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 pleased to announce that it has
recently acquired three separate entities with combined operations
in California, Missouri, Arkansas and Mississippi, reporting
combined unaudited trailing 12-month annual revenues of
approximately $5.5 million, and Adjusted EBITDA (defined below) of
$550,000 prior to integration. As a reminder all figures stated are
in USD.
Quipt is undertaking an ongoing national
expansion effort with the goal of economically growing its
operating footprint to serve as a leader in respiratory homecare
across the United States. Quipt has built out a significant
infrastructure platform which is highly scalable and allows the
opportunity for the Company to efficiently integrate acquired
businesses resulting in meaningful cost synergies and revenue
growth opportunities.
Quipt’s acquisition approach generally targets
companies that are either: (i) heavily respiratory weighted
companies with gross revenue in the range of $5 to $20 million, and
consistent annual EBITDA margins between 10% and 20% or more; (ii)
sub $5 million revenue targets with the strategic goal of expanding
our payer mix and expanding our geographical footprint across new
states to be become a national DME provider; or (iii) targeting
substantially larger opportunities that would be more meaningful in
terms of revenue, EBITDA, active patient base and geographical
operating footprint.
Acquisition Details
Quipt will operate each of the newly acquired
entities under the Quipt brand name post-integration. This marks
the start of a longer-term plan to transition certain local market
brands to Quipt, as it strengthens its brand equity and
recognition. Quipt believes this will be a driver of future organic
growth.
Combining these newly acquired entities provides
Quipt a pathway to grow into four new states (California, Missouri,
Arkansas, and Mississippi). The combined entities will add six
locations, over 10,000 active patients, important insurance
contracts and decades of operating experience. Each business has a
proven track record in the markets they serve and has diversified
product mixes, which combined is comprised of 66% respiratory and
33% traditional DME. Quipt has immediate access to attractive new
markets in which it intends to leverage its existing infrastructure
to create significant cross selling and patient growth
opportunities. In addition, the combined entities give Quipt the
opportunity to add patients to Quipt’s existing subscription-based
resupply program, and Quipt expects to derive strong revenue
synergies from this initiative. The combined entities have a
diverse payor mix with no more than 10% in sales coming from any
one particular payor source.
The Company is pleased to share the following
updated metrics taking into consideration the three newly acquired
entities:
- 130,000 current active
patients;
- 17,000 unique referrals; and
- 57 locations across 15 U.S.
States.
Under the terms of the definitive purchase
agreements, Quipt acquired the three combined entities for total
consideration of approximately $4.2 million in cash. It is expected
that the combined entities will increase Quipt’s annual gross
revenues by approximately $5.5 million and Adjusted EBITDA (as
defined below) will normalize to be in-line with the Company’s
overall margin profile. Leveraging existing infrastructure and
payor contracts, Quipt expects to achieve additional revenue
generated from organic growth, cross selling, and corporate
synergies.
Management Commentary
“The closing of three acquisitions with
operations spanning over four states represent the beginning of
what we anticipate will be a busy second half of the year at Quipt,
as we strategically aim to expand our operating footprint into
attractive new and existing markets. We are focused on economically
scaling the business, with our acquisition strategy, and robust
organic growth platform,” said Greg Crawford, Chairman and CEO of
Quipt. “We are excited to build our brand into local markets,
dedicated to exceptional patient care, and expect a smooth
integration process that will allow us to move quickly to capture
the many synergies available to us. We are able to add six new
locations, over 10,000 active patients, and $5.5 million in gross
revenue through these acquired entities providing us meaningful
infrastructure in these new areas of service.”
Chief Financial Officer, Hardik Mehta added,
“Our acquisition focus continues to be on companies with a heavily
weighted respiratory product mix, diversification of payor mix, and
a stable foundation for Quipt to build out its operations,
utilizing existing infrastructure. Our goal is to double the
Adjusted EBITDA margin post integration of the combined entities,
aligning more closely with our overall margin profile. We are
excited to have the opportunity to penetrate these new states both
organically and through strategic bolt-on opportunities that
present themselves. With approximately $37 million in cash and
untapped credit facility of $20 million, we believe this is just
the beginning of what will be a strong acquisition pace for us over
the remainder of 2021.”
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.
There can be no assurance that any of the
potential acquisitions in advanced 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 directors, shareholder and regulatory approvals.
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" and
similar expressions as they relate to the Company, including:
the Company’s acquisition approach; the Company’s plan to
transition certain local market brands to Quipt; the Company
strengthening its brand equity and recognition and the Company
believing this will be a driver of future organic growth, combined
with the ongoing efforts to date; the Company creating significant
cross selling and patient growth opportunities in the new markets;
the new entities giving the Company the opportunity to add
patients to Quipt’s existing subscription-based resupply program
and the Company expecting to derive strong revenue synergies from
this initiative; the amount the Company expects its annual revenues
and Adjusted EBITDA will increase as a result of the acquisitions
of the combined entities; the company expecting to achieve
additional revenue from organic growth, cross selling and
corporate synergies; the Company anticipating a busy second half
of the year at Quipt, as it strategically aims to expand its
operating footprint into new and existing markets; the Company
expecting a smooth integration process and that anticipated
results; the Company believe this is just the beginning of what
will be a strong acquisition pace for it over the remainder of
2021; 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; and the Company successfully
identified, negotiating and completing additional acquisitions,
including accretive acquisitions. 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 Quipt
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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