidity, which includes the impact from the
Change Healthcare cyber-attack, positions us exceptionally well to
navigate through an environment of higher interest rates, and to
strategically deploy capital to increase shareholder value.
Moreover, we have full confidence in our margin profile throughout
the remainder of the fiscal year, pursue both organic and
synergistic inorganic growth opportunities that may arise. Our
operations are structured to allow us to effectively drive our
strategy for expansion, and we are very confident in our business
model and in our continued future growth.”
The Company's full financial statements and
related management's discussion and analysis for the three and six
months ended March 31, 2024 is available under the Company's
profile on SEDAR+ (www.sedarplus.com) and posted on the Company's
web site at https://quipthomemedical.com/financials.
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; the Company expecting cash collections to
normalize in the coming months; and the Company being confident in
its margin profile throughout the remainder of the fiscal year; 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; legal proceedings and litigation,
including as it relates to the civil investigative demand (“CID”)
received from the Department of Justice and related subpoena from
the U.S. Securities and Exchange Commission; 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” 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 Q2 is calculated as
rentals of medical equipment of $27.4 million plus sales of
respiratory resupplies of $23.5 million for a total of $50.9
million, divided by total revenues of $64.0 million, or 79.6%.
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 |
|
Six |
|
Six |
|
months |
|
months |
|
months |
|
months |
|
ended March |
|
ended March |
|
ended March |
|
ended March |
|
31, 2024 |
|
31, 2023 |
|
31, 2024 |
|
31, 2023 |
Net loss |
$ |
(1.4 |
) |
|
$ |
(0.7 |
) |
|
$ |
(2.0 |
) |
|
$ |
(0.4 |
) |
Add back: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
12.0 |
|
|
|
9.6 |
|
|
|
24.3 |
|
|
|
16.4 |
|
Interest expense, net |
|
1.9 |
|
|
|
2.0 |
|
|
|
3.8 |
|
|
|
2.7 |
|
Provision for income
taxes |
|
0.3 |
|
|
|
— |
|
|
|
0.5 |
|
|
|
0.3 |
|
Stock-based compensation |
|
0.7 |
|
|
|
1.3 |
|
|
|
1.7 |
|
|
|
1.9 |
|
Professional fees related to
CID |
|
1.0 |
|
|
|
— |
|
|
|
1.5 |
|
|
|
— |
|
Acquisition-related costs |
|
0.0 |
|
|
|
0.9 |
|
|
|
0.2 |
|
|
|
1.2 |
|
Share of loss in equity method
investment |
|
0.1 |
|
|
|
— |
|
|
|
0.2 |
|
|
|
— |
|
Loss on foreign currency
transactions |
|
0.3 |
|
|
|
0.0 |
|
|
|
0.0 |
|
|
|
0.0 |
|
Adjusted EBITDA |
$ |
14.9 |
|
|
$ |
13.1 |
|
|
$ |
30.2 |
|
|
$ |
22.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin for Q2 2024 is calculated as Adjusted
EBITDA of $14.9 million divided by revenue of $64.9 million, or
23.3%.
Leverage Ratio is calculated as long-term debt
less cash, divided by (Adjusted EBITDA for Q2 times four), and is
reconciled as follows (in $millions):
|
As of and for |
|
the three months |
|
ended March 31, |
|
2024 |
Senior credit facility, principal |
$ |
66.4 |
Equipment loans |
|
12.8 |
Lease liabilities |
|
19.0 |
Cash |
|
(14.6) |
Long-term debt less cash |
|
83.6 |
Adjusted EBITDA for Q2 times
four |
|
59.6 |
Leverage Ratio |
|
1.4x |
|
|
|
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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